1. Design And Evaluation Of Innovation Policy: A Conceptual Framework
1-Jun-19
Design And Evaluation Of Innovation Policy: A Conceptual Framework
Bart Verspagen
UNU-Merit and Maastricht University, Department of Economics
1-jun-19
DEIP Jordan, B. Verspagen - Policy

2. DEIP Jordan, B. Verspagen - Policy
Reading list
B.-A. Lundvall & S. Borras, "Science, technology and Innovation Policy", in Oxford Handbook of Innovation (eds. Fagerberg, Mowery, Nelson)
J.-E. Aubert, "Promoting innovation in developing countries: a conceptual framework"
L. Georghiou, "Impact and additionality of innovation policy"
1-jun-19
DEIP Jordan, B. Verspagen - Policy

3. DEIP Jordan, B. Verspagen - Policy
1-Jun-19
Outline
Evolution of Policy for Innovation
Innovation Systems
Innovation Systems and Policy
General notions
Innovation in development contexts
Evaluation of innovation policy
1-jun-19
DEIP Jordan, B. Verspagen - Policy

4. Evolution of Policy for Innovation (in the developed world…)
1-Jun-19
Evolution of Policy for Innovation (in the developed world…)
The post WW2 broad development
The rise of the Science Push idea
The Technology Policy realm
Innovation policy: a system’s view
1-jun-19
DEIP Jordan, B. Verspagen - Policy

5. Origins and implications of the Big Science idea
1-Jun-19
Origins and implications of the Big Science idea
Francis Bacon (1627), J.D. Bernal (1939) and V. Bush (1945)
The social and economic utility of science
Large scale projects: Manhattan Project, nuclear energy, Apollo programme (Big Science)
Little science and the linear model
1-jun-19
DEIP Jordan, B. Verspagen - Policy

6. Science policy in the Big Science model
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Science policy in the Big Science model
Setting goals, either very specific (“Man on the moon”) or broader (“Science as a way to end hunger”)
Challenge is the mobilization of sufficient funds, and allocation to projects / disciplines
Fundamental problem: Serendipity vs. demand steering
1-jun-19
DEIP Jordan, B. Verspagen - Policy

7. Technology policy: a logical extension
1-Jun-19
Technology policy: a logical extension
Science based technologies as an engine of growth
Technology policy because of the extension of science to the commercial domain
Extension of the policy to economic issues, such as trade and industrial policy
1-jun-19
DEIP Jordan, B. Verspagen - Policy

8. Technology policy questions
1-Jun-19
Technology policy questions
Which technologies?
Idea that “high-tech” is good for growth
“Key-technologies” such as ICT and biotech
At what stage of the technology life cycle?
What about competition?
Trade policy: infant industry?
The market knows best?
Can government pick winners?
1-jun-19
DEIP Jordan, B. Verspagen - Policy

9. Innovation policy – 3 main ideas
1-Jun-19
Innovation policy – 3 main ideas
Innovation as a broad phenomenon (not only high-tech sectors)
Innovation systems:
Interaction (public-private)
systemic failures (lack of coordination)
Learning and education
1-jun-19
DEIP Jordan, B. Verspagen - Policy

10. DEIP Jordan, B. Verspagen - Policy
1-Jun-19
Innovation systems
Innovation is not done in isolation
Knowledge flows between actors in the system
Complementary capabilities
Actors: firms, policymakers, universities, consumers, public research organizations
1-jun-19
DEIP Jordan, B. Verspagen - Policy

11. DEIP Jordan, B. Verspagen - Policy
1-Jun-19
Systemic failure
Each of the actors categories may perform very well when viewed in isolation
But a change in behaviour of one category may have a beneficial effect on the other category
Example: industry – university interactions (“European Paradox”)
1-jun-19
DEIP Jordan, B. Verspagen - Policy

12. Collaboration and systems
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Collaboration and systems
Linked to the management of innovation resources
Missing system elements: are all relevant knowledge sources present?
Set up new research organizations
Entrepreneurship
Missing connections: opportunities and incentives for collaboration
Enhancing awareness
Removing barriers to collaboration
1-jun-19
DEIP Jordan, B. Verspagen - Policy

