Special issue on "new rationale and approaches in technology and innovation policy."

315 Pages·1998·0.915 MB·English

by  OECD

STI
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D
E
I
V
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No.22
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SCIENCE TECHNOLOGY INDUSTRY
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Special Issue on
"New Rationale and Approaches
in Technology
and Innovation Policy"
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Featuring papers from
a Conference jointly
organised by the OECD
O
and the Austrian Government,
held in Vienna on 30-31 May 1997
No. 22
STI
REVIEW
Special Issue on ‘‘New Rationale
and Approaches in Technology
and Innovation Policy’’
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
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(Article 13 of the OECD Convention).
Publie´ en franc¸ais sous le titre :
STI REVUE
Nume´ro spe´cial :
Politique de l’innovation et de la technologie : nouveaux fondements et nouvelles approches
N(cid:176) 22
(cid:211) OECD 1998
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FOREWORD
Prepared by the OECD Directorate for Science, Technology and Industry, the
STI Review, published twice yearly, presents studies of interest to science, tech-
nology and industry policy makers and analysts, with particular emphasis on
cross-country comparisons, quantitative descriptions of new trends and identifica-
tion of recent and future policy problems. Because of the nature of OECD work,
the STI Review explores structural and institutional change at global level as well
as at regional, national and sub-national levels. Issues often focus on particular
themes, such as surveys of firm-level innovation behaviour and technology-
related employment problems.
Issue 22 of the STI Review is devoted to new approaches for technology and
innovation policy. The articles presented are based on the contributions to the
conference on ‘‘New Rationale and Approaches in Technology and Innovation
Policy’’, held in Vienna on 30-31 May 1997. This conference took place in the
context of the second phase of the OECD project on Technology, Productivity and
Job Creation, which aimed at identifying best policy practices in technology and
innovation policy. It was hosted by the Austrian Ministries for Science and
Transport and for Economic Affairs and organised jointly by the Austrian TIP
programme – a technology policy research and consultancy programme carried
out by the Austrian Institute for Economic Research (WIFO) and the Austrian
Research Centers Seibersdorf (ARCS) – and the OECD.
Approaches to technology and innovation policy are examined both from an
analytical and a political view. The analytical contributions discuss the limits of the
‘‘market failure’’ approach and propose to widen the policy rationale to take
account of ‘‘systemic failure’’. Contributions from policy makers describe their
experiences in applying this new policy rationale and discuss the implications for
government policy management and institutions.
The view expressed in this publication do not necessarily reflect those of the
Organisation or of its Member countries. The STI Review is published on the
responsibility of the Secretary-General of the OECD.
3
CONTENTS
Introduction: New Rationale and Approaches in Technology
and Innovation Policy............. .. ... .. . . . .. . ... .. ... .. .... . 7
Managing a Systems Approach to Technology and Innovation Policy . ... 9
Technology Policies in Neo-classical and Structuralist-evolutionary Models 31
Equilibrium and Evolutionary Foundations of Technology Policy . ... .. .. 75
Market Failure or Market Magic? Structural Change in the US National
Innovation System .............. ... ... ... . .. . .... . .... . .... . . 101
Policies for Promoting Enterprise Restructuring in National Systems
of Innovation: Triggering Cumulative Learning and Generating System
Effects ............. .. ... ... . ... ....... . .... .. ... .. ... ... .. 137
Assessing the Infrastructural Needs of a Technology-based Service
Sector: a New Approach to Technology Policy Planning .. . ... .. ... .. . 171
Competence Blocs and Industrial Policy in the Knowledge-based
Economy ............. .. ... ... . ... .... .. ... .. .... . .... .. ... 209
Changes in the R&D Strategies of Transnational Firms: Challenges
for National Technology and Innovation Policy.. . ... .. ... .. .. . .. . .. . 243
New Approaches in Technology Policy – the Finnish Example .. . ... .. . 277
Technology and Innovation Policy for the Knowledge-based Economy:
the Changing View in Canada ............. .. . .. . .. . .. . .. . .... . . 285
Towards Systemic Policy at the European Level: Five Key Challenges
for the Future .............. ... ... ... .. ... . .... . ..... . .... . .. 307
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INTRODUCTION: NEW RATIONALE AND APPROACHES
IN TECHNOLOGY AND INNOVATION POLICY
This special issue of the STI Review has its origin in the Conference on ‘‘New
Rationale and Approaches in Technology and Innovation Policy’’, which was held
in Vienna on 30-31 May 1997 and was jointly organised by the OECD’s
Directorate for Science, Technology and Industry and the Austrian government.
