THE TOWER OF BABEL? THE INNOVATION SYSTEM APPROACH VERSUS MAINSTREAM ECONOMICS

Johannes Hers and Niek Nahuis ()
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Johannes Hers: Ministry of Finance, The Hague, The Netherlands

Method and Hist of Econ Thought from University Library of Munich, Germany

Abstract: The Innovation systems (IS) approach and the system failures it identifies, play an important role in the design and legitimization of innovation policy. This paper analyses the usefulness of this concept. We conclude that the IS-approach can be useful to visualize the complexity of the innovation processes. However, for policy design this approach is less suited, because system failures aim at symptoms in stead of underlying incentive structures. In our view, policy design should be based on standard economic framework of market- and government failures. Theoretically, an exception is the system failure path dependency. However, the empirical evidence for the existence of this phenomenon is mixed. Furthermore, policy initiatives to tackle path dependence are likely to be subject to severe government failure.

Keywords: innovation policy; Innovation systems; market failure (search for similar items in EconPapers)
JEL-codes: O38 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2004-03-04
New Economics Papers: this item is included in nep-cbe and nep-hpe
Note: Type of Document - pdf; prepared on winXP; pages: 15
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpmh:0403001

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