13. A more mainstream view on innovation policy: market failure
1-Jun-19
A more mainstream view on innovation policy: market failure
Spillovers and the lack of incentives
Basic science
R&D subsidies
The implementation of policies
Tax cuts vs. subsidies
Additionality of R&D subsidies?
“Picking winners”? and generic vs. specific policies
1-jun-19
DEIP Jordan, B. Verspagen - Policy

14. The link between innovation policy and development policy
1-Jun-19
The link between innovation policy and development policy
Development Policy has moved away from large scale structural policies
In a way, these were similar in ambition to science / technology policy
The alternative development policy: More markets (Washington consensus) or institutions (incl. innovation)?
1-jun-19
DEIP Jordan, B. Verspagen - Policy

15. The idea of Innovation Systems in a development context
1-Jun-19
The idea of Innovation Systems in a development context
A broad view of innovation
Innovation systems within the broader context
Actors are different in development contexts
1-jun-19
DEIP Jordan, B. Verspagen - Policy

16. A broad view of innovation
1-Jun-19
A broad view of innovation
New to the local environment (imitation)
Adaptation to the local environment (intermediate step)
Innovation at the global frontier
All 3 forms are found at all levels of development, but the mix changes along the development axis
1-jun-19
DEIP Jordan, B. Verspagen - Policy

17. DEIP Jordan, B. Verspagen - Policy
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The broader system
Innovation systems operate in a broader system, which is often “weak” in development countries
Education
Business environment (incl. capital markets)
Infrastructure (incl. ICT)
The difficulty of improving the general development level is a challenge for innovation in developing context (low development trap)
1-jun-19
DEIP Jordan, B. Verspagen - Policy

18. Development and innovation strategy
1-Jun-19
Development and innovation strategy
Exports as a springboard
FDI and sourcing of technology
Turning point agenda (creating proprietary technology based on local capabilities)
Domestic R&D
a changing role for FDI
1-jun-19
DEIP Jordan, B. Verspagen - Policy

19. Actors in Developing Innovation Systems - Firms
1-Jun-19
Actors in Developing Innovation Systems - Firms
Micro-firms (in the informal sector), SMEs (often low capabilities, but sometimes learning), larger firms, foreign firms
A role for business information policy as well as policies aimed at learning
Spillovers from foreign firms (FDI) are often very weak, dependent on absorption capabilities (and a role for IPRs, next lecture)
1-jun-19
DEIP Jordan, B. Verspagen - Policy

20. Actors in Developing Innovation Systems - Universities
1-Jun-19
Actors in Developing Innovation Systems - Universities
Primary role in education
Problem/challenge: braindrain
Research important, but interaction with local industry is often difficult
There are successful examples (see Aubert paper)
1-jun-19
DEIP Jordan, B. Verspagen - Policy

21. Actors in Developing Innovation Systems – technology institutes
1-Jun-19
Actors in Developing Innovation Systems – technology institutes
Often construed from a “technology policy” point of view (big science)
Risk of being a “white elephant”
Financing mix important (interaction with markets)
Create variety, but admit failures
1-jun-19
DEIP Jordan, B. Verspagen - Policy

22. Innovation policy evaluation
1-Jun-19
Innovation policy evaluation
Not a very advanced field of activity (even in developing countries)
Risk: evaluation often initiated by policymakers, who do not like to admit their policies don’t work
When does a policy work?
When firms use it? (low level of ambition)
Evaluation is as important in developing contexts as it is in the developed world
1-jun-19
DEIP Jordan, B. Verspagen - Policy

23. The basic idea of Additionality
1-Jun-19
The basic idea of Additionality
A policy works if it induces the subject of the policy to change behaviour in the way intended
Example: R&D subsidy
The policy works if the firm now undertakes the marginal R&D project that it would not have undertaken without the policy
The policy doesn’t work if the firm uses the money to finance a project it would even have undertaken without the policy
1-jun-19
DEIP Jordan, B. Verspagen - Policy

24. The difficulty in establishing additionality
1-Jun-19
The difficulty in establishing additionality
We only observe one world (not the counter-factual that additionality asks for)
Methodological innovations:
Econometric models (partly inspired by medicine)
“Experimental policy”
In-depth case studies
1-jun-19
DEIP Jordan, B. Verspagen - Policy