IDEAS home Printed from https://ideas.repec.org/p/stp/stepre/1999r08.html
   My bibliography  Save this paper

Economic rationales of government involvement in innovation and the supply of innovation-related services

Author

Abstract

This paper presents the economic rationales of government intervention into innovation activities and into the supply of innovation-related services as inputs in innovation processes. There are two approaches to the question of the economic rationale of government involvement in technological advance and innovation activities. One is the neo-classical of market failure and the other is the evolutionary economics or the innovation system approach of system failure. The traditional rationale for technology policy has been that of market failure. Government can intervene to provide for public goods and to mitigate for externalities, barriers to entry, information asymmetries etc. However recent research demonstrates ways in which the factors shaping technological progress call for government measures to address system failure i.e. the lack of coherence among institutions within an innovation system.Following a review of the static efficiency market failure approaches to innovation and technology policy, the paper surveys various approaches to identify and describe system failures. System failures within an evolutionary framework may create low-growth traps where the growth-generating evolutionary mechanisms themselves are impaired. Given the characteristics of the market system in an evolutionary framework, these failures in dynamic efficiency terms imply considerably enhanced challenges for the policy maker.Current trends in technology and innovation policies reflect the change in the perception of the rationale and effectiveness of government measures. The traditional core of technology policies has comprised interventions such as managing the science base and designing financial incentives to industrial R&D as solutions to market failures. This repertoire has been enhanced with instruments to overcome system failures such as promoting co-operation between firms, universities and government laboratories and changing the design of institutions and incentives (Andersson, 1998).Systemic evolutionary innovation implies that policy making itself becomes an adaptive and learning-based activity. The current standpoint of the OECD is that market and system failures are not mutually exclusive but that both require attention by policy makers. Each has its limitations and pitfalls. Market failure remains the basis for technology policies in many areas. At the same time factors shaping technological progress increasingly call for strategies that can cope with system failure and achieve coherence among underlying institutions and incentive structures. Government has a role to optimise the contributions of innovation and technology diffusion for the economy as a whole (OECD, 1998).

Suggested Citation

  • Johan Hauknes & Lennart Nordgren, "undated". "Economic rationales of government involvement in innovation and the supply of innovation-related services," STEP Report series 199908, The STEP Group, Studies in technology, innovation and economic policy.
  • Handle: RePEc:stp:stepre:1999r08
    as

    Download full text from publisher

    File URL: http://www.step.no/reports/Y1999/0899.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Meyer, Martin, 2000. "Does science push technology? Patents citing scientific literature," Research Policy, Elsevier, vol. 29(3), pages 409-434, March.
    2. Mansfield, Edwin, 1991. "Academic research and industrial innovation," Research Policy, Elsevier, vol. 20(1), pages 1-12, February.
    3. Godin, Benoit, 1996. "Research and the practice of publication in industries," Research Policy, Elsevier, vol. 25(4), pages 587-606, June.
    4. Narin, Francis & Olivastro, Dominic, 1992. "Status report: Linkage between technology and science," Research Policy, Elsevier, vol. 21(3), pages 237-249, June.
    5. Saviotti, Pier Paolo, 1998. "On the dynamics of appropriability, of tacit and of codified knowledge," Research Policy, Elsevier, vol. 26(7-8), pages 843-856, April.
    6. Yoshiko Okubo, 1997. "Bibliometric Indicators and Analysis of Research Systems: Methods and Examples," OECD Science, Technology and Industry Working Papers 1997/1, OECD Publishing.
    7. Meyer-Krahmer, Frieder & Schmoch, Ulrich, 1998. "Science-based technologies: university-industry interactions in four fields," Research Policy, Elsevier, vol. 27(8), pages 835-851, December.
    8. Manuel Trajtenberg & Rebecca Henderson & Adam Jaffe, 1997. "University Versus Corporate Patents: A Window On The Basicness Of Invention," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 5(1), pages 19-50.
    9. Nathan ROSENBERG, 2009. "Why do firms do basic research (with their own money)?," World Scientific Book Chapters,in: Studies On Science And The Innovation Process Selected Works of Nathan Rosenberg, chapter 11, pages 225-234 World Scientific Publishing Co. Pte. Ltd..
    10. Katz, J. Sylvan & Martin, Ben R., 1997. "What is research collaboration?," Research Policy, Elsevier, vol. 26(1), pages 1-18, March.
    11. Etzkowitz, Henry, 1998. "The norms of entrepreneurial science: cognitive effects of the new university-industry linkages," Research Policy, Elsevier, vol. 27(8), pages 823-833, December.
    12. Hicks, Diana M. & Isard, Phoebe A. & Martin, Ben R., 1996. "A morphology of Japanese and European corporate research networks," Research Policy, Elsevier, vol. 25(3), pages 359-378, May.
    13. Christopher T Hill & J David Roessner, 1998. "New directions in federal laboratory partnerships with industry," Science and Public Policy, Oxford University Press, vol. 25(5), pages 297-304, October.
    14. Pavitt, Keith, 1991. "What makes basic research economically useful?," Research Policy, Elsevier, vol. 20(2), pages 109-119, April.
    15. Bourke, Paul & Butler, Linda, 1998. "Institutions and the map of science: matching university departments and fields of research," Research Policy, Elsevier, vol. 26(6), pages 711-718, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Weber, K. Matthias & Rohracher, Harald, 2012. "Legitimizing research, technology and innovation policies for transformative change," Research Policy, Elsevier, vol. 41(6), pages 1037-1047.
    2. Chaminade, Cristina & Intarakumnerd, Patarapong & Sapprasert, Koson, 2012. "Measuring systemic problems in National Innovation Systems. An application to Thailand," Research Policy, Elsevier, vol. 41(8), pages 1476-1488.
    3. Valkonen, Laura, 2006. "Deregulation as a Means to Increase Competition and Productivity," Discussion Papers 1014, The Research Institute of the Finnish Economy.
    4. Dominik F. Schlossstein & Jin-Hyo Joseph Yun, 2008. "Das Nationale Innovationssystem S├╝dkoreas im Paradigmenwechsel," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 77(2), pages 113-127.
    5. Jeroen de Jong & Eric von Hippel, 2010. "Open, distributed and user-centered: Towards a paradigm shift in innovation policy," Scales Research Reports H201009, EIM Business and Policy Research.
    6. Laranja, Manuel & Uyarra, Elvira & Flanagan, Kieron, 2008. "Policies for science, technology and innovation: Translating rationales into regional policies in a multi-level setting," Research Policy, Elsevier, vol. 37(5), pages 823-835, June.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:stp:stepre:1999r08. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nils Henrik Solum). General contact details of provider: http://edirc.repec.org/data/steppno.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.