Innovation and modern technology

img02INNOVATION AND MODERN TECHNOLOGY

The emergence of the new type of economy based on knowledge and new technologies is an indisputable fact. We observe this phenomenon both in highly developed countries and in countries which have recently joined the path of accelerated economic and technological development. Innovativeness is currently one of the most important factors in social and economic development of countries and regions. The new type of economy, constructed by countries which want to achieve a high level of development and competitiveness, is based precisely on innovations. The European Union and its member states proceed in exactly this direction. The guidelines for the creation of competitive and innovative economy have been supplied so far by the Lisbon Strategy (2000-2010), which is currently being substituted by the Community’s new development strategy – Europe 2020.

Innovativeness = Competitiveness.

Innovations are one of the foundations of Knowledge Based Economy. For J. A. Schumpeter (1883-1950), one of the creators of modern economy and a forerunner of research on innovations, an innovation is a function consisting of creative thinking and action. In this sense an innovation is the introduction of a new product, of a new production method as well as opening of a new sales or supply market or implementation of a new organisation form. We can speak about various forms of innovations – technical, technological, marketing and organisational ones. It is important to understand innovativeness correctly. The point is to look at innovations widely. On the one hand, we should treat results in reference to various kinds of goods, services or new organisation ways as innovations but on the other hand we should understand innovations as a process and we should talk about innovative phenomena. In the other sense, which is extremely important, innovations encompass not only the final result but also all activities preceding the rise of a particular innovation, that is an idea, research and development, design, production, marketing and popularisation of the innovation. With this approach, innovations can be defined as a series of interactions starting from an idea of innovation ending with its implementation and popularisation, the aim of which is a change in a product, technology, organisation and society. This process is characterised by a new way of science and technology application assuring a market success. We should remark that innovations are a process of “learning”. Both single enterprises and whole regions take part in it. Each entity, engaged in the creation of innovations, has particular possibilities of accumulating knowledge and its usage depending on human, scientific and technical resources. Innovation development is substantially influenced by such factors as technological progress, changing expectations of goods and services customers as well as increasing competition on markets.

When considering innovativeness and competitiveness which is closely connected with it, we should refer to the research on innovativeness by M. E. Porter (1947─), a contemporary American economist. According to Porter, the real wealth of a nation is not inherited reality determined by natural resources, labour force potential of a given society or the value of a particular currency. In his opinion the wealth of nations is elaborated by generations. Competitiveness of countries depends on the ability of their societies to create and adsorb knowledge and the introduction of innovations in economy. In Porter’s opinion economic development is directly dependent on the implementation of innovations. According to the economist a high innovativeness level resulting in the competitiveness of a country and its economy, directly influences high living standards of its citizens. The achievement and sustaining of country’s competitive advantage worldwide, according to Porter, strictly depends on the particular country’s capability to introduce innovations.

Innovativeness in the European Union. The fundamental meaning of innovations for the development and competitiveness of economy is indisputable nowadays. In the European Union innovativeness is understood as a necessary condition for the future development of the Community. This standpoint was brought into prominence in the most important developmental documents, among other in the Lisbon Strategy (2000-2010) and the new development strategy of the European Union – Europe 2020.

The basic goal of the Lisbon Strategy, accepted during the meeting of the European Council in Lisbon in 2000, was the creation in the European Union of the most competitive and dynamically developing economy in the world, based on knowledge, capable of permanent development and creation of a bigger number of better work places, and at the same time to assure the highest social cohesion. The Lisbon Strategy required the initiation of consistent activities in many areas, among others: education, scientific research, public financing, creation of an information society or building of foundations for new economy based on knowledge and modern technologies. The Lisbon Strategy was based on the assumption that the European Union’s member states will use the communal scientific and research potential at most. It was to become the impulsion of economies of the member states. When in 2004 a special team directed by Wim Kok, a former Prime Minister of the Netherlands, prepared a report reviewing the results of a few year implementation of the Lisbon Strategy, it turned out that on a large scale it was impossible to achieve the basic aims of this document. The review of the Lisbon Strategy, carried out on the summit of the European Council in March 2005, caused the redefinition of its most important goals. In the Renewed Lisbon Strategy more emphasis is placed on ensuring sustainable economic growth of the Community and creation of new work places. The key to the success of the Renewed Lisbon Strategy were to be: innovations, knowledge based economy and better conditions for commercial activity on the European Union’s territory.

In spite of difficulties with the introduction of the settlements of the Lisbon Strategy, the European Union is determined to still follow its guidelines as well as the guidelines of the new strategic document – Europe 2020. The stake in increasing economic competition with the fastest developing and most technologically advanced countries in the world, such as the United States of America, Japan, South Korea or China, is very high. The execution of the guidelines contained in the European Union’s developmental strategies and in consequence the construction in Europe of modern, innovative and competitive economy will have impact on both European countries and the whole Community. One of the key developmental factors, to which we direct special attention, is innovativeness, in which field the European Union still loses to technological powers such as the United States of America or Japan. A significant impediment for the European Union is the systematic technological progress of the rising economic powers of the 21st century that is China and India. Until recently these countries won only in the race for the achievement of the lowest costs and highest efficiency in manufacturing of not much technologically advanced products. But the mentioned countries learn and modernise quickly, becoming greater and greater competition for the West, including the European Union. Asian tigers’ competition can appear to be a serious threat to the economic aspirations of the European Union. The execution of the Lisbon Strategy in the years 2000-2010 brought concrete benefit to the European Union. A report of the Word Economic Forum from 2008 informs us about the increase of the Union’s GDP in connection with the implementation of the Strategy (The Lisbon Review 2008. Measuring Europe’s Progress In Reform, Geneva: World Economic Forum 2008). For the future development of the Community it will be essential to increase the share of innovations in economy and to build economy based on knowledge to a larger extent than before. Although the European Union possesses enormous scientific potential and expanded research and development infrastructure, the range of innovation implementation is still insufficient. It is one of the basic reasons of too slow increase of the communal economy competitiveness and problems with the Union’s “catching up with” the most developed economies in the world.

