IMPACT AND EFFECTIVENESS OF PUBLIC SUPPORT … · IMPACT AND EFFECTIVENESS OF PUBLIC SUPPORT FOR...

IMPACTANDEFFECTIVENESSOFPUBLICSUPPORTFORBUSINESSINNOVATION

DavidA.Wolfe

INNOVATIONPOLICYWHITEPAPERSERIES2017-03

ContentsIntroduction.................................................................................................................................................2

EconomicRationalesforBusinessSupportPrograms..................................................................................3

TheNeoclassicalApproach:Market-basedRationales............................................................................3

TheEvolutionaryApproach:Neo-SchumpeterianRationales..................................................................5

TheSystemsofInnovationPerspective.......................................................................................................7

InnovationSystemsandInnovationPolicy...............................................................................................9

NationalStylesofScience,TechnologyandInnovationPolicies................................................................11

MissionOrientedversusDiffusionOrientedInnovationSystems..........................................................12

RapidInnovation-basedStrategies........................................................................................................15

RelevancefortheCanadianCase.......................................................................................................17

BuildingStrategicCapabilitiesacrossSectorsandClusters....................................................................18

KeyPoliciesandProgramstoPromoteInnovation....................................................................................22

BasicResearchandTechnologyTransfer...............................................................................................22

SocialReturnstoInvestmentinBasicResearch.................................................................................22

TechnologyTransferandCommercialization.....................................................................................25

OverviewofPolicyInstrumentstoSupportInnovation.........................................................................27

DirectMeasurestoSupportR&DandInnovation..............................................................................27

AccesstoFinanceandVentureCapital..............................................................................................30

ImpactofComplementaryServices...................................................................................................31

SupportforCollaborativeR&D...........................................................................................................32

TheConceptandRoleofPolicyMixes.......................................................................................................34

PolicyAlignmentacrossLevelsofGovernment.........................................................................................37

Conclusion..................................................................................................................................................38

References..................................................................................................................................................40

IMPACTANDEFFECTIVENESSOFPUBLICSUPPORTFORBUSINESSINNOVATION DAVIDA.WOLFE

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IntroductionAsthe21stcenturyunfolds,thereisagrowingrecognitionthatthecompetitivegloballandscapeis

alteringthecontextwithinwhichgovernmentsupportforinnovationprogramsshouldbeassessed.The

primaryjustificationforthisareaofpublicpolicyisthewidespreadrecognitionofthelinkbetween

innovationandproductivitygrowthanditsimpactonfutureincomelevels.Technologicaladvance,

broadlyconstrued,isthemostimportantsourceofproductivitygrowth;butrecentevidencesuggests

thatthoseadvancesareconcentratedamongtheleadingfirmsinmoretechnologicallyinnovative

sectors,whilebothlaggingfirmsandsectorsthatexperiencealowerrateofproductivitygrowthtendto

reduceaverageproductivitylevelsacrosstheentireeconomy(Andrews,Criscuolo,andGal2015).The

changingdynamicsofinnovationinthe21stcenturyaccentuatestheneedforaclearerunderstanding

ofwhatthecurrentstateofresearchtellsusaboutthedesign,implementationandeffectivenessof

businessinnovationpolicies.

Thisreportexploresanumberofconceptualandpolicydesignissuesthatarerelevantforthe

currentTreasuryBoardSecretariatHorizontalReviewofInnovationandCleantechprogramswithinthe

federalgovernment.Itprovidesanoverviewofsomeoftherelevantconceptualframeworksusedin

leadingindustrialeconomies,aswellassomethathaveexperiencedmorerapidinnovation-based(RIB)

economicdevelopment.Itprovidesanintroductiontorecentthinkingintheacademicandpolicy

relevantliteratureonthenatureofthesedesignissuesandsummarizessomeoftheinsightsand

findingsofrecentreviewsthathavebeenundertakenonprogramimpacts.Assuch,itisintendedtobea

highlevelreviewofthecurrentstateofthinkingontheseissuesandprovideaguidetothemore

detailedliterature,ratherthananexhaustivereviewoftheliterature.

Thereportaddressesseveralcriticalissues.First,itexaminestheconceptualandprogram

modelsthatexistforthedesignandimplementationofgovernmentsupportofbusinessinnovationat

differentjurisdictionallevels.Itplacesthisexaminationwithinthecontextoftwobroadapproaches

foundintheliterature,thetraditionalneoclassicalapproachtoinnovationpolicyandmorerecent

evolutionaryapproaches.Itexploresthedifferentpolicyapproachesadoptedinbothleading

economies,aswellasseveralthathaveadoptedarapidinnovation-based(RIB)approachtoinnovation

policyandexaminestherelativemeritsoftherespectiveapproachesusedbydifferentgovernments.

Thereportgoesontoexaminetheexistingevidenceontheimpactofarangeofpolicy

instruments,drawingseveralrecentreviewsofboththeacademicandmorepolicyorientedliterature.It

alsodrawsuponconceptofthe“policymix”forinnovationthatwasintroducedtenyearsagoinpolicy

reviewsundertakenfortheEuropeanUnionandOECD.Itexamineswhatvaluethe“policymixes”

approachaddstoourunderstandingofthedesignandimplementationofgovernmentprogramsforthe


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supportofbusinessinnovation.Finally,itaddressesthequestionofhowtheintroductionofinnovation

programswithinafederalsystemcomplicatestheevaluationoftheirimpactandcreatesaneedfor

greaterpolicyalignment.Inthisrespect,itaskswhatvaluetheconceptofmultilevelgovernance,

developedinitiallyintheEU,butadoptedandwidelyappliedinthescholarlyliteratureonCanada,

contributestoourunderstandingofhowtheeffectivenessofpoliciesissupportedorconstrainedbythe

behaviourofotheractorswithinthefederalsystem.

EconomicRationalesforBusinessSupportProgramsTraditionalneoclassicalmodelsandmorerecentevolutionarymodelsofeconomicstreattherationales

forpolicysupportfortechnologicalinnovationinsignificantlydifferentways,withattendant

implicationsforthedesignandimplementationofinnovationpolicy.Toalargeextent,thesetwo

intellectualparadigmshaveoperatedinisolationfromeachother,withlittledirectcomparisonofthe

strengthsandweaknessesofeachapproach.Theyhavealsotendedtoenjoygreaterpolicyattentionin

differentnationalcontexts,whichhasalsolimitedthedegreetowhichthestrengthsandinsightsof

eachapproachhavebeendirectlycompared,thuslimitingtheabilitytodrawinferencesforbothpolicy

designandevaluation.Thefollowingsectionsofthisreportprovideabriefoverviewoftherelevanceof

eachapproachforthedesignandevaluationofinnovationpolicy.Thefocusoninnovationasthebasis

foreconomicdevelopmentrepresentsasignificantdeparturefrommoretraditionalapproachesto

economicdevelopmentpolicy.Whilerelianceontheneoclassicalperspectivelimitedthejustificationfor

governmentinterventiontocasesofmarketfailure,aninnovation-focusedperspectiveshiftsthe

rationaletoexamininghowpoliciesandprogramswillenhanceanation’sfutureinnovativecapacity

(AtkinsonandEzell2012).

TheNeoclassicalApproach:Market-basedRationalesIntheneoclassicalapproach,innovationistreatedlargelyasanexogenousvariable,operatingoutsideof

thepropertiesofthegeneralequilibriummodels.AlthoughRomer’sworkinsertedtheroleofideasinto

theframework,muchoftheneoclassicalmodelremainedthesame(1986).Thefocusisonthestatic

efficiencyofaneconomyinallocatingscarceresourcesatasinglepoint,ratherthanitsdynamic

efficiencyingeneratingincreasingresourcesovertime.Thecentralquestionposediswhetherthe

marketwillallocatesufficientresourcestoresearchanddevelopmentforthecreationofnewproducts

andprocessesiflefttoitsowndevices.Thestartingassumptionofthisperspectiveisthatthe

unrestrictedoperationofcompetitivemechanismsbasedontherationalchoicesofindividualagents

interactinginthemarketwillproducetheoptimaleconomicoutcomes,bothintermsofthemicro-


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economicdistributionofrewardsandbenefitstothoseagentsandtheoptimallevelofwelfarefor

societyasawhole.

Thebulkofneoclassicaltheorizingaboutinnovationpolicyisconcernedwiththefactorsthat

inhibittheachievementofoptimaloutcomesintheallocationofresourcestoresearchand

technologicalinnovation.Thisapproachacknowledgesthatundercertaincircumstances,marketscan

anddoproducesuboptimaloutcomes,usuallyinsituationswheretheyoperateinimperfectfashion.

Themisallocationarisesfromthefactthattheinnovationprocessitselfisinherentlyriskyanduncertain

andthatmarketagentsareconstrainedbyinformationgaps,aswellastheirabilitytocapturethefull

valueofthebenefitsarisingfrominvestmentstheymake.Individualfirmsfaceaconsiderable

uncertaintywithrespecttotwocriticalfactors–theextenttowhichtheirinvestmentsinleadingedge

researchwillresultincommercialreturnstothefirmandthedegreetowhichthoseresultsmayleak

fromtheirfirmtootheronesintheecosystemthroughknowledgeortechnologicalspillovers.This

degreeofuncertaintyhasledtotheconclusionthatrationaleeconomicbehaviourmayresultina

sociallysuboptimallevelofinvestmentinresearchanddevelopment.Amongtheconditionsthatcan

resultinmarketfailure,themostnotableare:imperfectinformation(informationasymmetries),

imperfectmarkets(suchasinthecaseofnaturalmonopolies),riskyoruncertainoutcomes,significant

discrepanciesbetweenthesocialandtheprivateratesofreturn(knowledgespillovers)andthe

presenceofpublicandindivisiblegoods.Someeconomistssuggestthatattherootofthisdilemmaare

innovationandinformationasymmetrieswhichlieatthecoreoftheoperationofmarketeconomies

(Metcalfe1995;Cimoli,etal.2009).

Oneofthemostsignificantofexamplesofthesetypesoffailurearisesfromthepublicgood

natureofnewknowledgeandtheconsequentdifficultiesencounteredbyprivateagentsincapturingthe

fullreturnsfromtheirinvestmentsinbasicorcuriosity-drivenresearch.Theattendantproblemsthat

arisefromthepublicgoodnatureofknowledgecreation,whichincludetheproblemsofappropriability,

cumulativenessandknowledgespillovers,providethemostcommonlyacceptedrationalefor

governmentinterventiontostimulatehigherlevelsofspendingonresearchtofosterthecreationof

newknowledgeandpromotethesociallybeneficialeffectsofknowledgespilloversthatarisefromthat

spending.Oneofthemostimportantaimsofmoderngovernmentprogramstostimulatehigherlevels

ofinvestmentinresearchandinnovationistocounteractthesekindsofmarketfailuresandproduce

higherlevelsofprivateinvestmentinsituationswherethesocialratesofreturnarelikelytobe

considerablyhigherthantheprivaterates(McCannandOrtega-Argilés2013).Inthesesituations,

interventionsbygovernmenttostimulateorconstrainbusinessbehaviourarejustifiedinorderto

achieveamoreoptimalsocialoutcomeandabetterdistributionofeconomicwelfareforsocietyasa

whole.Thishasprovidedoneofthemostimportantcatalystsforgovernmenttostimulatehigherlevels

ofinvestmentinR&Dthroughamixoftaxincentivesanddirectsubsidyprograms.


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TheEvolutionaryApproach:Neo-SchumpeterianRationalesTheevolutionaryorneo-Schumpeterianapproachtotheanalysisofinnovationdiffersinmanycritical

respectsfromtheneoclassicalperspective.Theassumptionsoftheformeraboutthepresumed

rationalityofeconomicagents,theeasilycodifiedandundifferentiatednatureoftechnicalknowledge,

andthelargelysymmetricalbehaviourofidenticalfirmsintheinnovationprocess,areallchallengedby

thebodyofliteratureassociatedwiththelatterperspective(Nelson1994,297–304;Lundvall2006).A

criticaldifferencebetweentheneo-Schumpeterianandneoclassicalperspectives(includingRomer’s

endogenousgrowthmodel)istheirconceptionoftheorigins,natureandaccessibilityoftechnical

knowledge.Intheneo-classicalperspective,technologyisseenasinformationthatisgenerally

applicable,easytoreproduceandreuse,andisnotalwaysdistinguishedfromthegeneralbaseof

scientificknowledge.Firmscanproduceanduseinnovationsbydrawinguponafreelyavailablepoolof

technologicalknowledge(Dosi1988,1130).Technologyisdefinedas,“theabilitytocarryoutproductive

transformations...translatingmaterials,energyandinformationinonesetofstatesintoanother,more

highlyvaluedsetofstates”(Metcalfe1997,279).Itthusconsistsofthreekeyelements:knowledge;

skillsandartefacts;andfromanevolutionaryperspective,technologicalinnovationwhichinvolvesthe

processofapplyingknowledgeandskillstocombineanexistingsetofartefactsintonovelcombinations

thatfillamarketdemandandtherebycreatevalue(Arthur2009).

