Issues and Country Experiences
Edited by Jesus Felipe
Chapter 9: Do as I say, or as I do? US innovation and industrial policy since the 1980s
Considerable scholarship since the early 1980s has characterized the innovative dynamism of the United States (US) as the result of its embrace of markets, or of its prototypically ‘liberal market economy’ (Hall and Soskice 2001). In these views, markets serve as the central mechanism of economic coordination, while government helps create an ‘innovation environment’ by setting and enforcing the basic rules of the market, such as intellectual property protection, and correcting market failures through investments including public goods such as education, basic research and infrastructure. Under such a framework, innovative dynamism is typically maximized when private firms are insulated from government ‘interference’ and industrial policies are minimal or nonexistent. In parallel, since the 1980s, the dominant political rhetoric in the US has emphasized the economic dynamism and efficiency of markets, while the state is deemed a drag on growth and productivity.
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