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11. On the provision of industryspecific public goods: revisiting a policy process Dominique Foray* 1 THE CONCEPT OF INDUSTRY-SPECIFIC PUBLIC GOODS AND THE POLICY ISSUE One way to improve the effectiveness and efficiency of innovation support instruments is to carry out a ‘policy experiment’. There is one major reason for undertaking policy experiments, which is that the various international policy forums are quite conservative. Policy-makers do not like ‘innovation in policy’ simply because the costs and the benefits of any new policy are rather uncertain. As a result, the policy instruments available for promoting innovation and industrial competitiveness are not particularly innovative and do not fit well in local situations. In this chapter I shall give an illustration of the kind of policy experiment that could be carried out in this context and demonstrate that it is important for government to support this strategy. A particular policy problem arises over the fact that in any industry certain kinds of resources – such as basic research, training programmes, technical services, certification and quality control facilities, generic advertising and commercial information – are critical for the competitiveness of the industry and that small and medium-sized enterprises (SMEs) depend mainly on external infrastructures to access these resources. This policy problem involves several issues: who will pay for these resources and who will decide what kinds of resources must be provided? The problem is one of building and adapting the innovation infrastructure of an industry in which SMEs are predominant, to...