Theevolutionaryapproachtoinnovationandeconomicgrowthemphasizesthecomplex,

uncertainandinterdependentnatureoftechnologicalchangeandplacesentrepreneursandfirmsatthe

centreoftheprocess.Theseindividualagentsandorganizationsareendowedwithaccesstodifferent

knowledgebases,differentsetsoforganizationandtechnologicalcapabilities,andevendifferentrisk

profiles.Theyareconfrontedwithahighdegreeofmarketuncertaintyinwhichthepotentialforsuccess

orfailureofanewinnovationisunpredictableatbest.Giventheuncertainnatureoftechnological

innovation,firmsororganizationsrelyupontheirexistingknowledgebaseintheireffortstosolvenew

technologicalproblems.Theirknowledgebaseishighlystructuredandformspartofthecumulative

memoryoftheorganization.Itisbothcodified,asinthecaseofscientificknowledge,andtacit.

Individualsorgroupsworkingtogetherforthesamefirmororganizationoftendevelopacommonbase

oftacitknowledgeinthecourseoftheirresearchandproductionactivities(NelsonandWinter

1982,76–82;Dosi1988,1188).

Theevolutionaryperspectivealsostartswiththeassumptionthateconomicactorsoperatewith

boundedrationalityandthatinnovationinvolvesaconstantlychangingsearchprocessthatisbounded

bybothlimitsofscientificandtechnologicalknowledgeatanyonepoint,aswellasthestrategicand

managerialcapabilitiesofthefirmsengagedinthesearchprocess(Dosi1988;CohenandLevinthal

1990).Assuch,theinnovationprocesstendstomovealongatechnologicaltrajectorywheretherange

ofnewpossibilitiesisdeterminedbytheexternalknowledgebasethatfirmscandrawupon,aswellas


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theinternalheuristicsearchtechniquesthatfirmsadopttoguidetheirinnovationandnewproduct

developmentstrategies(NelsonandWinter1982).Theresultofthispatternofinteractionisthat

innovationtendstoprogressalongapathdependenttrajectory,wherepastchoicesandpastsuccesses

bothlimitandopenupthepossibilitiesforfuturetechnologicaldevelopment(Dosi1984).

Inthisapproach,firmsareactiveagentswholearnfromtheirownexperiences,aswellasfrom

theirinteractionwithabroadernetworkofcustomers,suppliersandtheprovidersofspecializedinputs

andservicestheyworkwith.Startingfromthisexistingbaseofknowledge,firmsemployavarietyof

searchactivities,routinesanddecisionrulestoguidetheirresearchefforts.Theparticularknowledge

baseofthefirm,andthespecificorganizationalpracticesassociatedwiththatknowledgebase,

contributetowhatistermedthecorecompetenceofthefirm,inotherwords,thethingsthatitisgood

at.Theextenttowhichfirmsrelyonestablishedroutinesanddecisionrulesintheirresearchefforts

depends,inpart,ontheoverallresultsoftheirpastsearchactivitiesandtheircapacitytolearnfrom

thatexperience.Theprocessofinnovationemergesoutoftheinteractionsbetweenthecumulative

increaseintheknowledgebaseandthetechnologicalcapabilitiesoffirmsinthedevelopmentand

diffusionofnewtechnologies.Thecreationofnewtechnologiesandthelearningprocessesassociated

withthemfollowtheirownuniquepathofdevelopmentinthesensethattheadoptionofnewroutines

andtheacquisitionofnewcapabilitiesbuildonwhathasgonebefore.Fromthisperspective,the

processoftechnologicaladvanceisseenas“aphenomenonoforganizedcomplexitythatresultsin

cumulativeandirreversiblylong-runchange,inwhichsuccessiveeventsareuncertain,highlycontingent

anddifficulttoforecast”(DavidandForay1995,17).

Despitethedynamicandunpredictablenatureoftheinnovationprocess,itinvariablydevelops

alongorderedpathsdefinedbytheeconomicandtechnicalpropertiesofpastdiscoveries.Thisisoneof

itscentralparadoxes.Theearlystagesinthedevelopmentanddiffusionofnewtechnologiesismarked

byanincreaseindiversity,intermsoftherangeofproducts,processesandservicesassociatedwiththe

technology—witnessthenumberofdifferenttypesandmanufacturersofpersonalcomputers

competinginthemarketplaceinthe1970sand1980s.Inthisearlystageofthetechnology,thedesign

isstillvariableandthereisnocertaintyaboutwhichproductswilldominatethemarket.However,the

cumulativeandirreversiblecharacteroftechnologicalchangeresultsfromthetendencyformarketsto

lockintoparticulartechnologiesastheirusebecomesmorewidespread.Technologiesbecomemore

usefulandmoreattractivetoendusersasthisoccurs.Thisphenomenonisreferredtoasincreasing

returns(Arthur1988).Inotherwords,historymatters;additionstotechnologicalknowledgeareby

naturecumulativeandtheabilitytoexploitnewknowledgedependsonthetechnologicalcapabilities

thatalreadyexist(Rosenberg1994,15).Adoptinganevolutionaryperspectivethusshiftsthelens

throughwhichinnovationprogramsareassessedandreviewedandallowsfortheconsiderationofa


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broaderrangeofprogramsintheoverallmixofagovernment’sResearch,DevelopmentandInnovation

(R,D&I)policy.

TheSystemsofInnovationPerspectiveTheincreasingsalienceofknowledgeandinnovationintheglobaleconomyfocusesattentiononthe

factthatinnovationandtechnicalprogressaregeneratedbyacomplexsetofstructuresthatproduce,

distributeandapplyvariouskindsofknowledge.Whiletheactualprocessofcreatingnovel

combinationsofexistingartefactsorcomponentsisthepurviewoffirms,enhancingtheknowledgeand

skillsneededtocreatethesenovelcombinationsistheresponsibilityofamuchwidersetofsocial

institutions—hencetheimportanceofthesystemsofinnovationperspectiveforunderstandingand

analyzingthenatureoftechnologicalchange.Overthepasttwodecades,agrowingnumberofpolicy

analystsandgovernmentorganizationshaveadoptedtheinnovationsystemsapproach,whichfocuses

onthecomplexandinterdependentroleofinstitutionalstructures,toexaminetherelativecapacityof

nationaleconomies.Thesystemsofinnovationapproachanalyzesthenatureofthesystemic

interactionsbetweenkeyactorsandinstitutionsthatcompriseaninnovationsystem.Thecentraltenet

oftheapproachisthatwhatappearsatthemacroeconomiclevelastechnologicalinnovationsthatare

developedendogenouslywithinthefirm,actuallyemergesoutofthecomplexinteractionofawide

rangeofeconomicandsocialagentsandorganizations,andthatmanyofthemarketforceswhich

determinethesuccessoftheseinnovationsaredelimitedbytheoperationofacomplexsetofnon-

marketinstitutions(Soete,Verspagen,andterWeel2009;Edquist1997;2005).

Thesystemsofinnovationapproachemphasizestheroleofvariousinstitutionalstructuresand

socialforcesininfluencingtheinnovationprocess.Studiesoftechnologicalchangehaveidentifiedthe

complexinterdependencebetweenpurelyeconomicdynamicsandthebroadersocialandpolitical

factorsthatsustaintheprocess.Whileinnovationisprimarilythefocusofindividualfirms,virtuallyallof

theauthorsassociatedwiththesystemsofinnovationapproachstressthecentralroleofthe

institutionalinfrastructuresinprovidingmuchoftheskillsandknowledge,aswellasthelegaland

regulatoryframeworksthatgovernandsupporttheadoptionanddiffusionofnewtechnologies.

Theinnovationsystemsapproachhighlightsthemannerinwhichthediscoveryanddiffusionof

newtechnologiesisfacilitated,orimpeded,bytheprevailingensembleofsocial,economicandpolitical

institutionsatdifferentspatialscalesandlevelsofindustrialorganization.Innovationandtechnical

progressareincreasinglygeneratedbythecomplexsetofstructuresthatproduce,distributeandapply

variouskindsofknowledgeandcombinethatknowledgeintonewproducts.Theseroutinesare

developedinthecontextofthebroadersetofsocialandpoliticalinstitutionsthatprovidemanyofthe


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keyinputsneededtosupportinnovationinthefirm—rangingfromscientificresearchandhighly

qualifiedlabourtothesourcesoffinanceandpublicpolicysupportsthatsustaintheprocess.The

innovativeperformanceofindividualcountries,regionsorindustrialsectorsisinfluencedbytheway

elementsofthisinstitutionalmixinteractwitheachotherinthecreationandapplicationofknowledge

(Wolfe,2011).Centralissuesfromtheinnovationsystemsperspectiveconcernthedegreeof

complementarityorfitbetweenthevariousinstitutionswhichperformthisroleandtheeffectiveness

withwhichtheyrespondtorapidtechnologicalchange.

Thekeyelementsthatcomprisethenationalandregionalinnovationsystemsinclude:the

internalorganizationoffirms;thenetworkofinter-firmrelationships;theroleofthepublicsector;the

institutionalset-upofthefinancialsector;andthedegreeofR&DintensityandthenatureofR&D

organizationinboththepublicandtheprivatesector.Theinteractionsamongtheseelementsofthe

innovationsystemareinfluencedbyavarietyoffactorsthatincludethemacroeconomicandregulatory

environment,thesystemofcorporategovernance,thenatureoftheeducationandtrainingsystem,the

stateofthecommunicationsinfrastructure,andprevailingconditionsinindividualfactorandproduct

markets.Interactionsamongthevariousinstitutionsandactorsthatcomprisetheinnovationsystem

oftenoperateacrossmultiplelevelsofjurisdiction,fromthenationaltothelocal,andtakeavarietyof

differentforms(NauwelaersandReid1995).

Buildingontheinitialinsightsdevelopedbysomeoftheoriginaltheoristsoftheconcept,Stan

Metcalfedefinesanationalsystemofinnovationasthe

...setofdistinctinstitutionswhichjointlyandindividuallycontributetothedevelopmentand

diffusionofnewtechnologiesandwhichprovidestheframeworkwithinwhichgovernments

formandimplementpoliciestoinfluencetheinnovationprocess.Assuchitisasystemof

interconnectedinstitutionstocreate,storeandtransfertheknowledge,skillsandartifacts

whichdefinenewtechnologies(Metcalfe1997,285).

Theinnovationsystemsperspectiveemphasizestherelativeimportanceofthepatternsof

interactionbetweenfirmsaspartofacollectivelearningprocessintheacquisitionanduseofnew

technicalknowledge,andtheirinteractionwiththebroaderinstitutionalelementsofoverallsystem.

Thisflowsfromtheirbeliefthatinnovationisincreasinglytiedtoaprocessofinteractivelearningand

collectiveentrepreneurship,especiallyintermsoftherelationshipsbetweenproducersandusersof

newtechnology.Theinnovativeperformanceofindividualcountriesisthereforeinfluencedbytheway

inwhichelementsofthisinstitutionalensembleinteractinthecreationandapplicationofknowledge.

Lundvallandhiscollaboratorssuggestitishelpfultothinkabouttworelateddimensionsofthe

innovationsystem.Thefirstinvolvesthestructureofthesystem—whatisproducedinthesystemand

whatinnovativecompetenciesareinvolvedinproducingthese;thesecondinvolvestheinstitutional


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make-upofthesystem—theensembleofnon-marketforcesthatshapeandconditionthewayinwhich

productionandinnovationoccur(Lundvall,etal.2002,220).

