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UK government outlines strengths and weaknesses in innovation

As part of the government’s overall innovation strategy, an evidence paper lists factors that influence the pace and direction of developments in the field

The UK government has produced research with evidence that supports the national innovation strategy, and listed the national strengths and challenges involved in achieving the goals of the overarching plan.

Published by the Department for Business, Energy & Industrial Strategy (BEIS), the report complements the UK Innovation Strategy published in July 2021, with evidence against its four pillars (see box).

Regarding strengths, the paper stated that the UK innovation system is ranked 4th in the Global Innovation Index, has a distinguished status in research impact among the G7, and is “a partner of choice” for international collaboration.

On the other hand, the country faces many challenges to boost its national and global innovation standing by 2035. The research noted that UK R&D investment is 1.7% of GDP, while average spend in Organisation for Economic Co-operation and Development (OECD) countries is 2.4%. In addition, the evidence paper added the proportion of innovation active businesses in the UK has decreased from 49% in 2014-2016 to 38% in 2016-2018.

Among the factors driving innovation across the four pillars, the paper noted that on unleashing business, the UK’s performance in adoption of ideas and technologies is weaker in comparison to leading countries.

According to the research, current and future economic growth depends on the UK’s ability to adopt innovations, given that technology diffusion explains 44% of the difference between GDP per capital across countries.

“Modifications to regulatory frameworks can have significant influence on how innovation occurs in a country, and the relationship varies by sector, time scale or market,” the report noted.

“Government or industry need to be forward looking and consider the wider innovation impacts when developing and setting regulatory frameworks and the interplay between them.”

The four strategic pillars of the UK's innovation strategy are:

  • Unleashing business (pillar 1): This pillar explores how finance, the supporting regulatory and intellectual property systems, and global collaborations stimulate innovation opportunities for business.
  • People and Talent (pillar 2): The factors around investment in human capital and the role it plays in unlocking new areas of innovation activities are analysed in this pillar.
  • Instituions and Places (pillar 3): The supports around the adoption and diffusion of new ideas are the focus of this pillar, as well as knowledge and processes across all regions of the economy.
  • Missions and Technology Advancement (pillar 4): This pillar relates to how mission-based policy and identification of technological advantages can achieve outcomes that support UK economic growth while tackling major societal challenges.

In relation to people and talent, the paper warned that if the UK fails to address the shortage of qualified people, it will experience major gaps in digital, management, and science, technology, engineering and mathematics (STEM) skills nationally. One of the key solutions to meet the demand by 2030, the research noted, is retraining people.

“It is critical to upskill the existing workforce to meet the UK’s innovation potential, as well as increasing the skills of new entrants,” the paper said. “Various literature can be pointed to showing the positive contribution of diversity to innovation performance, with particular value on gender and ethnic diversity within organisations.”

On institutions and places, the paper noted the issue of concentration of innovation activity, as the UK holds three of the most science and technology intensive clusters in the world in Cambridge, Oxford and London. The paper said that investing in places with existing and emerging strengths in the factors needed for research and development, “would benefit both regional and UK-wide productivity”.

When it comes to missions and technology advancement, the paper pointed out that the UK “needs to identify and focus on technologies with market potential and strategic interests”, and that business and government will play a role in unleashing opportunities across a specific group of seven technology families.

These are: advanced materials and manufacturing; artificial intelligence, digital and advanced computing; bioinformatics and genomics; engineering biology; electronics, photonics and quantum; energy and environment technologies; as well as robotics and smart machines.

According to the paper, the success of these technology families “lies in the future prioritisation and targeting of government and business activity to respond to market opportunities”.

“Technology families provide a starting point for prioritisation where the UK should display leadership to unlock their full potential and benefits,” it added.

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