Governing bodies of the European Union are aware of these difficulties. In the opinion of the representatives of the Commission although in the European Union we create many inventions and innovations, we still have problems with the introduction of these solutions in various section of economy. Numerous highly specialised enterprises (mainly small and middle size ones) operate in the European Union but usually they fail to turn into large companies which could become serious players on worldwide markets in specific branches. In some sectors, such as for instance the telecommunication one, the implemented innovations quickly bring measurable benefits, which we do not observe to the same degree in the introduction of innovations in other economic sectors. Enterprises operating on the Union’s market still have a problem with finding highly qualified employees without whom it is impossible to build modern and innovative economy. The average education level of adults in the European Union is still lower than in developed countries not belonging to the Community. Negative demographic changes resulting in the ageing of European societies will cause the situation in which by 2030, as the European Commission forecasts, the number of people in the production age will decrease by 6,8 %. It will worsen the personnel market situation, especially as far as highly qualified employees are concerned. Apart from personnel shortage, the lack of people qualified in exact and technical sciences is a serious obstacle to the creation of innovative communal economy in many countries of the European Union. According to the European Commission the expenditures on research and development in the Community’s member states are still too low. In this area the European Union is also inferior to highly developed countries. The estimated value of the outlay on research and development in the European Union in 2010 reached, according to the Commission’s assessment, maximum 2,6% of the Union’s GDP (An innovation─friendly, modern Europe, Communication from the Commission to the European Council (Informal Meeting In Lahti – Finland, 20 October 2006), Brussels 12.10.2006 COM(2006), 589 final.)

Raising the issue of building innovative and competitive economy in the European Union, we should take into account the fact that in the Community there is a wide diversity in the level of development and innovativeness of economies of particular countries as well as in the expenditures on research and development assigned by these countries. This diversity even increased after the latest enlargement of the European Union (UE─25 and 27). The situation is disadvantageous to the Community’s economic and social development. The data published by the communal institutions and the World Economic Forum show that Sweden, Denmark and Finland are the most advanced in the execution of the Lisbon Strategy, and thus in the creation of modern and innovative economy in the European Union. A report of the World Economic Forum, The Lisbon Review from 2008, mentions Sweden, as the country having the most competitive economy in the European Union (ahead of Denmark and Finland (The Lisbon Review 2008, Geneva: Word Economic Forum 2008, see also European Innovation Scoreboard 2007, 2008. Comparative Analysis of Innovation Performance, ed. European Commission. Directorate─General for Enterprise and Industry, Luxemburg: Office of Official Publications of the European Communities 2008─2009; The Global Competitiveness Report 2007─2008 and 2008─2009, Geneva: World Economic Forum 2008). The three above mentioned countries are still European leaders in the construction of new economy based on knowledge. It is not a result of some coincidence. For years these countries have realised the policy in which fundamental stress is placed on education and training of modern staff and on the enlargement of the research and development sphere. The pro-innovation policy of the authorities of Sweden, Denmark and Finland resulted in the considerable increase of competitiveness of these countries’ economies in a comparatively short period of time.

Modern technologies and economic development. A motive force of changes in current economy based on information and knowledge, as A. Toffler remarked, is a technological revolution connected with relatively recently emerged information and communication technologies ICT. Exactly ICTs seem to be the most important amidst currently introduced new technologies. A report The Economic Impact of IT, Software, and The Microsoft Ecosystem on The Global Economy published by IDC, one of the most important companies specialising in study of the global telecommunication and information market, published in October 2007, confirms the opinion of scientists that ICTs are essential for social and economic development in the contemporary world. The analysis by IDC shows that the IT branch directly contributes to economy development as well as to the creation of new work places. Technical progress and connected with it civilisation progress are nowadays closely linked to with IT technologies and the developing software market (IDC Economic Impact Study, October 2007).

The IDC report also shows that the Microsoft concern makes the crucial contribution to countries’ economic development based on the introduction of modern information technology (IT). The operation of this company, both locally and globally, determines the speed of the IT branch growth and stimulates economic development of countries and regions. Microsoft is a pioneer and a leader in this branch. Apart from profits, one of the basic aims of the concern’s activity is the support of entrepreneurship based on modern technologies. The company tries to influence the improvement of unimpeded access to IT technologies, including its own products. Microsoft substantially contributes to the elimination of still quite widespread information exclusion phenomenon. Thanks to such policy the company not only sustains its high position on the IT market but also is a sort of institution performing a social mission by the creation of information society and equalisation of chances of members of various societies in the sphere of the access to education and employment. It is particularly important for the creation of modern and innovative economy based on knowledge. The construction of this new economy requires not only technology but also proper management of the social sphere, thanks to which it is possible to engage people in the creation of a new type of society and beneficial technologically advanced economy.