InnovationSystemsandInnovationPolicyTheshifttoamoreinnovation-basedperspectivenecessitatesaconsiderablerethinkingofthe

government’soverallapproachtoR,D&Ipolicy.Intheprevailingneoclassicalparadigmthatjustifies

governmentinterventionintermsofcorrectingformarketfailures,theprimaryfocusinR,D,&Ipolicy

hasbeenoncorrectingforthemostobviouscaseofmarketfailures,particularlyinthecaseof

inadequateprovisionofpublicgoodswithextensiveknowledgespillovers(basicorfundamental

research),casesofimperfectmarkets,wheretherelativelysmallersizeofthedomesticmarketmay

limitthescaleofdemandforhighrisk,technologically-intensiveproductsorculturalproductsdesigned

toreflecttheuniqueexperienceofthelocalsocietyandwherethereisafurtherriskofdomestic

producersbeingoverwhelmedbyafloodofoverseasfirmswhoenjoythebenefitsofproducingwith

largerscaleeconomies.

Thefirstmajorapplicationoftheinnovationsystemconcepttoananalysisofnational

differencesininnovationpolicieswasthecollaborativestudyofinnovationacrossfifteennationsleadby

RichardNelson(1993).Inhisoverviewofthekeyfindingsofthestudy,Nelsonidentifiedthekey

elementsoftheinnovationsystemthataccountedforsomeofthedifferencesinnationalconfigurations

thatitrevealed.Amongthoseelementsidentifiedwerecorporateresearchanddevelopment

laboratories;theroleofuniversities,orscientificandtechnicaleducationstructuresmoregenerally;and

theroleofgovernments,andinparticular,theirpoliciesdesignedtoinfluencetherateandpaceof

innovation.Overall,heconcludedthattherangeofinstitutionalstructuressupportinginnovationvaries

acrossnationalsystemsasaresultoftheconsiderabledifferencesintheirrespectivetraditionsandtheir

developmentaltrajectories(Nelson1992,373–74).

AcomparativestudyofinstitutionaldifferencesacrosstheinnovationsystemsofEuropean

countriesdevelopsthenotionofinstitutionalcouplingandillustrateshowitshapesthenationalcapacity

forinnovation(LorenzandLundvall2006).Itanalyzesthecomplementarynatureofthestructureof

labourmarkets,theeducationandtrainingsystem,internalfirmorganizationalpatternsandthe

externalsourcesoffirmfinance.Theseinstitutionalstructuresareshapedandconstrainedbysocialand

politicalprocessesacrossthediversenationaleconomiesinEurope,thusconditioningtheirpotentialfor

change.Publicpolicieswhichfailtotakethesedistinctivenationalfeaturesintoaccountmaysufferfrom

alackoffitwiththeirexistinginstitutionalstructures.Thekeyinstitutionalfeaturesaffectingthesuccess

orfailureofpoliciestopromotetechnologicalupgradingaretheeffectivenessofinteractivelearning,

withinandbetweenorganizations,andthecapacityforrisk-taking.Theskillstructureandabilityto


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acquirenewskills,andtheextenttowhichtrainingandlabourmarketsystemsareintegratedwith

internalfirmdynamics(organizationalpatterns)arealsocritical.Thedistinctivefeaturesofnational

systemsstronglyaffectstheircapacitiesforinnovation;boththenatureandinterrelatednessofthese

institutionalsubsystemsaffectshownewandenhancedknowledgeisabsorbedandputtocommercial

usewithinfirms.Interestingly,amongthefirstcountriestoadopttheinnovationsystems(IS)approach

inthedesignoftheirnationalagencieswereFinland,seekingtorecoverfromtheeconomiccrisisit

experiencedinthe1990sfollowingthecollapseoftheSovietUnion,andSweden,whichestablished

VINNOVA–theSwedishGovernmentAgencyforInnovationSystems–in2001,formalizingapolicy

approachthatthecountryhadalsobeenfollowingsincethe1990s(WeberandTruffer2017).

Theadoptionoftheinnovationsystemsapproachhaspromptedashifttothebroader

conceptionofinnovationpolicyamongpolicyanalysts.Theinnovationsystems(IS)approach

emphasizesthefactthatwhileinnovationoccursprimarilywithinfirms,theinnovativecapacityof

nationsorregionsemergesfromthecomplexinterplayofwideconstellationofdifferentactorsand

organizations,includingfirms,researchinstitutions,sourcesoffinance,innovationintermediariesand

civicassociationsatdifferentlevelsofgovernance.Itistheinteractionbetweenthedifferentproperties

orcapabilitiesofthismixofactorsandorganizationsthatdeterminetheinnovativepotentialofthe

nationorregion,ratherthanthepropertiesofanindividualactororinstitution;hencetheemphasisin

theISapproachisontheinteractionofthevariousfactorsandhowtheydevelopovertimeThis

perspectivedrawstheattentionofpolicymakerstotheneedtoreviewandredesignkeylinkages

betweentheinstitutionalcomponentsofthenationalinnovationsystem.Weaknessesorfailuresin

nationalinnovativecapacityareanalyzedassystemfailures,ratherthantraditionalmarketfailures.The

ISperspectivethereforefocusesitsanalysisandprescriptionsontheconfigurationofcoreelementsof

theinnovationsystem,particularly:“(i)capabilityfailuresifactorslacktheappropriateskillsand

resources;(ii)coordinationfailuresinthecaseofinteractionslackingbetweenactors,and(iii)

institutionalfailuresincaseswherecontextconditionshinderthefurtherdevelopmentofinnovationsor

whenactorsareunabletoinfluenceinstitutionalstructuresinawaytosupportinnovation...”(Weber

andTruffer2017,112).

Governmentsconcernedwithpromotingamorecomprehensiveapproachtoenhancingthe

innovativecapabilitiesoftheirrespectiveeconomiesfocusonamoreintegratedapproachthatsees

R,D&Iaspartofacontinuumtopromotethecontinuousupgradingofinnovativecapabilitiesina

nationalorregionaleconomy.Workoninnovationsystemsincludesboththenationalandtheregional

levels.Thisshiftgrowsoutoftherecognitionthatinnovativecapabilitiesaresustainedthroughlocaland

regionalcommunitiesoffirmsandsupportingnetworksofinstitutionsthatshareacommonknowledge

baseandbenefitfromtheirsharedaccesstoauniquesetofskillsandresources.Theregionalinnovation

system,likethenational,canbeconceivedintermsofboththedemandandsupplysideforinnovation.


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Onthesupplysidearetheinstitutionalsourcesofknowledgecreationintheregionaleconomy.Closely

linkedtothesearetheinstitutionsresponsiblefortrainingandthepreparationofhighlyqualifiedlabour

power.Thedemandsideofthesystemsubsumestheproductivesector–firmsthatdevelopandapply

thescientificandtechnologicaloutputofthesupplysideinthecreationandmarketingofinnovative

productsandprocesses.Bridgingthegapbetweenthetwoisawiderangeoforganizations,whichplaya

roleintheacquisitionanddiffusionoftechnologicalideasandknowhow.Thesemayincludetechnology

centres,technologybrokers,businessinnovationcentres,organizationsinthehighereducationsector

thatfacilitatetheinterfacewiththeprivatesectorandmechanismsoffinancinginnovation,suchas

venturecapitalfirms(NauwelaersandReid1995).

WhiletheinnovationsystemsapproachhasgenerallygainedgreatercurrencyinEurope,policy

analystsintheUShavefavouredtheinnovationecosystemapproachwhichreflectsmoreofabusiness

andbottomupapproach.Fromthisperspective,innovationecosystemsconsistofacomplexwebof

relationshipsbetweenavarietyofindividuals,communities,organizations,materialresources,rulesand

policiesthatworktogethertofacilitateknowledgeproduction,knowledgetransferandindustry-driven

commercializationactivities(WessnerandNationalResearchCouncil2007).Theseecosystemsembody

abottom-upapproachtoeconomicdevelopmentandarecapableofachievingshort-termoutcomesand

longer-termeconomicandsocialimpacts.Eachregionalorlocalecosystemalsohasitsownsetof

operationalrulesandanorganizationalstylethatalignswithitsuniqueentrepreneurialcultureand

fostersitsknowledge-basedcompetitiveadvantage.Furthermore,thestructureofinnovation

ecosystemswillvaryconsiderablyduetothedifferencesinregionalpriorities,localeconomicand

politicalconditions,historicalcontexts,andtheagencyoflocalresearchandinnovationactors.Inturn,

eachinnovationecosystemwillhavedifferentknowledgeproductionprocessesandcommercialization

strategiestosupportitsmembersandtheiractivities.Asaconsequence,thereareanumberofvariables

thatinfluencetheinteractionofinnovationecosystemmembers,thestrengthoftherelationships

formed,andmorebroadly,theecosystem’scapacitytoinnovate.Theinnovationecosystemapproach

wasrecentlyadoptedintheCouncilofCanadianAcademiesreportonInnovationImpacts:Measurement

andAssessment(CouncilofCanadianAcademies2013a).

NationalStylesofScience,TechnologyandInnovationPolicies

MostobserversagreethatWorldWarIIwasthecriticalwatershedinthedevelopmentofnational

scienceandtechnologypolicies.Theexperiencegainedinfinancingandmanaginglargescalescience

projectsduringthewar,particularlyinthedevelopmentofradar,electronicsandatomicweapons,and


12

thehighlyvisiblecontributiontheymadetotheAlliedvictory,carriedoverafterthewarintoasurgeof

newinvestmentsinscienceandtechnologythatsurpassedanythingundertakenbefore(Hart1998).The

successfuloutcomeofthesefocusedresearcheffortsgeneratedsupportforsubstantialincreasesin

governmentprocurementandresearchfundingforhightechnologyindustries,especiallythose

perceivedascriticalfornationaldefence.Thislessonwasstronglyreinforcedbythesuccessfullaunching

ofSputnikin1957andtheensuingspaceracewhichittriggeredinthe1960s.Inthelaterpartofthe

twentiethcentury,manynewandemergingtechnologiesinareassuchasmicroelectronics,robotics,

biotechnology,nanotechnologyandtheexplorationofthehumangenome,havebeentheoutcomeof

thisincreasedfunding(WessnerandNationalResearchCouncil2003,50–51).

WhileintheearlyyearsafterWorldWarIIthefocuswasprimarilyonthecreationandfunding

ofnationalsciencepolicies,overthecourseofthefollowingdecades,nationaltechnologypolicies

emergedasanextensionofsciencepolicies,withafocusonthedevelopmentofnewtechnologiesand

thepromotionofindustrialsectors.Theyare“policiesthatareintendedtoinfluencethedecisionsof

firmstodevelop,commercializeoradoptnewtechnologies(Mowery,1995,514)...”Technologypolicies

canincludethoseintendedtoincreasethesupplyofscientificknowledge,throughsupportforbasic

research,technologydevelopment,andthedevelopmentofappliedciviliantechnologies.Theroleof

theresearchinfrastructureiscriticalforpoliciesdesignedtoenhancethesupplyoftechnologyina

nationaleconomy.Thisincludestheroleofpubliclyfinancedresearchinstitutesandresearch

universities.Italsoincludeseffortstosupportuniversity-industryresearchpartnerships,topromotethe

transferoftechnologyfromtheresearchlaboratorytoindustry,andtosupportindustrialtechnology

development(Teubal,etal.1996).However,thefieldofinnovationpolicyismarkedbycontinuing

debatesoverthepreciserolethegovernmentshouldplayinsupportingresearchandinnovation,the

choiceoftheappropriatepolicyinstrumentsforgovernmenttouse,andtherelevantpointfor

governmenttointervenealongthespectrumfrombasicorcuriositydrivenresearchtomoreapplied

typesoftechnologydevelopmentclosertothecommercializationendofthespectrum.1

MissionOrientedversusDiffusionOrientedInnovationSystemsInadditiontopoliciestoincreasethesupplyoftechnology,arangeofotherpoliciestargettheadoption

anddiffusionoftechnologymorewidelythroughouttheeconomy.Inbroadterms,analystshavemadea

distinctionbetweentwobroadpolicyapproachestosupportscienceandtechnology:mission-oriented

1Formoredetaileddiscussionsofthedistinctionbetweenbasic,orcuriosity,drivenresearchandappliedresearch,cf.(Stokes1997)andBranscomb(Branscomb1997;BranscombandFlorida1998;BranscombandAuerswald2001).


