The Australian Government's Innovation Report

The scorecard provides an overview of Australia’s achievements in the areas covered by the indicators and
compares these achievements with the situation in other OECD countries. There are some constraints on the
availability of recent internationally comparable data, but in every case data used in this scorecard are at least
one year advanced on that used in the 2004 scorecard and three years or more advanced on the 2002 scorecard.
Much of the data used in the earlier scorecards have been revised since those scorecards were published and
the revised data have been incorporated in the comparisons made below. With three sets of data now available
for most of the indicators, it is possible to make tentative observations about trends in some areas.
The scorecard is not designed to be prescriptive in the sense that Australia should be attempting to be the leader
in every indicator. Each indicator provides only a partial picture of innovative performance, so an increase in
any one indicator does not necessarily mean a better outcome for the whole economy. This is true especially for
indicators based on inputs or expenditure, such as those in the knowledge creation and human resources categories,
as it is difficult to establish a quantitative relationship between changes in expenditure and subsequent changes
in innovation output. Nor is it the case that having a higher ranking on any or all of the indicators relative to other
OECD countries is a goal in itself. Innovation policy and outcomes need to have regard to particular country
circumstances, including comparative advantages, economic and institutional performance and other policy goals
and objectives.
Main points of the 2006 Innovation Scorecard
The 2006 scorecard is shown in Table 13. It is examined in detail below but the main points are:
• In the 2006 scorecard Australia ranked in the top 10 OECD countries in 12 out of the 18 indicators,
performing above the average in 14 indicators and below in four. Australia performed well above the
average in five areas:
o in the Knowledge Creation category – science and technical articles per million of the population;
o in the Human Resources category – science graduates in employment;
o in the Finance category– investment in venture capital as a percentage of GDP;
o in the Collaboration category – innovators with collaboration activity; and
o in the Market Outcomes category – businesses selling over the internet.
• Australia was below the OECD average in four areas, most notably in the number of US patents per
million of the population, another indicator of Knowledge Creation.
• Australia improved its ranking between the 2004 and 2006 scorecards in five of the 14 common
indicators. This occurred even though, as is shown in more detail below, its performance compared
with previous years improved in nine out of the 14 indicators. Improvements in rankings were in:
o Knowledge Creation – US patents and business R&D expenditures;
o Finance – investment in venture capital as a percentage of GDP; and
o Knowledge Diffusion – internet usage and broadband subscribers.
• Australia’s ranking fell in five areas, with the greatest fall being three places in the average annual
multifactor productivity (MFP) measure for 1999–2003. Also of note, the percentage of the labour
force with a tertiary education indicator fell two places. Nevertheless, Australia remained well above
the OECD average and, as is shown below, the percentage of the labour force with a tertiary education
in Australia has grown substantially since the 2004 scorecard.
122 Backing Australia’s Ability