Altruism, or selflessness, is the principle or practice of unselfish concern for or the devotion to the welfare of others. Within the context of innovation, a selfless orientation in a nation can positively impact the broader global innovation system. In this regard, however, Australia seemingly has a way to go to attain recognition as a highly innovative country compared to its counterparts around the globe.
To expand on this, Australia ranks 22nd in how its domestic policies support worldwide innovation, according to an analysis released by the Information Technology and Innovation Foundation (ITIF). The findings come in a new report assessing 56 countries—which together comprise close to 90 percent of the world’s economy— on the extent to which their economic and trade policies contribute to or detract from global innovation.
The ITIF says that while previous research has ranked countries based on innovation capabilities or outcomes, this report is the first to assess the impact of countries’ policies on the broader innovation system. The report found a strong correlation between countries’ contributions to global innovation and their levels of domestic innovation success – implicating that doing well domestically on innovation policy can also mean doing well for the world. In specific, Stephen Ezell, ITIF’s vice president for global innovation, noted that, “robust innovation is essential for economic growth and progress … as countries increasingly vie for leadership in the innovation economy, they can implement policies that try to benefit only themselves but harm the production of innovation in the rest of the world. Or they can implement ‘win-win’ policies that bolster their own innovation capacity while also generating positive spillovers for the entire global economy. For innovation to flourish around the world, we need a system that is doing much more of the latter.”
Likewise, Robert D. Atkinson, ITIF’s president and a co-author of the report, described that, “while policymakers are primarily focused on the interests of their own citizens, they usually overlook the fact that adopting policies that also happen to be good for the global innovation ecosystem will compound the benefits for their citizens.” Certainly, as Atkinson states, innovation altruism’ really does pay.
In the final analysis, countries were assessed based on 14 factors that both support innovation domestically and have positive spillover effects globally, as well as another 13 that have negative spillover effects. Examples of positive factors cited in the report are supportive tax systems and strong per capita investment in R&D, while negative factors include forced localisation or weak intellectual property protection.
Indeed, a supportive tax system and investment in R&D is one tangible way of boosting innovation in country. The government currently offers a lucrative tax incentive that can assist in funding research. However, as at June 2014, fewer than 12,000 performing entities had registered for its benefits. This is particularly so as the R&D tax incentive is a frequently overlooked opportunity for small and medium sized companies (SME) and start-ups, with many erroneously believing they are not eligible. Although by capitalising on the incentive’s benefits, companies can produce generous tax savings including generating cash for their past and future investments. Moreover, as elucidated above, the innovations and knowledge acquired through R&D can have positive spillover effects on the global economy.
Swanson Reed provides specialist expertise across a wide range of industries and has assisted many clients attain tax cash savings under the R&D regime. Contact one of our specialist R&D Tax consultants to find out more about the scheme.