Systems thinking, market failure, and the development of innovation policy: The case of Australia
Innovation policy is increasingly informed from the perspective of a national innovation system (NIS), but, despite the fact that research findings emphasize the importance of national differences in the framing conditions for innovation, policy prescriptions tend to be uniform. Justifications for innovation policy generally relate to notions of market failure that are applicable in all nations in all conditions. In this paper we develop a broad framework for NIS analysis, involving free market, coordination and complex-evolutionary system approaches. Within this framework we explore the evolving relationship between market failure and systems approaches to innovation policy in the case of Australia. Drawing on information and analysis collected for a major review of Australia's NIS, and the government's 10-year plan in response to it, we show how the free market trajectory of policy-making of past decades is being extended, complemented and refocused by new approaches to complex-evolutionary system thinking. These approaches are shown to emphasize the importance of systemic connectivity, evolving institutions and organizational capabilities. Nonetheless, despite the fact that there has been much progress in this direction in the Australian debate, the predominant logic behind policy choices still remains one of addressing market failure, and the primary focus of policy attention continues to be science and research rather than demand-led approaches. We discuss how the development and elaboration of notions of systems failure, rather than just market failure, can further improve policy-making in the future.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Florence Jaumotte & Nigel Pain, 2005. "An Overview of Public Policies to Support Innovation," OECD Economics Department Working Papers 456, OECD Publishing.
- Mytelka, Lynn K. & Smith, Keith, 2002. "Policy learning and innovation theory: an interactive and co-evolving process," Research Policy, Elsevier, vol. 31(8-9), pages 1467-1479, December.
- Partha, Dasgupta & David, Paul A., 1994. "Toward a new economics of science," Research Policy, Elsevier, vol. 23(5), pages 487-521, September.
- Markus Balzat & Horst Hanusch, 2004. "Recent trends in the research on national innovation systems," Journal of Evolutionary Economics, Springer, vol. 14(2), pages 197-210, 06.
- Prof John Foster, 2004.
"From Simplistic to Complex Systems in Economics,"
Discussion Papers Series
335, School of Economics, University of Queensland, Australia.
- Hart, David M., 2009. "Accounting for change in national systems of innovation: A friendly critique based on the U.S. case," Research Policy, Elsevier, vol. 38(4), pages 647-654, May.
- Dore, Ronald, 2000. "Stock Market Capitalism: Welfare Capitalism: Japan and Germany versus the Anglo-Saxons," OUP Catalogue, Oxford University Press, number 9780199240616, June.
- Metcalfe, Stan & Ramlogan, Ronnie, 2008.
"Innovation systems and the competitive process in developing economies,"
The Quarterly Review of Economics and Finance,
Elsevier, vol. 48(2), pages 433-446, May.
- Metcalfe, Stan & Ramlogan, Ronnie, 2005. "Innovation Systems and the Competitive Progress in Developing Economies," Centre on Regulation and Competition (CRC) Working papers 30672, University of Manchester, Institute for Development Policy and Management (IDPM).
- Dodgson, Mark & Mathews, John & Kastelle, Tim & Hu, Mei-Chih, 2008. "The evolving nature of Taiwan's national innovation system: The case of biotechnology innovation networks," Research Policy, Elsevier, vol. 37(3), pages 430-445, April.
- John Foster, 2000. "Competitive selection, self-organisation and Joseph A. Schumpeter," Journal of Evolutionary Economics, Springer, vol. 10(3), pages 311-328.
- Soete, Luc & Freeman, Chris, 2007.
"Developing science, technology and innovation indicators: what we can learn from the past,"
MERIT Working Papers
001, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
- Freeman, Christopher & Soete, Luc, 2009. "Developing science, technology and innovation indicators: What we can learn from the past," Research Policy, Elsevier, vol. 38(4), pages 583-589, May.
- Eric J. Bartelsman & John Haltiwanger & Stefano Scarpetta, 2004.
"Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries,"
Tinbergen Institute Discussion Papers
04-114/3, Tinbergen Institute.
- Bartelsman, Eric & Haltiwanger, John C. & Scarpetta, Stefano, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," IZA Discussion Papers 1374, Institute for the Study of Labor (IZA).
- Bartelsman, Eric & Haltiwanger, John & Scarpetta1, Stefano, 2004. "Microeconomic evidence of creative destruction in industrial and developing countries," Policy Research Working Paper Series 3464, The World Bank.
- Sharif, Naubahar, 2006. "Emergence and development of the National Innovation Systems concept," Research Policy, Elsevier, vol. 35(5), pages 745-766, June.
- Bergek, Anna & Jacobsson, Staffan & Carlsson, Bo & Lindmark, Sven & Rickne, Annika, 2008. "Analyzing the functional dynamics of technological innovation systems: A scheme of analysis," Research Policy, Elsevier, vol. 37(3), pages 407-429, April.
- Markus Balzat & Horst Hanusch, 2003. "Recent Trends in the Research on National Innovation Systems," Discussion Paper Series 254, Universitaet Augsburg, Institute for Economics.
- Bengt-Åke Lundvall, 2007. "National Innovation Systems—Analytical Concept and Development Tool," Industry and Innovation, Taylor & Francis Journals, vol. 14(1), pages 95-119.
- Akkermans, Dirk & Castaldi, Carolina & Los, Bart, 2009. "Do 'liberal market economies' really innovate more radically than 'coordinated market economies'?: Hall and Soskice reconsidered," Research Policy, Elsevier, vol. 38(1), pages 181-191, February.
- Nill, Jan & Kemp, Ren, 2009. "Evolutionary approaches for sustainable innovation policies: From niche to paradigm?," Research Policy, Elsevier, vol. 38(4), pages 668-680, May.
When requesting a correction, please mention this item's handle: RePEc:eee:respol:v:40:y:2011:i:9:p:1145-1156. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.