Feature
Issue No. 5 - April/June 2002
Research Rich, Cash Poor
by Professor Richard Blandy
In Issue 4 of in-business South Australia I concluded that a far better economic strategy from Premier Rann is going to be needed if South Australia’s share of the national economy is not going to continue to shrink over the coming decade.
Indeed, Access Economics’ Business Outlook for December Quarter 2001 projects South Australia’s share of national GDP to fall from its present 6.5 per cent to 6.2 per cent in 2005/06. Extrapolating this rate of decline would give South Australia a share of national GDP of only 5.7 per cent in 2011/12.
An essential part of a strategy to slow, halt and reverse the shrinking of the South Australian economy relative to the national economy is an improved rate of business innovation. The reason why this is essential is that more than half of the growth of advanced economies comes not from capital investment and increases in employment, but from improvements in the productivity of these physical inputs. A very substantial part of improvements in productivity comes from innovation.
In his press release on 17 March announcing Professor Tim Flannery’s appointment as co-chair of the Government’s new Science and Research Council, Premier Mike Rann said that innovation is seen by the new Labor Government as one of the keys for job creation in South Australia.
Innovation means doing things in new and better ways, producing novel and clever goods and services, using sophisticated technologies and skills. Although innovation is not only about the application of scientific R&D, a large part is, in fact, about the application of R&D. Hence, South Australia’s scientific R&D capability is a very important factor in determining South Australia’s capacity to be innovative.
How does South Australia rate in the R&D stakes (Gross Expenditure on R&D, i.e., GERD) within Australia and the world?
Australia’s ratio of GERD to Gross Domestic Product (GDP), 1.49 per cent, i...
