And so enterprises, sectors, and governments must follow the practices and policies that not only will allocate resources more efficiently, but also provide the framework to encourage innovation. 1/4  Productivity through innovation When we talk about encouraging innovation, we're talking about two things. First, there are the incentives to encourage product innovations.
These include the encouragement of research and development (R&D) that generate the "eureka!" kind of knowledge creation that's done at universities, research institutes, and knowledge-intensive companies. But just as important, although sometimes overlooked, are the research and development that lead to incremental improvements in the design and performance of existing products. This kind of innovation requires investment.