Innovation is vital to the UK’s future economic prosperity and quality of life. So it is crucial that we understand where innovation comes from, who does it, what stimulates it, and how it benefits our economy and society.
In October 2006, we published the first in a series of reports on what we call ‘hidden innovation’ – the types of innovation that tend to be neglected by traditional indicators. We suggested that an ‘innovation gap’ had opened up between these indicators, the reality of innovation in the UK, and the policy intended to stimulate and support it.
Much has changed since then: a new UK government department for innovation; a White Paper that explicitly recognises the importance of hidden innovation; and the announcement of a major new effort to measure innovation in ways that more accurately reflect the UK’s economy and society. But much remains to be done.
This report, the third in the series, focuses on high-technology sectors such as aerospace and pharmaceuticals. It reveals the increasing importance of hidden innovation in these sectors, and the surprising ways in which our most innovative firms have adapted to technological change and international competition.