Search Results

This chapter introduces the main idea of the book, namely, the theoretical foundations, the problem-oriented approach, and the focus on the instrument choices of an holistic innovation policy. The chapter argues that innovation studies have left unfinished the theoretical foundations for the design of innovation policy. The chapter also argues that a starting point for developing it is the identification of the problems that tend to afflict the performance of innovation systems and the ten determinants of innovation processes. This provides the basis for the choice of innovation policy instruments. The chapter provides a road map of the contents of the book.

This chapter comes to grips with the nature of innovation and systems of innovation. It identifies ten specific activities that define systems of innovation. The ten activities are specific elements directly related to the performance of innovation, that collectively shape the way in which innovation takes place in an innovation system. We call this a ‘systems activities approach’, and it is a broad version of the systems of innovation approach. These activities are partly performed by private organizations and partly by public organizations. The theoretical basis for innovation policy proposed in this book is built from the identification of the concrete problems (failures, bottlenecks, weaknesses, etc.) that afflict innovations and their determinants in systems of innovation, including those problems that might be the unintended consequences of policy itself.

This chapter develops the core of the argument regarding the specific assumptions and theoretical propositions about the role and limits of innovation policy. The theoretical basis for the holistic approach to innovation policy proposed in this book is built from a broad version of the systems of innovation approach and the identification of the concrete policy problems that afflict the innovation system, including the unintended consequences of policy. Following from that, the chapter argues that most innovation policies across countries are still partial, not holistic; that innovation policy must be separated from research policy; and that innovation policy-learning can only take place using an analytical model that helps understanding what worked, how, and why.

Public procurement occurs when public agencies purchase products (goods, services, and systems). The rationale, purpose, and starting point of public procurement should always be to solve societal problems, to satisfy human needs, or to meet global challenges, such as environmental and health problems. This chapter discusses how public procurement can influence the direction and speed of innovation processes, as an instrument of innovation policy operating from the demand side. The chapter focuses on four specific kinds of procurement, namely (1) direct innovation procurement, (2) catalytic innovation procurement, (3) functional regular procurement, and (4) pre-commercial procurement. A conclusion is that functional specification is needed for all four of these different kinds of procurement. Questions addressed are: how can we achieve an increase in the use of innovation-enhancing procurement? What types of procurement initiatives have the potential to influence innovations most? And how can these be designed and implemented?

The purpose of this chapter is to discuss the different types of instruments of innovation policy, to examine how governments and public agencies in different countries and different times have used these instruments differently, to explore the political nature of instrument choice and design (and associated issues), and to elaborate a set of criteria for the selection and design of the instruments in relation to the formulation of holistic innovation policy. The chapter argues that innovation policy instruments must be designed and combined into mixes that address the problems of the innovation system. These mixes are often called ‘policy mixes’, though we prefer the term ‘instrument mix’. The wide combination of instruments into such mixes is what makes innovation policy ‘holistic’.

The purpose of this chapter is to provide a summary of the main arguments and conclusions in the book, and to highlight its main contributions. Taking the point of departure from the book’s analytical framework, and taking stock of the detailed considerations in its different chapters, this chapter looks into a series of issues related to the design of holistic innovation policy. With this purpose in mind, the chapter summarizes the theoretical foundations of an holistic innovation policy, how policy problems, obstacles, and barriers in innovation systems can be identified, and how policy instruments can be selected. The chapter finishes with a discussion of further avenues for innovation policy and innovation research. This summary chapter can be read independently of the rest of the book.

We argue that innovation-led growth requires bringing innovation to the heart of economic policy, and bridging macro and micro policies to assure that growth is smart, sustainable, and inclusive. Our analysis puts finance at the centre, holding that the challenge today is not to only ‘fix’ finance, but rather to change the way that the real economy and the financial sector interact, including definancializing the real economy. The historical record shows that this shift from finance to production has repeatedly been the key to moving from recession to golden age, and challenges the common assumption that the state only needs to ‘create the conditions’ for innovation. We argue instead for mission-oriented investments and policies, which create a specific direction of change. In particular we call for the ‘green’ direction, understood broadly as a tilting of the playing field towards wide-ranging sustainability, redirecting the entire economy.

How can one conceptualize the new ‘mission-oriented’ role assumed by national development banks (NDBs)? The standard ‘market failure’ perspective provides only a partial and limited justification for what NDBs do and does not explain historical and contemporary developments. This chapter combines insights from Keynes, Minsky, Schumpeter, and Polanyi (and works in their tradition) to review the old and new roles of NDBs. It discusses these roles taking into account two important dimensions: (i) the relationship between risks and rewards, and (ii) the criticisms that NDBs crowd out private investments. It shows that the roles typically performed by NDBs go beyond that of the state as ‘market fixer’ to assume that of market shaper and creator.