In Joseph Schumpeter’s view, fundamental breakthroughs of technology are the essence of the process, and they affect the entire economy. Thus technology and innovation policy can also be linked to the three pillars of sustainable development namely economic growth, social equity and environmental protection. Existing production technology and consumer behaviour can produce positive outcomes only up to a point or a frontier; beyond which depleting natural capital has negative consequences for overall growth for the economy. According to OECD (2010), innovation – implying both the creation of new products, processes and technologies, as well as their diffusion and application – can push the frontier outward and help to decouple growth from the natural resource degradation.
A key feature of innovation that emerges from existing analysis is that it does not follow a linear path that begins with research, moves through the processes of development, design, engineering, production, and ends with the successful introduction of new products and processes into the market, rather, it is an interactive (and cumulative) process that
involves continuous feedback loops between the different stages. A second feature is that innovation is essentially the result of an interactive process between many actors,
including companies, universities and research institutes.
Recent notions surrounding innovation policy refer to innovations with a reduced impact on the environment (Schiederig et al., 2011). This brief highlights the recognition of the need for “innovation” and the role of “innovation policy” to help in realization of sustainable development goals for tackling the trade-offs between economy, society and environment.
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