Tuesday, March 20, 2012

Innovation Policies and Socio-economic Goals: An Analytic-diagnostic Framework
INSEAD Working Paper 2012/35/IIPI

Quite often, innovation policy is called upon to bring about innovations that could provide solutions to socio-economic problems such as low productivity, regional economic regeneration, environmental, defence or health-related matters. Around the world, governments have outlined ambitious plans to drive innovation and move towards a knowledge driven economy. These strategic plans are comprised of distinct sub-goals related to ICT, education, infrastructure and many other intermediate goals. However, there are obstacles that may prevent policy makers from achieving these goals. Thus, innovation policies are often called upon to effectively solve two “problems”, firstly broad socioeconomic challenges, such economic growth, and secondly barriers and constraints associated with achieving socio-economic goals. In effect, these constraints are ‘intermediate problems’ that prevent achievement of socio-economic goals. Once the intermediate problems are identified, standard economic analysis is often deployed to design instruments of intervention such as subsidies, tax breaks or investments. While innovation policy makers have a plethora of tools to resolve these intermediate problems, they lack tools to link these intermediate problems with broader socio-economic problems. This paper introduces an analytic-diagnostic framework to equip policymakers and analysts with a tool that helps them develop innovation policies designed around socio-economic outcomes. This framework has been coined OCRIO- Outcomes, Constraints, Rationale, Intervention and Objectives.