Innovating innovation — but still on a shoestring

Here’s an idea: invite the super-rich who are buying hideaways and other bits of this country to put a bit of their pocket money (meaning, the odd $10 million or so) into high-tech startups here.

They get a deeper connection with their part-adoptive country. We get more of our science turned into business ventures — and just possibly more of the intellectual property and its earning power (and taxes) stays here.

This is one idea circulating in officialdom to promote science and innovation.

It recognises that a segment of the world’s wealthy get hooked on the liveability, as Len Brown would put it, of this place. It addresses the thin supplies of angel, seed and venture capital investors in a small economy that has lived beyond its means for 40 years. A side-effect might be to ease fears about foreigners buying us up.

The idea also recognises that a very small country needs outside connections in science and innovation, as in other fields.

One logical connection is outwards to New Zealanders who have found other places more intellectually, entrepreneurially or managerially rewarding. Some 32,000 are in the Kea (Kiwi expats) network which Sir Stephen Tindall initiated a decade ago to provide on-the-ground sources of advice and links into foreign markets, capital and expertise. A renewed push in this so-far patchy venture is another idea circulating in officialdom.

Then there is science diplomacy. This has become a feature of John Key’s interactions with foreign leaders and part of diplomats’ brief. That is intended to underpin the links some scientific and commercialisation institutions here have been developing with foreign counterparts — for example, Auckland University’s Uniservices’ partnership in Korea.

Now there is a new initiative: to discuss with other small countries science and innovation challenges and opportunities they share which are distinct from those of big countries. This has met a ready response from the likes of Denmark, Israel, Norway and Singapore and is likely to take more shape later in the year.

These countries are excluded from the G20. Israel is isolated (even if succoured by the United States). Denmark has big-brother Germany next door (as we have Australia). Norway has an independent foreign policy, as New Zealand has (for now). Singapore has lived on its wits for 60 years and to get still richer has to go higher-tech.

The potential for such interaction in other policy areas is obvious. Small economies differ from big economies in resources, scale, scope and flexibility. Transplanting big-country methods into small countries is often misconceived.

As Steven Joyce said, quoting in a speech to a conference on the interaction between science and policy on Thursday someone he didn’t identify: “For a small country, we do big country really badly.”

David Skilling, mentioned here two weeks back, last week argued in a new paper that through the past two/three decades small developed economies did better economically as a group than big developed economies. Their smaller, less formalised decision-making systems are able to adapt strategy, policy and practice to changing global conditions more readily than those of big countries.

Given that much of the OECD’s analysis of what works best is drawn from big countries, policymakers here may need to look elsewhere for what works.

Among those small countries that have done best, part of the strategy has been to push science and innovation — much more than New Zealand has done. A sad spiderweb chart in one of the two briefings to incoming minister Joyce by the Ministry of Science and Innovation (MSI) shows government spending below the OECD average and private sector spending far below.

Unsurprisingly, because innovation is nine points of ten in lifting real incomes, New Zealand has slid down the OECD’s wealth and income league table.

So is the government about to climb up the OECD science and innovation league? MSI trumpets an aim of doubling the value from science and innovation in the next five years.

Here’s Joyce last Thursday: “There won’t be a lot of money around. Government finances are tight and that is unlikely to change much this term, with any new expenditure in any area having to come largely from somewhere else.

“You could say (and many do) that you have to spend money before you make it but the world has gone about as far as it can go down that track. So we’re back to making ends meet and making the most of what we have.”

Then he quoted Lord Rutherford’s grossly misused line that there is no money so people must think — which invites the “fatalism” Skilling has contrasted with the conscious strategic responses successful small countries have gone in for.

Well, some officials and others have been thinking. Not about spending, Joyce’s myopic term, but about investment. Spending buys something, end of story. Investment generates a return.

Which the foreign hideaway brigade — and other small countries — know.