"Now get this: the volume of our exports of medium-skilled and technology-intensive manufactures has grown almost continuously over the past 30 years, as have our exports of high-skilled and technology-intensive manufactures, with the latter now bigger than the former. It's really only the low-skilled and labour-intensive manufactures that have fallen back. The starring industries make goods such as pharmaceuticals, professional and scientific equipment, and machinery and transport equipment.
Strikes me we're not dead yet."
Ross Gittins, The Australian 30 May 2015
Innovation is important for firms’ performance for a number of reasons. Businesses that actively innovate are characterised by increased profitability, high-level export market targets, increased ranges of products and services, and greater income from sales of goods and services.
Innovation is already an important driver of growth in some countries. Firms in several OECD countries now invest as much in intangible assets—for example, R&D, software and skills—as in physical capital, such as equipment. In fact, it is estimated that between 1995 and 2006, innovation was the primary source of growth in Austria, Finland, Sweden, the United Kingdom and the United States.
Across developed economies, manufacturing industries account for a large share of business expenditure on innovative activity, in particular the research and development component of innovation. However, it is highly concentrated in a few industries and firms. For example, in Canada, Finland, Ireland, the United States and the United Kingdom, more than 60 per cent of all manufacturing R&D was accounted for by high-technology industries in 2007.
Historically, manufacturing has driven innovation and technological change in Australia. Australian manufacturing allocates $4.5 billion each year to R&D, or one-quarter of total private sector expenditure. This funding focuses on adapting current technologies and developing new ones.
[bctt tweet = "Australia's great potential growth industries"]