Relationship between R&D and innovation: implications for the Scottish Innovation Strategy

It is widely accepted that innovation is precursor to competitiveness and growth. It is also believed that the innovative performance of a country is linked with its investments in R&D. Driven by such thinking, the devolved government of Scotland, spends considerable resources on promoting R&D in Scotland. This paper examines wide-ranging evidence, including that published by the Scottish Government, to show that innovation performance of businesses in Scotland is independent of its R&D expenditure and that Scotland cannot hope to become a more competitive region by spending more on R&D. There is thus a need of rethinking on innovation strategy in Scotland.