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IBM – Melbourne Institute Innovation Index of Australian Industry 2008

Wednesday 30 July 2008

Study finds Innovation in Australian industry tapering off

According to Dr. Paul H. Jensen, Senior Research Fellow at the Melbourne Institute "After falling by 2.6 percent in the year to 2005, there was a modest rise in the Australian Innovation Index of 0.7 percent in 2006. Most of the increase in the index came from the Mining, Communication services and Finance and insurance industries. While Health and community services recorded the largest fall, this was due to an anomalous spike in 2005 and does not necessarily indicate a crisis in health and community services innovation. Large apparent falls in innovativeness were found in the Utilities industry, Construction, and Cultural and recreational services industries."

In the year 2006, the strongest growth was recorded in R&D and trademark intensity (2.4 and 3.5 percent respectively). The biggest fall during 2006 occurred in patent intensity. This recent change is symptomatic of the trend since 1990. Both R&D and trademark intensities have experienced the strongest trend rises while patent intensity has shown a more modest rise. Organisational and managerial innovation continues to trend downwards – in 2006, the annual rate of innovative activity fell by 2.0 percent. It should be noted that all of these indicators are normalized for the growth of either employment or value-added in the industry. Accordingly, while it does suggest that Australia as a whole is putting more resources into innovative activities vis-à-vis direct production activities, this effort has tapered off over the last couple of years.

The main observations to be drawn from the IBM – Melbourne Institute Innovation Index of Australian Industry 2008 are:
  • The annual increase in the rate of innovative activity in Australia in 2006 was only 0.7 percent, a figure which is much lower than the average rate of increase in the period since 1990 (2.0 percent per annum).
  • Most of the growth in the Index was due to an increase in trademarking intensity, and to a lesser extent, the growth of R&D activity. The intensity of patenting and design activity fell between 2005 and 2006.
  • Organisational and managerial innovation continues to trend downwards – in 2006, the annual rate of innovative activity fell by 2.0 percent.
  • Across the 13 industries considered, 9 experienced falls in the rate of innovative activity in 2006. The largest falls were recorded in Health and community services; Utilities; and Construction.
  • Only 4 industries experienced an increase in the annual rate of innovative activity in 2006. The largest recorded increases occurred in the Communication services, Mining, and Finance and insurance industries.
  • A lack of skilled labour is increasingly seen as a major barrier to innovation, across firms of all size.
  • Price competition is seen as an increasingly important driver of innovation for small businesses – 34.5 percent of small businesses stated it was a driver of innovation in 2005 (up from 23.2 percent) in 2003.
  • Across firms of all size, revenue and cost reduction were seen as less important drivers of innovation in 2005 compared to 2003.

The IBM – Melbourne Institute Innovation Index of Australian Industry is a comprehensive, inter-industry, multiindicator approach to measuring the rate of innovative activity in Australia. It embraces six different dimensions of innovation and then adjusts the measure for the level of economic activity. Accordingly, the Innovation Index is a measure of the proportion of total activity that is taken up with innovative endeavours.

The latest IBM – Melbourne Institute Innovation Index of Australian Industry can be found here.

Research Enquiries Contact
Dr Paul H. Jensen
Melbourne Institute of Applied Economic and Social Research, The University of Melbourne
Phone : 03 8344 2117
Fax : 03 8344 2111
Email : pjensen@unimelb.edu.au

Media Enquiries Contact
Mr Ordan Andreevski
Media Relations Manager
Melbourne Institute of Applied Economic and Social Research, The University of Melbourne
Mobile : 0438 385 466
Fax : 03 8344 2111
Email : oan@unimelb.edu.au
Web : www.melbourneinstitute.com

 

 

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