13

anddiffusion-orientedpolicies.Innationalsystemsdedicatedtothemission-orientedapproach,the

emphasisisplacedonsubstantialinvestmentsinachievingradicalinnovationstoreachclearly

establishednationalgoals.Incontrast,diffusion-orientedpoliciesemphasizetheeffectivediffusionof

technologicalcapabilitythroughouttheindustrialstructuretofacilitatetheincrementaladoptionofnew

technologiesacrossawiderangeofindustries.Intheinitialphaseofthepostwarperiod,publicpolicies

tosupportscienceandtechnologywerestronglyinfluencedbytheUSlead,withthepredominanceof

publicinvestmentinthenuclear,militaryandspaceprograms.Thispatternwasparticularlytrueofthe

UKandFrancewhichmostcloselyfollowedthemission-orientedmodel.Furthermore,theactual

patternofpolicyinthesecountriestendedtoemulatethe‘bigscience’approachthatwasestablished

bythewartimeManhattanProjectandcontinuedtobefavouredintheUS.Incontrast,policiesinother

industrialcountries,suchasGermanyandSweden,morecloselyapproximatedthediffusion-oriented

approach.Diffusion-orientedpoliciestendedtobemoredecentralized,focusingonimprovingthe

technologicalcapabilitiesofsmallandmedium-sizedenterprisesthroughvocationaleducation

programs,establishingastrongsystemofindustrialstandardsandpromotingcooperativeR&D(Ergas

1987).Thereisnotastrictcorrelationbetweentheeconomicrationalesprovidedbytheneo-classical

andtheevolutionaryperspectivesforsupportinginvestmentsinscienceandtechnology.However,ata

broadlevel,themission-orientedapproachtendstobeguidedbytheneo-classicalrationalefor

subsidizingthesocialreturnstoinvestmentsinbasicorfundamentalresearchthatmayleadto

breakthroughdiscoveries,whilethemission-orientedfocusontheneedtodiffusetechnologiesmore

broadlyacrosstheeconomyismorecloselyalignedwiththeevolutionarysystemsperspective.Inmore

recentyears,however,thedistinctionbetweenthesenationalstyleshastendedtoblurasmore

countrieshaveadoptedelementsofboththemission-orientedanddiffusion-orientedapproaches.

Japanwasuniqueamongtheindustrialcountriesinadoptingahighlystrategicapproachtothe

designofitspostwarscienceandtechnologypolicies.TheJapanesesystemwasdirectedtowardsthe

challengeofrebuildingitsindustrialstructureafterWorldWarIIandcatchingupwiththeUSandother

industrialleaders.Oneofthehallmarksofitsinnovationsystemfrom1945tothe1980swasthecritical

roleplayedbygovernmentagenciesinguidingthatprocess.Duringthisperiod,governmentministries

pursuedlong-termstrategicobjectivestoguidetheacquisitionanddevelopmentoftechnologyby

Japaneseindustryandtoshapetheoverallstructureoftheeconomy.Fromtheearly1950sto1975,the

majorgoalofpolicywastoencouragetheimportationoftechnologiesthatJapaneseindustriesneeded

tocompetewiththoseinotherindustrialcountries.TheMinistryofInternationalTradeandIndustry

(MITI)gaveprioritytotechnologyneededtoproduceintermediategoods,suchaschemicals,and

suppressdemandforconsumergoods(Kodama1995,26–30;Johnson,Tyson,andZysman1989).Inthe

subsequentperiod,fromthemid–1970sonwards,thefocusshiftedtowardsanemphasisonsupporting

industrialresearchforlong-termeconomicgrowth.Industrialandtechnologypolicywasreoriented


14

towardsperceived‘sunrise’industries–thosethatwerelessenergyandmaterialsintensiveandmore

knowledge-based.Theseindustrieswereperceivedtobe‘strategic-transformative’ones,suchas

informationtechnology,thatheldthepotentialtotransformbothproductsandproductionprocesses

acrossawiderangeofothersectors.Inthereorientationoftheearly1970s,governmentefforts

targetedanumberofnewtechnologiesandindustrialsectors,includingelectronicsandcomputing,new

materialsandbiotechnology,whichwereperceivedasthesectorsthatwouldlaythebasisforeconomic

growthacrossawiderangeofthebroadereconomy(TysonandZysman1989).ThesuccessofJapanin

aligningitsinstitutionalstructurestogainacompetitiveadvantageoverleadingEuropeaneconomies

andtheUSinsomeofthesekeytechnologiesprovidedtheimpetusforinitialdevelopmentoftheIS

approachinthelate1980s(Freeman1987).

TheUSisgenerallycharacterizedashavingpursuedamission-orientedapproachandrecent

analysesofUSscience,technologyandinnovationpolicieshavedocumentedtheextenttowhich

governmentinitiatives,ofteninthenameofspaceanddefenceobjectives,wereinstrumentalinseeding

thegrowthofentirelyneweconomicsectorsassociatedwiththeemergingpost-industrialeconomy.

Overthecourseofthepostwarperiod,theUSgovernmentunderwrotebetweenone-halfandtwo-

thirdsoftotalR&Dspending.FinancialsupportfortheexpandedUSresearcheffortwasreadilyavailable

notonlyfromtheextensiveprogramsoftheNationalScienceFoundationandthecorresponding

NationalInstitutesofHealth,butalsofromahostofmission-orientedprogramssponsoredbyspecific

agencies,suchasDefence,theAtomicEnergyCommissionandlaterNASA.Atthecentreofthis

innovationsystemwastheUSAirForce,which“...exercisedsignificantinfluenceovertheatomic

energyprogramandacademicresearchinarangeofphysicalscienceandengineeringdisciplinesaswell

asoveranarrayoflargeandsmallcontractorsinaviation,electronicsandahostoflesserindustries”

(Hart1998,214).ThiswascomplementedbyariseinprivatecorporateR&D,fundedinsomeindustries,

suchaselectronics,jetenginesandspacesystems,bythesamefederalagencies.Amuch

underappreciatedfactistheextenttowhichtheUSAirForcewasresponsibleforestablishingthe

academicdisciplineofcomputerscienceinpostsecondaryinstitutionsinthe1960stomeettherapidly

growingneedforwell-trainedcomputerprogrammersversedintheprogramminglanguagesstartingto

gaingreaterapplicationinthemilitary,spaceprogramsandthebroadereconomyaswell(Moweryand

Langlois1996).ThesubstantialandcontinuingnatureoftheseinvestmentspropelledtheUSintoa

positionofworldleadershipinscientificresearchandindevelopingandimplementingsomeofthekey

technologiesthatdrewuponthisresearch(NelsonandWright1992;Weiss2014).

Inthelaterpartofthetwentiethcentury,manynewandemergingtechnologiesinareassuchas

microelectronics,robotics,biotechnology,nanotechnologyandtheexplorationofthehumangenome,

havebeentheclearbeneficiariesofthisincreasedfunding(WessnerandNationalResearchCouncil

2003,50–51).Inafarrangingstudyoftheimpactofgovernmentsupportonthedevelopmentofnew


15

technologies,theUSNationalResearchCouncildocumentedcriticalcomponentsofthecomputer

revolutionthatbenefitedfromUSgovernmentsupportprograms.Governmentsupportwasessential

forthedevelopmentofmostoftheearlydigitalcomputersintheUSandenabledcriticalbreakthroughs

inareasrangingfromcomputertime-sharingandtheInternettoartificialintelligenceandvirtualreality.

Federallysupportedresearchconcentratedinparticularinareasthatprivateindustryhadlimited

incentivetopursue:“long-termfundamentalresearch;largesystembuildingeffortsthatrequirethe

talentsofdiversecommunitiesofscientistsandengineers;andworkthatmightdisplaceexisting

entrenchedtechnologies”(NationalResearchCouncil1999,5).

RapidInnovation-basedStrategiesSomeofthemostsuccessfulexamplesofeffectiveinnovationpolicyoverthepastfourdecadesare

foundinthecaseofanumberofcountriesthathaveusedarangeofpolicyleverstoeffectively

acceleratethetechnologicaldevelopmentofkeysectorsoftheireconomy,mostofteninthefieldof

informationandcommunicationstechnologies.Thisformofpolicyinterventionhasbeenjustifiedonthe

basisofthedifferentelasticitiesofdemandassociatedwithvarioustechnologiesandtheimplications

thatshiftingthedevelopmentaltrajectoryofanationalorregionaleconomycanhaveforlong-term

growthratesoftheeconomyandthelong-termtrendinpercapitaincomes.Thepotentialbenefitsthat

flowfromanindividualsetoftechnologyandproductionchoicesarestronglydeterminedbythe

potentialdemandforthosetechnologiesorproductsinworldmarkets–orwhateconomistsrefertoas

theincomeelasticitiesofdemand.Thefasterthedemandincreasesinworldmarketsforacountry’s

products,thegreaterwillbethenetbenefits,intermsofgrowth,thatflowtothatcountry.Thechoices

madeindividuallybyfirms,orcollectivelythroughpublicpolicy,abouttheproductmixthatacountry

specializesinwillstronglyaffectitsfuturewell-being(Dosi,Tyson,andZysman1989,15).

Akeycharacteristicofthoseeconomiesthathavesuccessfullyindustrialized,fromtheearliest

casestomorerecentexamples,hasbeenmasteryoftheabilitytomanipulateandproducemore

technologicallycomplexproductsandproductionprocessesandtodevelopandsustaintheeconomic

formsoforganizationnecessarytoproducethesegoods.Asthepaceoftechnologicalchangehas

accelerated,thereappeartobeanumberofcriticaltechnologies“whosedomainsofapplicationareso

wideandtheirrolesocrucialthatthepatternoftechnologicalchangeineachcountrydependstoa

largeextentonthenationalcapabilitiesinmasteringproduction/imitation/innovationinsuchcrucial

knowledgeareas....”Asaresulttheabilitytomasterthosecapabilitiesdisproportionatelytendsto

influencethelong-termgrowthprospectsofindividualcountries(Cimoli,etal.2009,23).Itisthe

potentialbenefitsthatcanarisefromthelong-termgrowthpotentialofthesekindsofincome


16

elasticitiesthathavebeenusedtojustifytargetedgovernmentsupportforspecificsectorsinthe

contemporaryeconomy,suchasinformationtechnology,biotechnologyornanotechnology.

DanBreznitzhasanalyzedtheinnovationstrategiespursuedbyanumberoflaggingcountriesto

altertheireconomicdevelopmenttrajectorythroughfocusedsupportforwhathetermsrapid

innovation-based(RIB)industries.Inthesecases,aconventionaldevelopmentstrategythatrelieson

imitationofleadingeconomiesandtechnologytransferisnoguaranteeofsuccess.Inthesuccessful

casesanalyzed,includingIsrael,Taiwanand,toalesserextent,Ireland,criticalfactorsintheeffectiveof

theinnovationstrategieshaveincluded:afocusonthewaysinwhichknowledgeisacquiredatthe

nationallevelanddisseminatedtorelevantinstitutionsandfirmswithintheinnovationsystem;policy

interventionstoreducethedegreeofrisktoencourageprivatefirmstoentertheindustry;andactions

bythenationalgovernmenttosupportthelinkingoflocalfirmstomulti-nationalenterprises(MNEs)

embeddedinglobalproductionnetworks(GPNs)beyondthenationalboundaries(Breznitz2007,6).

Inmorerecentwork,BreznitzandOrnstonhavesuggestedthatRIBstrategyrequiresthe

establishmentofaSchumpeterianDevelopmentalAgency(SDA)chargedwithidentifyingandrefining

newpolicyapproachestotransformthekeysectorsoftheeconomy.Radicalinnovationismorelikelyto

bestimulatedbyagenciessituatedattheperipheryofthepublicsector,whichoperatewithrelatively

limitedresources.Thisperipherallocationfacilitatespolicyinnovationduetothefactthattheyareless

likelytobetargetedforpoliticalinterferencebyestablishedpublicsectorinterestsandareless

vulnerabletolobbyingbyspecialinterestgroups.Thisenablespolicymakerstoexperimentwithnovel

andriskyinitiatives.Anadditionalfactorcriticaltothesuccessoftheseagenciesisthewillingnessof

governmentstosupportthemoveralongperiodthatallowsthestrategiesrefinedandimplementedby

theagenciestoeffectsignificantlong-termchangeinthetargetsectorsoftheeconomy,aswasthecase

inFinland,andIsrael(BreznitzandOrnston2013).

