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

http://www.innovationgrowthlab.org.uk