national markets. Therefore, it is important to understand the innovation process and why some companies, industries, and countries are apparently more innovative and enjoy a greater gross domestic product (GDP) per capita than others.

The panel observed that one reason for the strong interest in measuring innovation activity in Canada is that the GDP per capita for Canada is $28,000 (United States; adjusted for purchasing power1) but in the United States it is $36,000 US. This disparity is in part attributed to an evident “productivity gap” that is not being resolved by the market. This, in turn, has given rise to policy interventions to close the gap. In Canada, this takes the form of a 10-year innovation strategy, which aims to make Canada one of the world’s most innovative countries. European countries face a similar gap. Emphasis on innovation policy in Europe was affirmed at a special meeting of the European Council held in Lisbon in 2000, which set a strategic goal for the coming decade of making the European Union “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion” (European Council, 2000). The “Lisbon strategy” was reaffirmed and strengthened by the European Commission in March 2003 (European Commission, 2003a). Developing countries in Latin America, including Argentina, Chile, and Mexico, among others, have also conducted innovation surveys.

If this perceived shortfall in productivity attributed to a relative lack of innovation is the driving force for interest in innovation studies abroad, is there a similar rationale for the gathering of information on innovation by NSF in the United States? Although interest in systematic innovation measurement has been less intense in the United States, it is widely recognized that innovation information is valuable for offering insights about best practices and where they can be applied with greatest effect. It is also recognized that there are intraregional and structural dimensions to innovation in the United States. The GDP per capita of the state of Georgia, for example, is less than that of California, and presumably less than that of several European countries, and the propensity to innovate in pharmaceuticals is greater than that in wood products industries.

Although economic statistics can identify a productivity gap, understanding why the gap exists requires information about firms. This can


Purchasing power parities (PPPs) are the rate of currency conversion that eliminates the differences in price levels between countries. They are used to compare the volume of GDP in different countries. PPPs are obtained by evaluating the costs of a basket of goods and services among countries for all components of GDP (Organisation for Economic Co-operation and Development, 2002b).

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