ThecaseofTaiwanprovidesanotherstrikingexampleofRIBdevelopmentintherecentpast.In

thiscase,thegovernment’sstrategydeployedapublicresearchlaboratory,theIndustrialTechnology

ResearchInstitute(ITRI),topromotethediffusionoftechnologysourcedfromabroadintothe

Taiwanesemarketplace.ITRI’srolewastoscantheglobeforusefultechnologiesanddevelopthe

capabilitytoexploitthesetechnologiesinitsownlaboratories.TheTaiwanesegovernmentdecidedto

entertheintegratedcircuitindustryinthemid-1970s.ITRIwasestablishedtoderisktheprocessof

adoptingtechnologyfromabroadandtransferringittolocalfirms.ITRI’smissionwastoscanfor

technologiesofinteresttoTaiwaneseindustry,importthattechnology(throughlicenseandjoint

collaborativedevelopment),andtoabsorb,adapt,andtransferthattechnologytoTaiwanesefirmsby

providingtrainedpersonnel,equipment,andknow-howtoTaiwanesefirmswhocouldexploitthe

technologyforcommercialdevelopment(Matthews2002).Revenuesforthefirstfewyearscame


17

exclusivelyfromgovernmentcontractsthroughaseriesofpublicR&Dprojectsinthe1970sandearly-

1980s(Breznitz2007).

Thisstrategyultimatelyledtothespin-offoftwoanchorfirmsfromITRI.ThefirstwasUnited

MicroelectronicsCompany(UMC),whichbecamethefirstfoundryforsiliconwafermanufacturinginthe

country.UMCwasheavilysupportedbythegovernmentwiththetransferofpersonnel,technology,

equipment,andIPfromITRIintoUMC(Hsu2004).ThesecondkeyanchorfirmwasTaiwan

SemiconductorManufacturingCompany(TSMC),whichwascreatedfromtheoriginalITRIlab.With

UMCandTSMC,thekeysuppliersofsiliconwafersforintegratedcircuitmanufacturingwere

established.ThissameprocessofITRIlicensingtechnology,developingmanufacturingproceduresinits

laboratories,andpassingthemalongtolocalfirmswasrepeatedintheearly1990swithCD-ROM

technology,inthemid-1990swithEthernetswitchtechnology,andinthelate-1990swiththinfilm

transistorliquidcrystaldisplay(TFT-LCD)technology.ITRI’srelationshipwithTaiwanesefirmshas

changedasthosefirmshavematured.ITRIismovingawayfromtheparadigmofmethodandknowledge

transferoftechnologiesinventedinotherplaces,andisbeginningtoconductoriginalindustrialresearch

inconjunctionwithTaiwan’suniversitiesandincollaborationwithinternationalpartners(Yeung2016).

RelevancefortheCanadianCaseRecognitionoftheimportanceofshiftingthetechnologicaltrajectoryofnewandemergingsectorsof

theeconomyhasbeensingularlylackinginmostCanadianapproachestoinnovationpolicy.Onenotable

exceptionisRichardHarris’seminalstudyfortheMacdonaldRoyalCommission.Harriswasconcerned

withaspecificmarketimperfectionthathasreceivedinadequateattentioninmostanalysesof

innovationpolicy:theuniquechallengefacedbyfirmsinsmall,opentradingeconomies,wherethesize

ofthedomesticmarketmaygenerateinsufficientdemandtosustainfirmsandindustriesinleadingedge

technologiesorproducts.Theoriesthatlinkinternationaltradewithtechnologicalinnovationarguethat

shiftsinleadershiparenotrandomlydistributedacrossindustrialsectorsorbetweencountries.

Reflectingthisperspective,Harrisarguedthatmuchoftechnologicalcompetitiontendstobecumulative

andthatthenatureofthatcompetitioncontainsalargedegreeofirreversibility.Therearesubstantial

advantagestobeingfirst.Tryingtoadaptindustrialandtechnologypolicyontheprincipleofcatchingup

tothetechnologicalleadersmayprovedifficult.Technologicalcompetitiontendstobepre-emptiveand

produceirreversibleresults.Thebenefitsoftechnologicalleadershipallowafirmtorecoveritsresearch

anddevelopmentcosts,aswellasrealizeahigherthanaveragereturnonitsinvestment.Ineffect,

‘successbreedssuccess’,or“beingsuccessfultodayraisestheprobabilityofsuccessinthefuture”

(Harris2015,99).Thismaygreatlyreducethechancesforcompetinglateron,whichwillopenupa

significantgapbetweenthetechnologicalleadersandtechnologicallaggardsresultinginsignificant

differencesinnationalincomesbetweenthetwotypesofeconomiesandasignificanttradesurplusor

tradedeficitinhightechnologyproducts.


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Harrissuggestedthatthereisabiasinsmall,openeconomiesagainstSchumpeterianor

technology-basedindustries.Theentrybarriersassociatedwithtechnologicalinnovationaffectsmaller

firmstoagreaterextentthanlargeones.Andtothedegreethatsmallereconomiesarecharacterizedby

alargernumberofsmallerindigenousfirstfirms,thisplacestheentireeconomyatsomewhatofa

disadvantagewithrespecttotechnologicalcompetition,“theSchumpeterianindustriesinsmall

economiessufferfromarelativedisadvantageinindustrialstructure.Asaconsequencehesuggests“the

socialincentivetosubsidizeSchumpeterianindustriesisgreaterinasmallopeneconomythaninthe

largeclosedeconomy”(2015,105).Thereasonforthisisthattherelativelysmallersizeoffirmsinthe

smallereconomiesleadstoasuboptimalindustrialstructurewithrespecttocompetingin

Schumpeterian-basedindustries.

HarrisalsonotedthatsubsidizingsmallfirmstoengageingreaterlevelsofR&Dspendingdoes

notautomaticallyensurethatthefirmwillgrowtosufficientsizeinordertoovercomethebarriersto

entryinworldmarkets.HeconcludedthatmarketfailureintheindustrialR&Dprocesswithin

Schumpeterianindustriesdisadvantagesfirmsinasmallopeneconomy,resultingintheneedtodesign

technologypolicywiththisfactinmind.ThepolicyimplicationsofHarris’insightswerelargely

overlookedintherecommendationsadvancedbytheRoyalCommissionandhavebeenabsentfrom

muchofCanadianinnovationpolicyforthepastthirtyyears.Aswillbenotedinsubsequentsectionsof

thisreport,thereissubstantialevidencetosuggestthatbothdirectandindirectinnovationpolicies,

targetedatindividualfirms,canincreasethevolumeofresearchandinnovationactivitywithinspecific

sectorsofthedomesticeconomy,atboththestart-upphaseofgrowthandformoreestablished

technology-basedfirms.However,thecontinuingunderperformanceoftheCanadianeconomywith

respecttomanyofthekeyindicatorstrackedbytheCouncilofCanadianAcademies,theScience,

TechnologyandInnovationCouncilandtheScience,TechnologyandInnovationOutlookspublishedby

theOECD,allindicatethattheabsenceofalongertermstrategicperspectivemaybeacontributing

factorinthispersistentproblem(CouncilofCanadianAcademies2009;2013b;ScienceTechnologyand

InnovationCouncil2014;OECD2016).

BuildingStrategicCapabilitiesacrossSectorsandClustersTheevolutionaryperspectivesuggeststhatinnovationpoliciesandprogramsneedtobeassessedfroma

differentperspectivethanthatsuggestedbythetraditionalneoclassicalemphasisonmarketfailure.It

providesabroaderlensthroughwhichtoassesstheoveralleffectsandimpactsofthecomplexmixof

policymeasuresadoptedbygovernmentstosupportR,D&I.Theinnovationsystemsapproachalso

suggestsaneedtoshiftthefocusfromsupportforindividualfirmstoviewingtheinnovative


19

performanceofthefirminabroadercontextthatshedslightonhowthefirm’sperformanceis

conditionedbythebroadersectororclusterwithinwhichitoperates.

Thedevelopmentofproductivecapabilitiesinanationalorregionaleconomyfrequently

generatestechnologicalspilloversfromonefirmtoanotherinthesamesectorandsometimesacross

firmsinrelatedsectors.Sometimesthesespilloversfollowthelinesoftradedinput-outputrelationships

intheeconomy,butoftentheyoccuralonglinesthatarenottraded.Thesetechnologicalspilloversare

tiedtoknowledgeandpracticesthatarenotalwayscodifiedorexplicit.Theyarefrequentlyshared

amongfirmsortransferredfromfirmtofirmthroughvariousformsofnetworks,suchasuser-producer

relationships,strategicalliances,R&Dconsortia,collaborativetrainingandmarketingschemes,and

supportivepublicinfrastructure,suchaseducationalinstitutions.Theymayalsoderivefromother

institutionalarrangements,suchastheparticularnormsandrulesgoverningthefunctioningoflocal

labourmarkets.Theseformsofcollaborationandnetworkinggiverisetotheexistenceof‘untraded

interdependencies’withinaregionaleconomy,whichrepresentimportantregionalassetsand

capabilities(Dosi1988;Storper1995).

Theimplicationofthisperspectiveisthatpolicyneedstofocusnotjustonbuildingthe

innovativecapabilitiesofindividualfirms,butalsoabroadersectoralcapacitytosupportnew

technologyplatformsinemergingareassuchasalternativefueltechnologiesorcloud-basedanddata

analyticcapabilitiesfortheinformationtechnologyandadvancedmanufacturingsectors.Whilethe

federalgovernmenthasnotalwaysbeenexplicitaboutitsadoptionofasector-basedapproachto

innovationpolicies,adetailedexaminationofthehistoryofscience,technologyandinnovationpolicies

inCanadaoverthepasthalfcenturysuggeststhatspecificsectorshavebeensingledoutforfocused

policyattention,principallytheaerospace,automotiveandtelecomsectors.

DatingbacktotheintroductionoftheDefenceProductionSharingAgreementsin1958and

downtotherecentcollapseoftheSADIprogramintothenewCanadaInnovationFund,theaerospace

sectorhasconsistentlybeentargetedasasectorofstrategicimportance.Formostofthisperiod,the

mostimportantfederalspendingprograminthisareawastheDefenceIndustryProductivityProgram

(DIPP).Createdin1959,ontheheelsoftheJointDefenceProductionSharingAgreementbetween

CanadaandtheUS,DIPPprovidedsupportforCanadianfirmsintheircompetitionwiththeirlargerUS

counterpartsforashareofthelucrativecontinentalmarketindefencecontracts.Modifiedin1968and

placedunderthecontrolofthefederalDepartmentofIndustry,theprogramcontinuedtoprovide

strongsupportfortheCanadianaerospaceanddefence-relatedsectorindustries,overwhelmingly

locatedinOntarioandQuebec.UnderthetermsofDIPP,firmswereabletoobtainconditionalgrantsfor

theeligiblecostsofR&Dprojects,tocoverthecostsofacquiringadvancedproductionequipmentfor

modernizingorupgradingmanufacturingfacilities,tocoverthecostsofestablishingqualifiedCanadian


20

suppliersofdefencerelatedproducts(sourceestablishmentassistance)andtocarryoutmarket

feasibilitystudies.DIPPfundingaveragedbetween$150and$300millionannuallyduringthecourseof

itsexistence,butwascontinuouslythemainsourceofsupportforR&Dandinnovationintheaerospace

industry(BothamandGiguère1993,82).

Despiteitssuccessandthecriticalroleitplayedinsupportinginnovationinthekeyaerospace

sector,theprogramwasterminatedinthe1995budget,aspartofageneralreductionofbusiness

subsidies.Thisactionsparkedafirestormofprotestfromtheaffectedsectorsofindustryanditwas

subsequentlyreplacedbyTechnologyPartnershipsCanada,whichwaseventuallyreplacedbythe

StrategicAerospaceandDefenceInitiative(SADI)in2007(Smardon2014,371).Aerospacehasnotbeen

theonlysectorsingledoutfortechnologysupport;theautomotivesectorhasalsoreceivedconsistent

supportfromboththefederalandtheprovincialgovernmentssincetheearly1980s,whichwas

formalizedwiththeintroductionoftheAutomotiveInnovationFund(AIF)in2008andsubsequentlythe

AutomotiveSupplierInnovationProgram(ASIP)introducedin2015(Doern,Castle,andPhillips

2016,203–05).Historically,thefederalgovernmenthasalsoadoptedfocusedpoliciestosupportthe

restructuringortechnologicaldevelopmentofotherkeysectors,includingtextiles,telecommunications

andpharmaceuticals(AtkinsonandColeman1989).

