The New Economics of Technology Policy
Show Less

The New Economics of Technology Policy

Edited by Dominique Foray

This book focuses on technological policies, in other words all public interventions intended to influence the intensity, composition and direction of technological innovations within a given entity (region, country or group of countries). The editor has gathered together many of the leading scholars in the field to comprehensively explore numerous avenues and pathways of research. The book sheds light on the theory and practice of technological policies by employing modern analytical tools and economic techniques.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 2: Building Effective ‘Innovation Systems’ versus Dealing with ‘Market Failures’ as Ways of Thinking About Technology Policy

Richard R. Nelson


Richard R. Nelson In this chapter I compare two different theoretical frameworks in economics for orienting analysis of issues in technology policy. One is a neoclassical framework that sees appropriate policies as dealing with ‘market failures’. The other framework is provided by an evolutionary and institutional approach to economic analysis that sees appropriate policies as building or maintaining an effective ‘innovation system’. It should be no surprise that I believe the latter framework is the more useful one. I begin by laying out the key general differences between the two broad theoretical frameworks, and how they lead to different perspectives on technology policy. Then I turn to a particular case: technology policy regarding pharmaceuticals. Finally, I comment on the general question of the role of economic theories in framing policy analysis. 2.1 DIFFERENCES IN THE PERSPECTIVES At the broadest level, and possibly the deepest, the difference between the neoclassical theory that has dominated microeconomic theorizing over the last half century, and the evolutionary economic theory that is taking shape, concerns their assumptions about the economic context for action. Neoclassical economics sees the economy as in an equilibrium configuration, at rest, or undergoing well-anticipated change. In such a context the action best suited to the context can be assumed to be one that decisionmakers have learned through relevant experience, or can calculate based on what they know securely. In contrast, evolutionary theory sees the economy as always in the process of change, with economic activity proceeding in a context that never...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.