The central components of national systems of innovation in the advanced OECD
countries are the innovative activities performed by practitioners (mainly businesses),
and the basic research and related training performed by universities. The close
linkages observed between the national science base and innovative activities in
nationally owned firms reflect the advantages of physical agglomeration in innovative
activities, and allow companies and countries to extract major economic benefits from
their investments.
However, national systems of innovation are under increasing strain, because of
emerging imbalances between what the science base has to offer, and the demands of
the technology system. These imbalances reflect the combined effects of (1) the
liberalisation of international exchanges, (2) uneven rates of national technological
development, (3) increasing pressures of competition, (4) the increasing range of fields
of potentially useful technology.
These imbalances have long been felt by large firms in smaller countries. They have
recently been experienced in different forms in Germany, Japan and the UK, in the last
of which the dominant links between the science base and national firms has virtually
disappeared in the electronics industry, and been replaced by more complicated links
with foreign firms. These are likely to grow in all countries in future
