Challenges for European Innovation Policy
Show Less

Challenges for European Innovation Policy

Cohesion and Excellence from a Schumpeterian Perspective

Edited by Slavo Radosevic and Anna Kaderabkova

This book uniquely applies the Schumpeterian innovation policy perspective to the countries of Central and Eastern Europe. A broadly defined framework of the science, technology, innovation and growth system underpins the empirical and conceptual analysis of the critical issues including demand, FDI, finance and education.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 5: EU Innovation Policy: One Size Doesn’t Fit All!

Alasdair Reid


Alasdair Reid 5.1 INTRODUCTION The rationale for public policy intervention to support science, technology and innovation (STI) has been traditionally based on the concept of market failures.1 Such failures occur when market mechanisms (assumed in the ‘neoclassical’ economics to equate with perfect competition and rational expectations) are unable to secure long-term investments in innovation due to uncertainty, indivisibility and non-appropriability of the innovation process (Arrow, 1962). Typically, a market failure manifests itself in an insufficient allocation of funding by enterprises for risky and innovative investments and, hence, the market failure approach leads to instruments that allocate resources to firms (R&D grants or tax incentives). Since the early 1990s, STI policy-makers have increasingly begun to adopt the language of national systems of innovation (NSI) (OECD, 1997) theory, which stresses that the flows of technology and information among people, enterprises and institutions are at the core of the innovation process. Innovation and technology development are the result of a complex set of relationships among the actors in the system, which includes enterprises, universities and government research institutes. For policy-makers, an understanding of the NSI can help to identify leverage points for enhancing innovative performance and overall competitiveness. Moreover, innovation systems theory implies that policy measures that only aim to correct market failures will not result in optimal innovation performance. Rather the primary role of the state in terms of innovation policy is to facilitate the emergence of well-functioning innovation systems (Metcalfe, 2005). As systems are defined by components interacting within boundaries,...

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.