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Public Management, Policy Capacity and Innovation


  • Erkki Karo
  • Rainer Kattel


In this paper we discuss the question of what factors in development policy create specific forms of policy capacityand under what circumstances development-oriented complementarities or mismatches between the public and private sectors emerge. We develop the notion of policy capacity into a concept that reflects the variety of modes of making policy that originate from co-evolutionary processes between political and policy ideas, public management and private-sector dynamism. We argue that the interactions between these factors are reflected in three interlinked policy choices, each fundamentally evolutionary in nature: policy choices on understanding the nature and sources of technical change and innovation; policy choices on the ways of financing economic growth, in particular technical change; and third, policy choices on the nature of public management to deliver and implement both previous sets of policy choices. Using the historical case studies of the East Asian developmental state of the 1960s-1980s and Eastern European development polices of the 1990s-2010s, we show how and why these economies developed almost opposite institutional systems for financing, building and managing techno-economic systems and how this led, through co-evolutionary processes, to different forms of policy capacity.

Suggested Citation

  • Erkki Karo & Rainer Kattel, 2013. "Public Management, Policy Capacity and Innovation," The Other Canon Foundation and Tallinn University of Technology Working Papers in Technology Governance and Economic Dynamics 52, TUT Ragnar Nurkse School of Innovation and Governance.
  • Handle: RePEc:tth:wpaper:52

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    Cited by:

    1. Karo , Erkki & Kattel , Rainer, 2015. "Innovation Bureaucracy: Does the organization of government matter when promoting innovation?," Papers in Innovation Studies 2015/38, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    2. Marek Tiits & Tarmo Kalvet & Imre Mürk, 2015. "Smart Specialisation in Cohesion Economies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 6(2), pages 296-319, June.

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