Creating a positive environment that encourages this investment is a joint responsibility of government and private business. The government certainly has an important role to play, but so does business. A business culture that highly values innovation and competition and that is not afraid of taking risk will surely help in creating this positive environment. There are no simple answers here.
But a recent report by Innovation and Science Australia provides some guideposts. The report's subtitle is ‘A plan for Australia to thrive in the global innovation race’. It is worth a read. The report rightly focuses on the importance of education and the accumulation of human capital.