Innovation and Change Essay Example | Topics and Well Written Essays - 3250 words - 2

Innovation and Change - Essay Example Today, innovative activity is a vital undertaking in determining the competitiveness of a country in the global markets as well as its economic progress. Despite the great importance that innovation bears in addition to the opportunities brought about by globalisation and new and advanced technologies; many governments around the globe are faced with difficulties in strengthening their activities in this area (Cole, 2010). This paper sets out to discuss the policy issues and challenges that face innovation and look at the ways to address these challenges. In the process of addressing these challenges; it is evident that influencers of policies regulating innovation activities are mostly governments. In addition, the major steps to be taken towards addressing most of the challenges are often within the power of the government. Today, the rise in the standards of living of people around the globe can be attributed to innovation. Today’s more productive economy can be pointed to the application of technological advances in combination with innovative and entrepreneurial approaches in the creation and distribution of commodities; both goods and services (Economist Intelligence Unit, 2009). In areas where the regulatory and market structures are favourable to the expansion of the more productive activities; the result is more economic growth and development hence; the effort of innovation in conjunction with formal research and development (R&D) remain the main themes of growth. Research opines that innovation is on the rise towards forming a major part of the economic activity (Warda et al., 2006). In the past two decades, growth in investment in machinery and equipment has been more rapid than in knowledge in most countries. In countries such as the United States and Finland, investment in knowledge is much greater than that in machinery and equipment. Furthermore, activities of R&D have intensified in most countries in the past decade but major developed n ations still remain unchanged in this area. The rate of growth of productivity is heavily influenced by improvements made in the skill composition of the workforce. More recently, the significance of innovation has been bolstered by the rapid technological advances and globalisation that have led to the establishment of new markets and new forms of competition that deliver consumers with innovative products and services. Even though these developments hasten the need for many countries to elevate the value chain; de Serres et al. (2006) opine that strengthening innovation performance is a major problem in these nations. An example is the slow progress witnessed with the Lisbon strategy of the European Union. However, a renewal of the strategy resulted in some success in helping the EU’s R&D and innovation performance – which is a key element of the Lisbon strategy; to increase the intensity of R&D in every economy. Innovation, however, is difficult to measure using R&D since for it to succeed it requires that a number of policies be implemented across extensive domains ranging from funding of the R&D, entrepreneurship, immigration, education as well as financial, product and labour market regulations. Analysis from the past decade reveals that the rapid increases in the intensity of R&D in many countries around the globe are due to a number of factors. These factors include (de Serres et al., 2006): i. Reduced anti-competitive regulations of the product market that