The Vienna Conference was organised in the context of the OECD project
‘‘Technology, Productivity and Job Creation’’. It was attended by policy practition-
ers and researchers who discussed the changing rationale of technology and
innovation policy and the concrete implications for policy making in a globalised
knowledge-based economy.
While technology has always been key to productive resource use, firms and
governments alike are currently confronted with new challenges in mastering the
opportunities and risks associated with technological progress. The cumulative
nature and growing complexity of technology make effective innovation increas-
ingly dependent on the appropriate combination and co-ordination of multiple
assets and functions.
The direction and consequences of technological change are thus influenced
by a range of conditions, including the properties of product and factor markets,
and the extent to which technical change is accompanied by organisational
change and human capital development. Market forces, government institutions,
regulations and other policies influence the preconditions for technical change,
often with different components strengthening or interfering with each other.
Although countries differ in important respects, there is great potential for mutual
learning from, and interdependence between, technology-related policies in differ-
ent countries (Andersson).
Views of what technology and innovation policy can achieve and how it
should achieve it have changed markedly. These changes have three main
sources:
– A better understanding of innovation and technology diffusion
processes owing to advances in economic theory. The traditional rationale
for technology policy has been that of market failure. Governments
intervene to provide for public goods, as well as to mitigate externalities,
inefficient market structures and barriers to entry, imperfect markets for
information, etc. The need to temper intervention because of the limits to
the effectiveness of government action has long been recognised.
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STI Review No. 22
However, recent research (Metcalfe and Georghiou; Lipsey and Carlaw)
demonstrates ways in which the factors shaping technical progress
increasingly call for measures to address ‘‘systemic failure’’, the lack of
coherence among institutions and incentives, through new approaches to
support innovation in the business sector (Mowery and Ziedonis; Teubal;
Eliasson) and to the development of infrastructures (Link and Scott).
– A new policy-making environment. The economic environment in which
both government and firms operate is being fundamentally transformed,
first and foremost, by globalisation that makes some national policy instru-
ments less applicable, or less efficient, whereas those determining a
country’s attractiveness as a location for knowledge-intensive production
take on increasing importance (Reger). There are also important changes
in macroeconomic conditions, including more stringent fiscal policies and
evolving societal demands in a context of regional integration, calling for
joint or co-ordinated action at the international level (Caracostas).
– Lessons learned from successes and failures in implementing
policies. While governments should be guided by common core principles
regarding policy rationale, these do not always translate into similar
priorities and instruments for concrete action, depending on country-
specific institutional features (Ormala; Sulzenko).
Jean Guinet
Wolfgang Polt
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MANAGING A SYSTEMS APPROACH TO TECHNOLOGY
AND INNOVATION POLICY
TABLE OF CONTENTS
I. Introduction............. .. ... ... . .. . .. . .... . .... .. ... .. .. 10
II. Challenges and Policy Responses ....... .. ... .. . .. . .. . .. . .. . . 12
III. Towards a Systems Approach? ......... ... .. .. . .. . .. . .. ... . . 16
IV. The International Dimension............ .. . .. . .. . .. . .. . .... . . 19
V. Principles of Sound Implementation ...... .. .. ... .. .. . .. . . . .. . . 23
VI. Conclusion ............. .. ... ... . .. . .. . .... . .... .. ... .. .. 25
Notes ............. .. ... ... . ... ....... . .... .. ... .. ... ... ... . 27
Bibliography .............. ... ... ... .. .. .... . .... . .... . ..... .. 28
This article was written by Dr. Thomas Andersson, Deputy Director of the OECD Directorate for
Science, Technology and Industry, also Associate Professor, affiliated with the Stockholm School of
Economics, Stockholm, Sweden (e-mail: [email protected]).
