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Innovation Activity in Australia Doubles in 2010 Index

Fourth Edition of the Innovation Index of Australian Industry Shows Minimal Impact from economic slow down

Sydney, Australia - 09 Dec 2010: IBM Australia (NYSE: IBM) and the Melbourne Institute of Applied Economic and Social Research, University of Melbourne, today published the fourth edition of the IBM-Melbourne Institute 'Innovation Index of Australian Industry’ (Innovation Index), which reveals  growth in Innovative activity in Australia between 2007-2008.

The Study revealed that following a three-year period of flat Innovation growth in Australia between 2005-2007, this year’s report shows a significant rise in Innovation activity of 6.1%,  compared with an average rate of increase in the period since 1990 of 3.1 per cent per annum. This finding is of particular interest given the backdrop of the Global Financial Crisis (GFC), which would have had some impact on the period under review.

Whereas Innovation activity seems to have been slowed or affected by other economic disruptions during 1990 to 2007, this year's Study shows a strong increase relative to a slow-down in economic growth (2.4% in 2008 and 1.3% in 2009).

The 2010 Innovation Index also found that Australia seems to be focused on the commercialisation of innovation, with patent intensity quadrupling in the period under review. The top five performing Innovation Industries in 2008 were: Cultural & Recreational Services; Personal/Other Services; Retail; Communications; Wholesale Trade. The Study also found a strong correlation between the top performing innovation sectors and those industries that were strong ICT innovators, in particular: Communications; Retail; Wholesale Trade; Finance; and Utilities.

 “It’s extremely encouraging to see Australia continuing to invest significantly in Innovation even at the outset of a massive economic disruption like the GFC,” said Glenn Wightwick, Chief Technologist, IBM Australia. “It’s also clear from the Study that ICT is a key innovation enabler. As we move into the next phase of Australia’s growth, underpinned by smart systems and a ubiquitous broadband network, we expect innovation growth to continue despite any continuing GFC lag in the next Study.”

Commenting on the backdrop of the GFC on this year’s Study, to Associate Professor Paul Jensen, Senior Research Fellow, Melbourne Institute of Applied Economic and Social Research said: “Economic growth in Australia slowed to 2.4 per cent in calendar year 2008 from 4.7 per cent the previous year as the effects of the GFC started to be felt. Most of the growth in the Innovation Index in 2008 was due to an increase in patent, design and R&D intensity, as well as the increase in the organisational/managerial component. This seems to indicate that business confidence from government announcements about pro-innovation policy development, coupled with longer term micro-economic reform, allowed Australian businesses to continue implementing innovation-related policies, even during a period of economic uncertainty.”

The ‘Innovation Index of Australian Industry’ was conceived by IBM Australia and prepared by researchers at the Melbourne Institute to fill a gap in innovation research. Although innovation is widely accepted as a key driver of productivity, until the Index, there had not been a published study in Australia that measured the many different aspects in which local industries innovate in their provision of products and services. The Index is still the only study to reflect the complex nature of innovation via an inter-industry, multi-indicator analysis approach. This is achieved by addressing the many contributors to industry innovation with the analysis of six key data groups, comprising: research and development intensity; patent intensity; trade mark intensity; design intensity; organisational/managerial transformation; and productivity.

The Study is unique in that it captures innovation trends across thirteen categories of Australian industry – as defined by the Australian Bureau of Statistics – over a period of 19 years since 1990. It tracks the evolving innovation performance of the Australian economy to provide business leaders, analysts and policy makers with a rigorous and insightful new measure to assess industry and national economic performance.

“The IBM-Melbourne Institute 'Innovation Index of Australian Industry’ embodies IBM’s ongoing commitment to and investment in innovation and the prosperity of the Australian economy even as we recover from a major global economic disruption. This year’s Innovation Index is quite revealing when we look across different industry segments: the most significant changes in innovation tend to be in industry segments that are business-to-consumer focused rather than business-to-business oriented[1]. This suggests that innovation in the digital era is geared towards improving customer interactions – a finding also supported by IBM’s 2010 CEO Study,” said Matt English, Partner, IBM Global Business Services.

to Associate Professor Paul Jensen, Senior Research Fellow, Melbourne Institute of Applied Economic and Social Research, comments: “With 19 years of data to draw from, we have a unique insight into longer term trends around Innovation, which is such an important driver of economic growth. Some of the more noteworthy longer term trends include the overall rise in the Innovation Index, which has increased by 74 per cent from 1990 to 2008. Growth in patent intensity has significantly outpaced that of the other innovation components since 1990, more than quadrupling during the period under review. By industry, Manufacturing recorded its strongest gain ever during the period under review, which is thought to be one of the sectors experiencing significant change. Overall, in 2008 the productivity index - a key overall gauge of past successful innovation- was 30 per cent above the 1990 benchmark level. All these indicators point to a robust culture of innovation in Australia that should continue, even with some GFC lag factors taken into account, into the next period of review in 2011.”

Key Observations:

The IBM-Melbourne Institute ‘Innovation Index of Australian Industry’ defines innovation as the introduction of new and improved ways of enhancing business productivity. The Innovation Index records this activity in relation to goods and services; technical operations; and organisational, managerial and marketing functions, encompassing activity that is both ‘new to the world’ and ‘new to the organisation’.

The key findings from the ‘IBM – Melbourne Institute Innovation Index of Australian Industry 2010’ are:

IBM-Melbourne Institute Innovation Index

For more information about the IBM-Melbourne Institute Innovation Index of Australian Industry, and to download a full analysis of the results click here.

Melbourne Institute of Applied Economic and Social Research

The Melbourne Institute of Applied Economic and Social Research is a department of the Faculty of Economics and Commerce at the University of Melbourne. The Institute was formed in 1962 under the leadership of Professor Ronald Henderson and was the first economics research institute in an Australian university. Its objective is to be nationally and internationally renowned in academia, government, business and community groups as a major institute of applied economic and social research. For more information, see http://www.melbourneinstitute.com/.

IBM Australia

For more information on IBM Australia, visit www.ibm.com/au

About IBM:

For more information about IBM, please visit www.ibm.com/think


[1] The one exception is Finance and Insurance - see page 7 of The Index)

Contact(s) information

Helen Shaw
IBM External Relations
+612-9937-8308
+61-(0)412-690-573
hjshaw@au1.ibm.com

Adrianne Kern
Text 100 Public Relations for IBM
+61 2 9956 5733
+61 411 426 135
adrianne.kern@text100.com.au

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