Mostofthecurrentsectorfocusedprograms,includingSADI,AIFandASIPwerewoundupin

the2017federalbudgetandtheirfundingtransferredintothemorebroad-basedCanadaInnovation

Fund.Thisraisesafundamentalquestionabouttherelativevalueandimportanceofsectorspecific

innovationpoliciesversusthesectorneutralapproachadoptedinthemostrecentfederalbudget.While

anevolutionarysystemsperspectivewouldsuggesttherearesomevirtuestoadoptingasectorfocused

approach,thistrajectoryofprogramevolutionisconsistentwiththegeneralpatternacrossOECD

countriesobservedinthereviewofthedirectprogramsupportforR&Dandinnovationundertakenby

researchersatManchesterUniversity.Theynotedthatlargetechnologydevelopmentprogramsfocused

onspecificsectors,suchasaerospace,thenuclearindustry,telecommunicationsandthecomputer

industry,wereamorecommonfeatureoftheinnovationpolicylandscapeinOECDcountriesinthe

1960sand1970s.Themajorityoftheseprogramshaveeitherbeenwounddownorinthecaseofthe

EU,theyhavebeenrolledoverintomorecollaborativeresearchprogramsthroughtheEurekaorEU

InformationSocietyprograms,orbecomealesssignificantpartoftheoverallmixofpoliciesintheir

respectivecountries.However,thereportalsonotesthattheyhaveundergonesomethingofarevivalin

thepastdecadeintheformofnewprogramstargetedatstrategictechnologiesorbuildingtechnology

platformsthatmaycutacrossseveraltraditionalindustrialsectors(Cunningham,Gök,andLaredo

2013,12).


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Thepolicyrationaleforthisshiftinprogramfocustowardsanemphasisonthedevelopmentof

newtechnologyplatformsmaybefoundinanevolutionaryperspectiveontheevolvingnatureof

technology-basedcompetition.Firmsmayencounterspecificformsofmarketorsystemfailure

associatedwiththedevelopmentofnewtechnologies.Thesepotentialfailuresincludethegreater

degreeofriskandhigherlevelofuncertaintyassociatedwiththedevelopmentofnewtechnology

platforms,thelackofstandardsfornewandemergingtechnologyplatforms,aswellastheproprietary

technologiesthataretheproperrealmofinter-firmcompetition.Theshiftinfocusbythemajorityof

R&DperformingfirmstomoreappliedR&Dspendinginordertoremaincompetitiveinthelatterstages

oftechnologylifecycles,meansthereisevengreaterneedforgovernmenttosupportthequasi-public

goodstagesofresearchandtechnologydevelopment.Thebroaderimplicationsofthisarethat,

(m)anyeconomiesarenowcompensatingforthese‘marketfailures’byestablishingpublic-

privateresearchpartnershipstopoolrisk,improvetheefficiencyofR&D,anddiffusenew

technologyplatformsmorerapidlywithindomesticsupplychains.Theseeconomiesarealso

investingincreasingamountsinsupportingtechnicalinfrastructure(infratechnologiesand

standards)toincreaseefficiencyacrosstheR&D,manufacturingandcommercializationstages

oftechnology-basedeconomicactivity(Tassey2013,307).

Recognizingthestrategicsignificanceoftechnologyplatforms,aswellastheR&Dspending

levelsorinnovativepracticesofindividualfirms,hastwocriticalimplicationsfortheobjectivesof

innovationpolicymorebroadly:itrequiresabroaderanddeeperintegrationofthelinksbetween

individualprogramsdesignedtosupporttheresearchanddevelopmentcapabilitiesofresearch

institutions,especiallyinthepublicsectorandtheintegrationofthoseresearchcapabilitieswiththe

absorptivecapacityofdomesticfirms(CohenandLevinthal1990);2).Theneedforthisintegrated

perspectivehasbeenreflectedinthedevelopmentofthepolicymixapproachdiscussedinmoredetail

below.

ItalsorequiresthattheeffectivenessofR,D&Iprogramsbeassessedwithinabroadercontextof

thecompetitivenessstatusoffirmsintheglobaleconomy,whichaffectstheirstrategicpositionin

rapidlyevolvingglobalproductionandinnovationnetworksandglobalvaluechains(Chaminade,etal.

2016;Cantwell2009;Cantwell2017).ThesignificanceofthesepointswasunderscoredintheOECD

InnovationStrategyreleasedin2010.Thestrategyhighlightedthepredominantroleplayedby

multinationalfirmsintheglobalizationofinnovation.Fewerthan700globalfirmsaccountforcloseto

halfoftheworld’stotalR&Dspendingandthesecorefirmshaveplayedacentralroleintheemergence

ofglobalinnovationnetworks–widelyviewedasthenextstepintheprogressionbeyondglobalvalue

chainsandglobalproductionnetworks.Thesemultinationalsaresourcingtheirinnovationactivitiesona

globalscaleinordertobothgainaccesstonewmarketsandreducetheircosts.Increasingly,however,


22

theyarealsosituatingtheseglobalinnovationactivitiesinnewlocaleswheretheycantapintolocal

centresandclustersofknowledge,aswellasgainaccesstothehighlyqualifiedworkersthatanchorthe

labourmarketsinthoseclustersofexpertise.TheOECDstrategywentontounderlinethecentralrole

thatknowledgenetworksplayinintegratinglocalfirmsandresearchcapabilitiesintotheseglobal

connections,

Butknowledgenetworksaresofarmuchlessdevelopedthanproduct,labourandfinancial

markets...(andt)heirdevelopmentisimportantforstimulatinginnovationandimprovingits

efficiencybyreducingtransactioncosts.Publicpolicyshouldthereforesupporttheformationof

knowledgenetworksandmarkets.Thiscanbedonethroughpoliciesthatencouragethe

developmentofknowledgebrokerages(OECD2010a,18).

KeyPoliciesandProgramstoPromoteInnovationBasicResearchandTechnologyTransfer

Publicpoliciestosupportinnovationandeconomicdevelopmenthavebeenintroducedinalayered

fashionoverthepast60to70yearssincetheendofWorldWarII,leavingacomplexlegacyof

overlappingandinteractingpolicies.Thislegacyreflectsthegradualevolutionofthesepoliciesoverthe

periodand,inparticular,theshiftinfocusfromsciencetotechnologytoinnovationpoliciesdiscussed

above.Intheearlypostwarperiod,theprimaryemphasiswasplacedonexpandingpublicinvestments

inbasicresearch;thisfocusinitiallyreflectedthelegacyandimpactofmajorresearchinitiativesto

supportthedevelopmentofradarandatomicweaponsduringthewarandwasstronglyreinforcedby

thelaunchingofthefirstSputniksatellitein1957,triggeringthespaceracewiththeWest.Inthe

ensuingdecades,thefocusshiftedtopromotingtechnologyadoptionanddiffusionthroughoutthe

economyandsupportingthecommercializationofbasicresearch.Thechallengefromanevaluation

perspectiveisthefrequentlyoverlappingandsometimesconflictingprogramobjectivesassociatedwith

specificpolicies.Thisleavesthosechargedwithresponsibilityforprogramevaluationwiththe

challengingtaskofunravellingthemultipleobjectivesofspecificprogramsanddeterminingthemost

appropriatecriteriatoapplyinindividualcases.

SocialReturnstoInvestmentinBasicResearchNowhereisthisproblemmoreevidentthaninthecaseofpublicfundingforbasicresearch.The

traditionalviewoftheeconomicbenefitsderivedfromgovernmentsupportforbasicorfundamental

scientificresearcharguesthatgovernmentactionservestocorrectamarketfailure.Asnotedatthe

outset,therationalebehindpublicsupportforresearchfocusesontheroleofinformationineconomic

activity.DrawingontheworkofKennethArrow,itunderlinestheinformationalpropertiesofscientific


23

knowledge,suggestingthatthisknowledgeisnon-rivalandnon-excludable(1962).Fromthis

perspective,theresultofgovernment-fundedscientificresearchiseconomicallyusefulinformation,

freelyavailabletoallfirmsinanon-exclusionaryfashion.Byincreasinggovernmentfundingforbasic

research,itisdeemedpossibletoexpandthepoolofeconomicallyusefulinformationavailablefor

industrialfirmstodrawupon.Thisinformationisseentobedurable,freelyavailable,andcostlessto

use.Governmentfundingovercomesthereluctanceoffirmstofundtheirownresearch(toasocially

optimalextent)duetoitsnon-appropriability;newpacketsofeconomicallyusefulinformationare

created;andthedistributionofthisinformationenhancedthroughthetraditionofpublicdisclosurein

science.2

Incontrast,theevolutionaryapproachsuggeststhattheinformationalviewofknowledge

substantiallyundervaluestheextenttowhichknowledgeisembodiedinspecificresearchersandthe

institutionalnetworkswithinwhichtheyconducttheirresearch.AsRosenbergstates,theinformation–

basedviewtendstoregardscientificknowledgeasbeing“ontheshelf,costlesslyavailabletoall

comers”(1990,165).Thisviewfailstoappreciatetheextenttowhichscientificortechnicalknowledge

requiresasubstantialinvestmentandcapabilityonthepartoftheuser.Oftenthiscapacityisexpensive

ordifficulttoacquireandmaintain(PatelandPavitt1994,112).Inaninfluentialsurvey,Cohenand

LevinthalsuggestthatonecancharacterizetheR&Doffirmsashavingtwofaces:R&Dbothallowsthe

firmstocreatenewpoolsofknowledgeanditenhancestheirabilitytoassimilateandexploitexisting

knowledge.Theyrefertothisseconddimensionasthefirm'sabsorptivecapacity(1990).Inthe

evolutionaryview,firmshavenodirectandcostlessaccesstothiskindofknowledge,otherthantothat

whichtheyarecurrentlyusing,

...technologyisnotafreegood,butinvolvesspecific,oftenidiosyncratic,partlyappropriable

knowledgewhichisaccumulatedovertimethroughspecificlearningprocesses,whose

directionspartlydependonfirm–specificknowledgeandonthetechnologiesalreadyinuse

(DosiandOrsenigo1988,16).

Overtheyears,anumberofmethodologicalapproacheshavebeenemployedtoestimatethe

socialreturnstoinvestmentsinbasicresearch.Moststudiesofthesocialandprivaterateofreturnto

publiclyfundedresearchstressthepositiveratesofreturn.Byloweringthecostsincurredindeveloping

newtechnologiesorproductsthroughinvestingintheinputs,publiclyfundedprojectsgeneratea

broadersocialbenefit;converselyestimatesoftheprivaterateofreturntoresearchanddevelopment

tendtobelowerthanthoseforthesocialrateofreturn(Mansfield1995).Thisdifferenceunderscores

thenecessityofestimatingthesocialratesofreturnforinvestmentsinscientificresearch,despitethe

2Ihaveexploredthisissuesatgreaterlengthintwopreviousreports(WolfeandSalter1997;Wolfe,D.A.2006).Thefollowingsectiondrawsonthediscussioninthosereports.


24

methodologicalproblemsinvolved.Estimatesofsocialandprivateratesofreturntoprivatelyfunded

R&Dvarybetween20and50percent(Griliches1995).3Onelineofresearchintothebenefitsof

publicly-fundedresearchhasinvestigatedthespilloversfromgovernmentfundingtoothertypesof

activities,suchasindustrialR&D.Theexistenceofthesespilloversaugmentstheproductivityofonefirm

orindustrybyexpandingthegeneralpoolofknowledgeavailabletoit.“[I]tisassumedthatthelevelof

productivityachievedbyonefirmorindustrydependsnotonlyonitsownresearcheffortsbutalsoon

thegeneralpoolofknowledgeaccessibletoit”(Griliches1995,63).

Mansfieldhasalsomadeaninterestingcontributiontotheattemptstomeasuretheeconomic

benefitsofinvestmentsinbasicresearch.Basedonasampleof75majorAmericanfirmsinseven

manufacturingindustries(informationprocessing,electricalequipment,chemicals,instruments,

pharmaceuticals,andmetalsandoils),heobtainedestimatesfromR&Dmanagersabouttheproportion

ofthefirm’sproductsandprocessesoveratenyearperiodcouldnothaveoccurredwithouttheresults

oftheacademicresearch.Thesurveyresultssuggestthatabout11percentofthesefirms’new

productsand9percentoftheirnewprocessescouldnothavebeendeveloped,intheabsenceofthe

academicresearch,withoutsubstantialdelay.Thesepercentagesofproductsandprocessesaccounted

for3percentand1percentofsalesrespectivelyforthefirmsconcerned.Mansfieldconcludedthatthe

economicbenefitsofacademicresearcharespreadoversevenyears.Bytheeighthyear,thefirms

themselveswouldhaverealizedsuchresearch.ThesebenefitsaccrueonlytoAmericanfirmsandthey

providebenefitstoonlytheinnovatingfirm.Usingthesefigures,Mansfieldestimatesthebenefitfrom

academicresearchtobe28percent.Thefigurerepresents“thepresentvalueofthestreamofbenefits

associatedwiththeresearchequaltocosts.(Inotherwords,itistheannualprofitrateonsociety’s

investmentinacademicresearch)”(Mansfield1991,10).