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STI Review No. 22
I. INTRODUCTION
While technology has always been key to productive resource use, firms and
governments alike are currently confronted with new challenges in mastering the
opportunities and risks associated with technological progress. The cumulative
nature and growing complexity of technology make effective innovation increas-
ingly dependent on the appropriate combination and co-ordination of multiple
assets and functions. At the same time, there are growing challenges to master
the combination of long-term investment decisions and adaptation to changing
conditions.
The direction and consequences of technological change are thus influenced
by a range of conditions, including the properties of product and factor markets,
and the extent to which technical change is accompanied by organisational
change and human capital development. Market forces, government institutions,
regulations and other policies influence the preconditions for technical change.
With expanding codification of information, international trade and mobility of
production factors, there is also increased potential for mutual learning from, and
interdependence between, technological progress in different countries.
In this setting, governments need to raise their awareness and understanding
of how a broad spectrum of institutions and policies bear upon technological
change. Relevant and effective technology and innovation policy must rely on a
sound rationale. Although the fundamental cornerstone for all economic policy
action is that of addressing market failure, extensive consideration must clearly be
given also to government failure. Governments cannot a priori be assumed to do
better than markets, even when the latter fail. Beyond this, the basis for and
implementation of technology policy is subject to systemic issues.
Both theoretical and empirical observations point to the inadequacies of a
piecemeal policy approach to technology. As will be further discussed below,
maximising the benefits of technological advance increasingly calls for a systems-
based approach.1 However, such an approach is also associated with certain
costs. One fundamental question in this respect concerns the requirements of a
systems approach in terms of understanding country-specific conditions. To what
extent does its adoption reduce the scope for general lessons, increasing the
need for – and making policy success dependent on – the ability of public authori-
ties to gather and respond to idiosyncratic information? If a high dependency of
this sort emerges, there is a risk of diminishing scope for checks on government
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Managing a Systems Approach to Technology and Innovation Policy
policy, possibly leading back to a situation of costly government failure, and
making it harder to achieve virtuous policy learning and co-ordination between
countries.
A related tricky question is whether countries differ with respect to the options
for governments to boost competitiveness in knowledge-intensive activities. The
influential so-called ‘‘new growth theory’’ (Romer, 1987) has paid considerable
attention to the conditions that determine, or endogenize, technical progress. For
instance, because knowledge-intensive activities tend to be characterised by
increasing returns to scale, the outcome of technological effort may depend on a
critical mass of resources being devoted to it. Moreover, inter-country specialisa-
tion in production may also be driven by different abilities to attract knowledge-
related production factors and capabilities. Krugman (1991a and 1991b) argued
that segmentation of product markets makes large economies enjoy a compara-
tive advantage in production based on economies of scale. In relatively small
economies, on the other hand, there would instead be specialisation in more
standardised production based on constant returns to scale. Related considera-
tions apply to the continued development prospects of newly industrialised coun-
tries, such as Korea and Mexico, and to the former socialist transition economies
of Eastern Europe.
If countries are confronted with inherently dissimilar risks and opportunities
with respect to technological development, this may underscore the importance of
a systems approach which can determine and address those interconnecting
issues which are relevant for the individual country. On the other hand, it cannot
be taken for granted that all countries will be in a position to capture sufficient
benefits to compensate for the potential costs of adopting such an approach. For
example, governments in larger economies may have greater resources to invest
in analytical capacity. If a country has an inherent disadvantage in fostering
knowledge-creating activities; for example, because of limited size, embarking on
a demanding systems approach to technology policy may not be worthwhile.
A first systematic evaluation of technology-related policy performance apply-
ing a systems perspective was recently undertaken in OECD (1998). Based on
the results of that study, the next section reviews current challenges and policy
responses. Issues related to the adoption of a systems approach to technology
and innovation policy are reflected on in Section III. Further aspects of these
issues, arising from the international dimension, are examined in Section IV.
Principles of relevance to the sound implementation of a systems approach are
discussed in Section V. The last section concludes.
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