First study to measure innovation across Australian industry

Rates activity from 1990 to 2005

The first ever study of its kind to measure Australian innovation since 1990 was announced today by IBM Australia and the Institute of Applied Economic and Social Research at the University of Melbourne.

Dubbed the Innovation Index of Australian Industry, the inaugural study uses rigorous analysis of key economic data to provide a measurable rating of Australia's innovation activity by industry for the past 15 years.

It was conceived by IBM Australia and prepared by researchers at the Melbourne Institute to fill a gap in current innovation research. It is the first study to reflect the complex nature of innovation via an inter-industry, multi-indicator analysis approach.

Although innovation is widely accepted as a key driver of economic growth and productivity, there has not been a published study to date in Australia that measures the many different aspects in which local industry innovates in their provision of products and services.

The IBM-Melbourne Institute Innovation Index of Australian Industry is the first study to address the many contributors to industry innovation with the analysis of six key data groups, comprising of: research & development intensity; patent intensity; trade mark intensity; design intensity; organizational/ managerial transformation; and productivity.

It captures innovation trends across 13 categories of Australian industry as defined by ANZSIC1 - to provide business leaders, analysts and policy makers with a rigorous and insightful new measure to assess industry and national economic performance.

ANZSIC is the Australian and New Zealand Standard Industrial Classification. It is the official classification system used for A/NZ industry for data collection purposes, and is aligned with the international system of industry classification.

The Innovation Index excludes non-market sector industries such as government and defence, education, not-for-profit health services, as well as agriculture, forestry and fishing.

IBM Australia CEO, Glen Boreham, said there is no doubt that Australia's industry leaders are embracing innovation to drive growth.

However, according to the results of the innovation index there is the potential for much more to be done.

"Our hope with this index is that by empowering local industry leaders with the necessary information we can, together, have a more informed debate and build Australia's global economic future on a path of successful and competitive innovation," he said.

Melbourne Institute director, Professor John Freebairn, said the use of innovation in the development of new and better products and services is critical for Australia's sustained economic prosperity.

"This index employs modern statistical techniques to provide a valuable and unique picture of the evolving innovation performance of the Australian economy. The index provides useful new insights on the important missing ingredient that drives economic growth," he said.

The index defines innovation as the introduction of new and improved ways of enhancing business productivity encompassing activity that is both new to the world and new to the organization.

During the 15 year study period (1990 to 2005), allowing for changes in growth of the economy, the index shows that Australia has increased innovation activity by 25.8 per cent, with particularly strong growth since 1996.

The overall increase in the rate of innovative activity since 1990 is 1.6 per cent per annum.

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