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Increasing the impact of public investments in innovation
Three questions
What to invest in
How much to invest
R&D
Intangibles Unicorns
Labour Productivity
60%
1.12%
United StatesEuropean Union
How to invest effectively
€150billion
spent every year on innovation, entrepreneurship and business growth support
programmes in Europe alone
But slow productivity growth and convergence in Europe
Source:http://www.innovationgrowthlab.org/blog/much-%E2%82%AC152-billion-spent-across-europe-supporting-businesses-does-it-work
Little credible evidence on
what works, and what doesn’t
14740 evaluations of support schemes
Credible (2.4%) + Impact (0.6%)Source: Systematic reviews conducted by the What Works Centre for Local Economic Growth at the LSE (Credible: Level 3 Maryland Scale – Positive impact on employment)
Becoming more experimental
Why experiment
More impactful policies & better value-for-money
Novel solutions to policy challenges
De-risk new programmes
Continuous improvement
Time-limited unless demonstrated impact
Better evidence & decisions Save money
More effective messages: the UK’s Business Department used ‘nudging’ trials experimenting with different language to recruit business mentors
New research collaborations: Harvard Medical School researchers were randomised to meet as part of a grant programme information session
More successful startups by making a small tweak: the Startup Chile accelerator trialled sharing application feedback with its participants
Helping businesses grow with a low-cost networking intervention: two academics trialled monthly meetings between business owners in China
Researchers were 75% more likely to collaborate
Startups raised +50% more funding
Increased firm revenue by 8%
Read more about what we’re learning from policy experiments
Additional 800 mentors recruited, policy target met
Trials can have a powerful impact
right incentives
experimentation funds
How to become experimental
An experimental €1 bn productivity fund
An impactful BICC investment
Leverage BICC to increase the effectiveness and efficiency of member
states investment
€1,000 billionEuropean countries’ expected expenditure in policies to support businesses to innovate and grow in 2021-2027
Invest 0.1% (€1 bn) to find ways to maximise the impact
of the remaining 99.9%
Some potential programme areas
Innovation in how we regulate
SANDBOX
Testbeds
Regulators’PioneerFund
Give startups the option to operate under the same rules
across the EU through a single digital platform, while
preserving the rights of member states over specific
issues → Help innovative startups to grow faster
Piecemeal regulatory reforms constrained by status quo and institutional inertia →
This 29th regime would create a new system from
scratch designed for the 21st century, not one inherited
from the 19th century
Reinventing business regulation
Innovate in regulation and enforcement
Less-fragmented internal market
Reduce competitiveness differentials
The “Eurocompany”: a new full-fledged business regime, sitting alongside national regimes without replacing them (either EU-wide or for a smaller group of countries)
Give entrepreneurs from countries with poor regulatory environments the opportunity
to opt-out from inefficient national rules (introducing
regulatory competition without a race to the bottom) → Accelerate convergence
Changing systems
TRANSFORM FUNDING Higher innovation
Faster economic growth
Better living standards
TRANSFORM REGULATION
Experimental 1 billion productivity fund
More impactful support programmes and funding
instruments
“Eurocompany” business regime
More innovation-friendly and less fragmented
regulatory regime
Conclusion
Annex:About the Innovation Growth Lab
What IGL is
A global partnership bringing together
governments, foundations and researchers to scope, develop and test different approaches to increase
innovation, support high-growth
entrepreneurship and accelerate business growth
IGL – A global community for better policies through experimentationIGL Partners
Other organisations we’ve worked with:
IGL Research Network Over 85 researchers from around the world:
IGL Scientific CommitteeNick Bloom Stanford Graduate School of Business | Dietmar Harhoff Max Planck Institute for Innovation and Competition | Karim Lakhani Harvard Business School | Josh Lerner Harvard Business School | Fiona Murray MIT Sloan | Mark Schankerman LSE | Scott Stern MIT Sloan | John Van Reenen MIT Sloan