By Neil Lee, author of Innovation for the Masses: How to Share the Benefits of the High-Tech Economy
I grew up in Oxford, England, sometimes called the City of Dreaming Spires and a place known for science and innovation. Most people see the city as a place of great economic success, but I’m not so sure. It’s the most unequal city in the UK, house prices are much higher than earnings, and the labour market is bifurcated between a few top earners and the rest. Oxford has a highly innovative economy, but the benefits aren’t being shared.
Inspired by my hometown’s failure, I wanted to look at places which do things better. In my new book, Innovation for the Masses: How to Share the Benefits of the Tech Economy, I draw on case studies of four places which combine innovation with shared prosperity. These places aren’t perfect – their models are also deeply flawed in various ways. But by broadening our perspectives and looking at these places, we can find vital lessons for cities like my own.
First, I draw on the case of Austria. For many, Austria’s economy looks moribund. There are few start-ups and little venture capital. But Austria has experienced the largest increase in Research and Development (R&D) spending of any OECD country outside of the OECD, most of which came in industries such as steelmaking which are not traditionally seen as R&D intensive. The result has been that formerly industrial regions in Austria haven’t declined in the way they have in the United States or United Kingdom. Austria’s example shows us that innovation shouldn’t be narrowly focused on high-tech sectors.
One critique of Austria is that it doesn’t produce the sort of fast growth enterprises in digital tech which have been so important in the knowledge economy. So, I draw on the example of one of Europe’s most successful countries in digital tech, Sweden, and the example of Stockholm, one of Europe’s most successful tech hubs. Sweden shows us that that a strong state is perfectly compatible with highly innovative firms.
My next case is Switzerland. Few think of Switzerland as being an equal place, but the key feature of the Swiss model is that it manages a process of pre-distribution: incomes are relatively equal before taxes and benefits, rather than after it. There are lots of features of Switzerland which make this happen, but one is that vocational education gives workers the tools to use and adapt new technologies to their own specific uses. This both helps firms, who can gain from innovation, and workers, who gain as well. The key implication is that the diffusion of innovation is vital for sharing its benefits.
Finally, I consider Taiwan. Sadly, Taiwan’s recent growth has been accompanied with growing inequality. But in its early growth phase it managed to synchronise population skills with its growth strategy. This shows the importance of synchronising the education system with growth strategy, including a strong focus on vocational education and STEM.
What can Oxford — and other unequal places — learn from these countries? While Oxford is obsessed with world class science and innovation at the frontier, there has been far less consideration of more mundane issues of the diffusion of innovation, education, and state support for vulnerable people. It’s not enough to have a highly innovative economy, we need to share the benefits as well.