Regulatory Reform and Innovation

2 3 FOREWORD Government regulations can have both positive and negative effects on the innovation process. Among other goals, regulatory reform in the OECD countries is intended to enhance the positive regulatory effects on innovation. Reforms should help ensure that regulations in all spheres of activity are fully responsive to changes in the economic, social and technical conditions surrounding them. The regulatory process must take into account the effects of regulation on innovation as well as the implications of technical change for the rationale and design of regulation. The regulation/innovation interface is mutual and dynamic; an understanding of this interface is crucial to regulatory reform efforts. The OECD Directorate for Science, Technology and Industry (DSTI) is currently exploring the diverse and complicated links between regulation and innovation. Regulation and regulatory reform can affect technological development in sectors ranging from biotechnology to banking, and can influence the innovation process from research through technology diffusion. This report presents an overview of the relationship between regulatory reform and innovation. It is an interim report which presents some preliminary findings of ongoing DSTI research in this area. This work will contribute to the OECD horizontal programme on regulatory reform and to the work programme of the Committee for Scientific and Technological Policy (CSTP).