InastudyconductedinGermany,BeiseandStahlreplicatedMansfield’smethodologyusinga

largersampleoffirmstoassesstheeffectsofpubliclyfundedresearchatuniversities,polytechnicsand

federalresearchlaboratoriesonindustryinnovations.Insurveying2300companies,theyfoundthatless

thanonetenthofproduct–orprocess–innovatingfirmsintroducedinnovationsbetween1993and1995

thatwouldnothavebeendevelopedwithoutthebenefitofpublicresearch.Thesenewproducts

amounttoapproximatelyfivepercentofallnewproductsales.Theprimaryvariabledeterminingthe

successoftechnologytransferwasthedegreeofmovementofqualifiedacademicsbetweenthe

researchcentresandindustry.Firmsalsotendedtociteresearchinstitutionslocatedclosetothefirm

andthefirm’sownR&Dactivitiesassupportintheabilitytoabsorbthefindingsofpublicresearchand

3AmoredetaileddiscussionofthevariousmethodsusedtoestimatethesocialandprivateratesofreturntoinvestmentsinR&Dandthespecificresultsofindividualstudiescanbefoundin(WolfeandSalter1997);cfalso(SalterandMartin2001).


25

turnthemintoinnovations.Additionally,firmswithhighR&Dintensitiescitedremotepublicresearch

institutesmorefrequentlythanlessR&D-intensivefirms(BeiseandStahl1999).

Anotherapproachtoevaluatingthebenefitsofpubliclyfundedresearchis(Mansfield1991,10)

foundintheworkofNarinetal.usingacitationanalysisoftheUSpatentdatabase.Theymeasuredthe

academiccitationsinUSpatentstoconcludethatoverasevenyearperiod,therewasatriplinginthe

knowledgeflowfromUSsciencetoUSindustry.Basedonananalysisofthefrontpagesofover400,000

USpatentsissuedbetween1987and1994,theytracedthe430,000non–patentcitationscontainedin

thesepatents.Ofthese430,000non-patentcitations,175,000werereferencestopaperspublishedin

the4000journalscoveredbytheScienceCitationIndex(SCI).Basedonananalysisofthesepapers,they

demonstratedasecularincreaseacrosscountries(UK,France,German,andJapan)incitationsofscience

inpatentrecords.Patentsalsotendtocitetheirowncountry'spaperstwoorthreetimesmoreoften

thanexpected,whenadjustedforthenumberofacountry'sscientificpublications.LargeUSfunding

agencieswerealsohighlylistedassourcesoffundingforthecitationsincludedinthepatents.The

authorssuggestthatthisindicatesastrongreliancebyUSindustryonthescientificresultsofresearch

fundedbythepublicsector(Narin,Hamilton,andOlivastro1997).

Asubstantialbodyofresearchontheimpactofgovernmentinvestmentsinresearchhasbeen

undertakenbytheUSNationalInstituteofStandardsandTechnology.NISThasbeenconducting

economicimpactstudiesonaregularbasisto:informthepolicyandbudgetcommunitiesofthe

economicreturnstosocietyfromNISTprojects;andfulfillthereportingrequirementsoftheUS

GovernmentPerformanceandResultsAct(GPRA)forperformanceevaluationdata.Ingeneral,

economicimpactmeasures,suchasthebenefit–costratio(BCR)andsocialrateofreturn(SRR),provide

usefulandinformativeoutcomedatafortheagency.MostofNIST’simpactanalyseshavefocusedon

firmsand/orindustriesinthesupplychainthatbenefitmostdirectlyfromtheiroutput.Collectively,the

entiresetofeconomicimpactstudiesconducteddemonstratesthattheratesofreturnonNIST

infratechnologiesconsistentlymatchorexceedratesofreturntoprivateinvestmentintechnology.In

addition,thesestudiesandothereconomicanalysessuggestthatpublicinvestmentininfratechnologies

complementsprivateinvestmentinproprietarytechnologies,whichinturngenerateshigherratesof

economicgrowth(Tassey1999).

TechnologyTransferandCommercializationMuchofthebasicresearchanalyzedinthesestudiesisconductedinuniversities.Whilethestudiesmay

providesomeindicationofthemacro-impactoffundingbasicresearchoninnovation,theydonot

providemuchinsightintotheprecisemechanismsbywhichthisknowledgeistransferred.Yetthetask

oftransferringknowledgefromuniversitiestoindustrieshasproventobemorecomplex,andtheroleof

universitiesineconomicdevelopmentismuchmorevaried,thanthelinearconceptionoftheinnovation


26

processallows.Successfulknowledgetransferdependsonthetypeofknowledgeinvolved,andhowitis

employed.AsMoweryetal.haverecentlyargued,“Anyassessmentoftheeconomicroleofuniversities

mustrecognizethenumerous,diversechannelsthroughwhichuniversityresearchinfluencesindustrial

innovationandviceversa”(2004,179).

Thenatureofknowledgetransfer,andtheactualsubstanceofwhatfirmsdrawfrombasic

research,variessignificantlyacrossindustrialsectors.Severallarge-scalesurveysofindustrialR&D

managershaveprobedfortheextentandimplicationsofinter-sectoraldifferencesinthewaythatfirms

indifferentindustrysectorsdeployscientificknowledgeintheinnovationprocess.Apioneeringstudy

conductedatYaleUniversityqueried650R&DmanagersinUSfirms,representing130linesofbusiness.

itdistinguishedbetweentworolesthatscienceplaysinsupportinginnovation:oneasanexpandingpool

oftheoryandproblem-solvingtechniquesdeployedinindustrialR&D;theotherasadirectsourceof

newtechnologicalpossibilitiespointingthewaytowardsnewsolutionstooldproblems.Overall,

university-basedresearchinafieldisreportedasbeingmuchlessimportanttorecenttechnicaladvance

inindustrythanistheoverallbodyofscientificknowledgeinthefield.Inmostfields,whatacademic

researchprovidesarenotpilotinventions,butthebroadunderstandingsandtechniquesthatindustry

canemployforavarietyofdifferentpurposes.IndustrialR&Dmanagersvaluethescientificbackground

andtrainingoftheirR&Dstaffmorehighlythanthecurrentresearchactivitiesofuniversity-based

researchers.TheYaleresearchersalsonotedthatadvancesinfundamentalscientificknowledge

influencethepatternofinnovationinindustrythroughasecond,moreindirectroute–throughtheir

incorporationintheappliedsciencesandengineeringdisciplinesandtheirimpactonresearchinthose

fields.Thedisciplineswiththehighestrelevancescoresofuniversityresearchforthelargestnumberof

industrieswerecomputerscience,materialsscience,metallurgyandtheengineeringdisciplines

(Klevorick,etal.1995).

BoththeresearchmethodologyandthefindingsoftheoriginalYalesurveywerereplicatedina

subsequentsurveyofindustrialR&DmanagersconductedatCarnegieMellonUniversity.Publicresearch

issignificantinaddressingpreviouslyidentifiedneedsorproblems,ratherthansuggestingnewlinesof

innovativeactivities,withtheexceptionofaselectfewindustries,suchaspharmaceuticals,thatdraw

directlyuponthepublicresearchbase.Anadditionalfindingwasthatthemostimportantmechanisms

forcommunicatingresearchresultsfrompublicresearchinstitutestoindustryarethetraditionalonesof

publicationandconferences,stronglycomplementedbyinformalexchangesandprivateconsulting

arrangementsbetweenfirmsandresearchers(Cohen,Nelson,andWalsh2003,139–41).

TheCarnegie-Mellonstudyunderlinesthemultifacetedwaysinwhichresearchconductedat

universitiescontributestoindustrialinnovationandeconomicdevelopment.Inadditiontogenerating

newknowledgethroughtheconductofbasicresearch,universitiesprovidebothformalandinformal

technicalsupport,aswellasspecializedexpertiseandfacilitiesforon-going,firm-basedR&Dactivities.A


27

studybytheNationalAcademyofEngineeringdocumentedthemultiplewaysinwhichuniversities

contributetothedevelopmentandexpansionoflocalindustry:throughtheprovisionofskilled

graduateswhobecomekeyplayersinlocalindustry;throughtheconductoflong-termfundamental

researchthatcontributestothesciencebaseandunderstandingavailabletoprivatefirms;throughthe

promotionofanatmosphereofintellectualdiversitythattoleratesdifferentapproachestothesolution

oftechnicalproblems;throughdirectcollaborationwithindustrybothonspecificprojectsandinlonger

termrelationships;byservingastestbedsfornewtechnologiesandresearchinstrumentationthatare

ultimatelytransferredtoindustry,andfinallyasthenucleiforstart-upcompaniesthatspin-offfrom

universitiestobecometheseedsofnewbusiness(NationalAcademyofEngineering2003,46–48;

Grossman,Reid,andMorgan2001;Moweryetal.2004).Asnationalinnovationsystemsbecomemore

interconnectedandastheknowledgebaserequiredtosupporttheproductionof‘complex

technologies’,universityresearchbecomesincreasinglyimportanttolocalfirmsnotjustforthetransfer

ofknowledgegeneratedthroughitsownresearchactivities,butalsoasaconduitenablingfirmsto

accessknowledgefromthe‘globalpipelines’ofinternationalacademicresearchnetworks(Bathelt,

Malmberg,andMaskell2004).

OverviewofPolicyInstrumentstoSupportInnovationThereisasubstantialbodyofworkintheliteratureoninnovationpolicyregardingtherelativemerits

andeffectivenessofdifferentpolicyinstruments,particularlytaxincentivesversusdirectsupport,as

wellaspoliciestosupportnetworkingandcollaboration,policiestopromoteentrepreneurshipand

policiestostimulatethegrowthofaventurecapitalindustryandprovideadditionalsourcesoffunding

totechnology-basedfirms.Ingeneral,thesesurveysdistinguishbetweenfourmajorinstruments:

governmentsponsoredR&D,directgovernmentprocurementofnewtechnologies,directsubsidies,

loansandrepayablecontributionstobusinesses,universitiesandnot-for-profitorganizations,andtax

incentives(FinanceCanada1997).

DirectMeasurestoSupportR&DandInnovationAfundamentaldistinctionmadeintheliteraturethatreviewstheeffectivenessofinnovationpolicy

instrumentsisbetweenthosepoliciesthattargetthesupplysideoftheinnovationprocessandthose

thattargetthedemandside.Giventhatthemajorityofthepolicyinstrumentscoveredinthisreview

focusonsupplysideinstruments,thefollowingdiscussionisrestrictedtothoseinstruments.Virtuallyall

supplysideinstrumentstargettheobjectiveofincreasingthevolumeofR&Dspendinginanational

economyastheirkeyobjective.Theprimaryrationaleforthisformofinterventionistheneo-classical

argumentsconcerningthelikelihoodthat,iflefttotheirowndevices,privatefirmswillfailtoinvestin

thesociallyoptimallevelofR&Dduetotheinabilitytofullycaptureallofthesocialreturnstotheir


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investment.AfurtherassumptionthatfrequentlyliesbehindgovernmentsupportforR&Disthebelief

thatincreasedinvestmentwillgeneratenewproducts,increaseexportsandsalesandresultinhigher

levelofemployment(Edler,etal.2013).

FiscalmeasurestosupportincreasedlevelsofR&Dcanbedeliveredboththroughthetax

systemandthroughdirectsubsidies.Therelativeadvantageofusingtaxpolicyinstrumentsincludes

theireaseofuseforfirmsintermsofthelowercostofcomplianceandadministrationgiventhatthey

areappliedthroughtheexistingtaxadministrationstructure.Thereisalsoahigherdegreeof

predictabilityoftheresults,althoughthiscanclearlyvarywiththecomplexityofthetaxadministration

processinvolvedwithaparticularsetoftaxincentives.Anotheradvantageistheirwideapplicability

acrossabroadrangeofindustrialsectors,firmsorinvestments.Criticismsoftheuseoftaxpolicy

instrumentsusuallyfocusonthelackofopenness,transparencyandaccountabilityfromapublicpolicy

perspectiveastheactualtaxdecisionsaresubjecttotheconfidentialityrequirementsoftheIncomeTax

Act.Anothercriticismthathasbeenlevelledbysomegovernmentsisthatthefocusonproviding

supporttoindividualfirmsthroughthetaxsystemunderminestheabilityofthegovernmenttopromote

cross-firmlinkagesandcollaborationofthekindthatwouldbesuggestedbytheISapproach.Afinal

criticismistheopen-endednatureoftaxexpenditureswhichmakethemmoredifficulttopredictfrom

theperspectiveofrevenueforecastinginthefiscalframework.

