Research-based competence plays an increasingly important role in the development of innovations and new technology. In developing effective innovation-oriented R&D policies, it is important to understand how, and under what conditions, research-based expertise can contribute to prosperity and address social challenges. The purpose of this report is to summarise 40 years of research into the links between innovation, technology and research. The main message is that we need to think of innovation not as a sudden flash of inspiration, but as a long process of searching, experimenting and learning. Publicly funded research can contribute in many different ways and at all stages of the innovation process. For this to become a reality requires policies that allow for continuous interaction so that researchers and companies can learn from each other. We hope this publication may help stimulate innovation efforts through increased understanding of the long-term effects and the complex relationship between public investment in research and sustainable growth.