Benchmarking Evaluation of National Innovation Policy Implementation (2008)

ABSTRACT As small island countries, both Taiwan and Ireland have been regarded as locations that have performed economic miracles. Growing from agricultural economies to major regional players, both have often been studied as examples of national development and innovation. Therefore, this study seeks to compare the innovation policy in national contexts. comparison of respective innovation policies on supply, environmental, and demand sides with a more elaborated classification base shows that the Taiwanese government adopts a more active top-down approach, making use of substantial levels of government research funding and resources to develop target industries. In contrast to this is the bottom-up approach of the Irish government that focuses more on creating an innovation environment and lifting firm-level research and development (RD one, Taiwan, was part of high growth Tiger economies that included Hong Kong, Singapore, Taiwan, and Korea. other gained the nickname the Celtic Tiger as its sudden economic rise during the 1990s mirrored the growth of the Asian Tigers during the 1980s. Growing from agricultural economies to major regional players in western and oriental worlds, both have been studied as examples of national development and innovation (Preston, 1997; Hu and Mathews, 2005; Hsu, 2005; Lodge, 2005). In particular, studies have documented the remarkable progress of Taiwan and cited government innovation policies as a major factor in this success (Kraemer et al., 1992). National innovation policies are considered especially relevant for small developing economies as part of their adjustment to the changing international, economic, and technological order as well as improvements to their own economic and technological situation (Davenport and Bibby, 1999; Pack, 1992). According to the Global Competitiveness Report 2006-2007, published by the World Economic Forum (WEF), Taiwan ranks 9th and Ireland 19th in the field of innovation among the 125 countries included in the study worldwide. In Asia, Taiwan ranks second, behind only Japan (Porter et al., 2007). It is usually agreed that innovation is the key driver of economic performance. Innovation as a driver of growth theory is derived from the economic theory of creative destruction put forward by Joseph Schumpeter (1942) that states that in a capitalist society, long-term economic growth is generated by the creation of the new and the displacement of the old. As nations achieve higher levels of gross domestic product (GDP) per person, the main source of this change becomes innovation. Porter and Stern (2001) thus describe changes in advanced countries: The challenges of a decade ago, were to restructure, lower costs and raise quality. Today, continued operational improvement is a given advantage must come from the ability to create and then commercialize new products and processes, shifting the technological frontier as fast as their rivals can catch up. In addition, statistical comparisons of economic performance among countries show that the intensity of national innovative activity is correlated with higher rates of standards of living and productivity growth (Furman et al, 2002). In 1986 the Irish GDP per capita stood at US$9,265 and Taiwanese GDP per capita was a close US$9,088. A decade later, strong economic growth in both countries had produced similar GDP figures of $15,481 and $14,092 in Ireland and Taiwan, respectively. However, by 2004, average annual working hours per employee in Ireland had dropped to almost 75% of their Taiwanese counterpart, the GDP gap had risen to nearly $7,000 (Taiwan $18,527 vs. Ireland $25,540), and Taiwan had experienced a period of very slow growth (Groningen Growth and Development Centre, 2006). …