Framework Conditions for Innovation (OECD Reviews of Innovation Policy: China 2008)

It is widely acknowledged that innovative capacity is determined not only by a country's research and development (R&D) system but also by the interplay of factors which enable knowledge to be converted into new products, processes and organisational forms which in turn enhance economic development and growth. Arnold et al. (2001) talk about "frameworks for innovations". Silberglitt et al. (2006) link science and technology (S&T) capacity to "institutional" capacity, which they define as including "the quality and reach of governance in a country, a banking and financial system that works, an honest and functioning judiciary, and working educational and health systems". The World Economic Forum attempts to measure countries' overall competitiveness by looking at a number of indicators: institutions, infrastructure, macroeconomy, health and primary education, higher education and training, market efficiency, technological readiness, business sophistication and innovation (World Economic Forum, 2006). Framework conditions have also been an integral part of OECD analysis of innovation systems and policy over the past decade. All recognise that the efficacy of the wider innovation system often hinges upon the quality of framework conditions and the capacity to ensure an innovation-friendly environment in both core R&D and in more peripheral parts of the economy.
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