The practice and future of financing science, technology, and innovation

Abstract

The importance of financing science, technology and innovation (STI) is growing increasingly relevant and is changing its content. New, more comprehensive financing mechanisms are emerging. With STI costs rising and government budgets shrinking, research and innovation has become more cooperative and network-based. The paper discusses the different instruments and incentives available for governments to improve the financing of innovation. Two case studies illustrate government efforts from the United Kingdom and Brazil towards innovation financing issues. Lastly, recent and future STI financing trends are reviewed. Governments continue to play a crucial and determining role in STI financing, whether through financial incentives, fiscal incentives or a mix of both. Countries with low national innovation performance should assign more weight to fiscal incentives, while countries with high innovation performance financial incentives prove more efficient.