AlthoughtaxpolicyinstrumentstosupportR&Dliesoutsidethescopeofthecurrentreview,

thereisanextensivebodyofliteraturethatexaminesitsimpact.Themajorityofstudiesfocusonthe

impactofR&Dincentivesoninputadditionality,i.e.theincreaseinlevelsofR&Dspendingthatcanbe

attributedtotheeffectofthetaxincentive.Ingeneralthestudiesreviewedreportedpositiveeffectsfor

differenttypesofR&Dtaxincentives.IntheUScase,theresultsindicateapositiveandsignificanteffect

forthetaxcreditintermsofincreasingR&DexpenditureintheUSby$1forevery$1offoregone

revenue(Köhler,Larédo,andRammer2013;OECD2010b).Morerecentstudieshavealsolookedatthe

impactoftaxincentivesonoutputadditionalityandhavefoundpositiveeffectsintermsofincreasesin

theprobabilityoffirmsintroducingnewproductsandnewprocesses.AwidelycitedCanadianstudy

foundapositivecorrelationbetweentheR&Dtaxcreditandthefrequencyofnewproduct

development,theintroductionofproductsthatarenewtothemarketandtheshareofsalesderived

fromnewproducts,butdidnotfindpositiveimpactsonfirmprofitabilityormarketshare(Czarnitzki,

Hanel,andRosa2011).

ThecomprehensivereviewoftheliteraturebytheOECDEconomicsDirectoratelookedatthe

effectofR&Dtaxcreditsontotalfactorproductivity.Whiletheeconomicanalysisshowsthattaxcredits

increaseproductivityinOECDcountriesandthattheydostimulategrowth,theyfoundrelativelymodest

effects.Theanalysisalsoshowedthatthepositiveeffectsaregreaterforthoseindustriesthatare

structurallymoreR&Dintensive.TheresultstendtosupportagreatertargetingofR&Dtaxincentivesat


29

firmsthataremorehighlyinnovativeandindustrysectorswithahigherpropensitytoconductR&D

(Palazzi2011,47).

Giventhattheuseoftaxpolicyinstrumentsliesoutsidethemandateofthecurrentreviewof

innovationandCleantechpolicies,thefollowingdiscussionfocusesontheotherinstruments.Thereisan

extensiveliteratureontheadvantagesanddrawbacksofdirectspendingprogramstosupport

innovation.Directspendingamountsforspecificprogramscanbeestablishedwithintheparametersof

thefiscalframeworkandgrantscanbeawardedonthebasisofmoreselectivecriteriatoindividual

firmsorbusinessintermediarieswithinspecificsectorswhosatisfytherequirementsofspecific

programs.Thedisadvantageofdirectgrantsisthehighercompliancecostsinvolvedforthefirmswho

mustapplytogovernmentadministratorsforthegrantsandundergoastringentduediligenceprocess

beforebeingawardedthefunds.Afurtherlimitationisthebudgetenvelopecanbeexpendedbefore

theapplicationsofalleligiblefirmshavebeenevaluated,ashashappenedinrecentyearswithsome

federalprograms,suchasIRAP.Whilethismayconstituteeffectiveprogrammanagementfromthe

perspectiveofthefiscalframework,itgenerallyunderminestheimpactofaspecificprogramin

achievingitstargetedgoals.

ReviewsoftheeffectsofdirectmeasuresofsupportonincreasedlevelsofR&Dgenerallyfind

thatthesupportstimulateshigherlevelsofinvestmentinR&Dandinnovationactivitiesbutthatthe

specificresultsofdifferentprogramsdependstoagreatextentontheparticularfeaturesofthe

programdesignandthebroadernationalcontextinwhichtheyareimplemented.Acomprehensive

reviewoftheimpactofdirectsupportprogramsconductedbyUniversityofManchesterresearchers

withsupportfromNESTAnotedthattheyhadbecomemuchmoresophisticatedincombiningtheir

primaryobjectiveswithadditionalonesthataimtoencouragegreatercollaborationorknowledge

transferbetweenfirmsorbetweenprivatefirmsandpublicsectorresearchorganizations.Direct

supportprogramsinanumberofcountrieshavealsobecomemoretargeted,withaspecificfocuson

hightechnologySMEsandstart-ups.Asnotedabove,thekeyadvantageofthedirectspendingpolicy

instrumentasopposedtotaxpolicyinstrumentsistheabilitytotargetspecificcategoriesoffirmsor

formsofcollaborationforpublicsupport.

Thecomprehensivereviewoftheevidencefromstudiesontheimpactofdirectsupport

programassessedthatevidenceintermsofthreecriteria:evidencethatgovernmentsupportcreated

additionalinputswithrespecttoR&Dandinnovation;evidencethatthegovernmentprogramscreated

additionaloutputs,intheformofincreasedsales,exportsorhigherlevelsofemployment,withoutthe

governmentsubsidy;andevidencethatthegovernmentinterventiongeneratedobservablechangesin

thefirm’sorganizationalbehaviour(Köhler,Larédo,andRammer2013).Ingeneral,thesurveyofthe

evidenceconcludedthatgovernmentsupporttendedtogenerateadditionalprivatelevelsofactivity

withrespecttoinputstotheR&Dprocess.Inthevastmajorityofthecasescoveredbythereview,the


30

projectsinvestigatedwouldnothavebeenstarted,ortheywouldhaveproceededataslowerpace,with

alowerleveloftechnologicalinputandoutputintheabsenceofthesupport.Thereisfurtherevidence

thattheeffectsoninputadditionalityaremorenoticeableinsmallerfirms(althoughthisisnot

universallythecaseinallstudies,inlowtechnologysectorsandinlaggingregions.Theevidenceon

outputadditionalityforR&Dandproductivityimprovementswaslessstraightforward,althoughsome

studiesfoundpositiveeffectswithrespecttojobcreation.Whilethenumberofevaluationsofimpact

onfirmbehaviourismorelimited,theevidenceshowsthatthedirectionoftheeffectsisalmost

universallypositive.Moreimportantlyforthisreview,anumberofthestudiesreviewedsuggestthatthe

effectivenessofdirectsupportprogramscanbeincreasedthroughtheadoptionofrigorousselection

processes,combinedwithongoingmonitoringoftheimpactofthesupport,regularinteractionbetween

programadministratorsandrecipientsofthesupportandprolongeddurationoftheprograms

(Cunningham,Gök,andLaredo2013,40–43;OECD2011).

Afurtherobservationworthnotingconcernsthe“haloeffect”ofdirectfundingfromso-called

prestigeprograms,suchastheAdvancedTechnologyProgram(ATP)programintheUS,onfirm

performance.Thecomprehensivereviewofimpactofdirectsupportnotedthattherewasaninput

additionalityeffectassociatedwiththeseprograms,whichallowedthefirmsreceivingfundingto

successfullyraiseadditionalroundsofexternalfinance(Cunningham,Gök,andLaredo2013,33).Astudy

oftheATPprogramconductedintheearly2000sconcludedthattheATPprogramhadadistinctive

“haloeffect”;winninganATPawardsignificantlyincreasedafirm’schancesofaccessingothersources

offundingfortheirR&Dactivities,“...theATPawardappearstosendamarketsignalthatcertifiesthat

thefirmandtechnologyarepromising”(FeldmanandKelley2001,207).

AccesstoFinanceandVentureCapitalTheavailableevidenceontheimpactofgovernmentprogramstoprovidegreateraccesstofinancing

andventurecapitalismorelimitedthantheresearchontheimpactoffiscal(tax)incentivesanddirect

subsidies.However,theavailableevidencedoesindicatethattheschemesaremorelikelytogenerate

outputeffectsintermsofhigherlevelsofemploymentandsales.Theavailablestudiesunderlinethe

importanceofdesigncriteriaintheoveralleffectivenessoftheseprograms,particularlywithrespectto

thewayinwhichrisksaresharedbetweenthefundsreceivingpublicsupportandthefirmsinwhich

theyinvest.Thereviewalsonotedtheneedforclarityintheoperationofthefunds,shortertimelags

andalimitedamountofbureaucracytoresultinimprovedperformance(Edler,etal.2013,16).

Anumberofrelatedstudieshighlightthevalueoflinkingpublicprogramsdesignedtoprovide

accesstosourcesoffinancewithadditionalsourcesofadvice.Thisresearchindicatesthatinnovation

supportdeliveredthroughintermediaryorganizationshasthepotentialtohaveagreatereffecton

companiesthanpurelyfinancialsupport.WorkdonebyStatisticsCanadafortheBusinessDevelopment


31

BankofCanadashowsthatfundingandadviceincombinationhasagreaterimpactonventure

performancethaneitherfundingoradvicealone(BusinessDevelopmentBankofCanada2013).The

insufficiencyofprovidingventurefundingalonetostartupfirmsisstronglyreinforcedinaseriesof

studiesconductedbyBarberandCrelinstenoverthecourseofadecadeintheearly2000s.They

discoveredaconsistentpatterninbothaninitialsetofinterviewswiththeCEOsof30startupfirmsand

inasubsequentstudyof18hightechnologyfirmsthathadsurvivedbetween3and20yearsand

collectivelyraisedalmost$500milliononfinancing.Thecultureofscienceandtechnologyisstrongin

Canadaandthesefirmswerefrequentlystaffedwithtechnicalpersonnelwithworld-classskills.What

theylackedwassufficientstaffwithadeeperunderstandingofwhattheylabelthe“cultureof

commerce”—namely,theimportanceofsales,marketingandmanagementskillsforgrowingand

retaininginCanadasuccessfultechnologyfirms(BarberandCrelinsten2005;2009).Somewhat

depressingly,thisobservationisconsistentwiththefindingsofacomprehensivereviewofthestateof

themanagementofinnovationresearchinCanadaconductedinthe1980s(Wolfe1990).Whilethe

provisionoftechnologyandbusinessadvisoryserviceswouldnotbesufficienttoovercomethisdeficit

byitself,theevidencepresentedinthenextsectionsuggeststhatitdoesconstituteavaluable

complimenttothemoreconventionalformsofprovidingfinancialassistancetotechnologyfirms.

ImpactofComplementaryServicesAkeyobjectiveofinnovationpolicyinanumberofindustrialcountrieshasbeentoprovidemore

effectivetechnicalexpertisetofirmstosupporttheirgrowththroughthevariousstagesoftechnology

development.Themostcommonformofthissupportisthroughtechnicaladvisoryservicesthatprovide

information,consulting,mentoringandtechnicaladvicetoassistfirms.Themajorityoftheseservices

aretargetedatSMEs,butthisisnotexclusivelythecase.Theorganizationsprovidingtheseserviceswill

oftenengagewithcompaniesonanindividualbasisaswellasthroughmorecollectiveformsof

interaction,suchasclusterorganizations.Theassistancecanbeprovidedthroughextensionstaff,such

asIRAP’sIndustrialTechnologyAdvisors(ITAs),fieldofficesanddispersedtechnologycentres,suchas

theManufacturingExtensionPartnershipofficesintheUS,someoftheCatapultCentresintheUK,or

theFraunhoferInstitutesinGermany.4Whiletheprecisenatureoftheservicesandtheformstheytake

varyconsiderablyacrosscountries,thereisagrowingbodyofevidencetodemonstratetheir

effectivenessaskeyinnovationintermediaries.

Arecentcomprehensivereviewoftheexistingevidenceontheeffectivenessofthesetechnical

advisoryservicesconcludedthattheyprovidepositivebenefitstothefirmsthatparticipate.Thenature

ofthebenefitsthatresultcanincludereductionsinthecostoftechnologydevelopmentprograms,

4Forasurveyandoverviewofsomeofthenationaldifferencesintheapproachtotheseorganizations,cf.(HepburnandWolfe2014).


32

improvedqualityintheresultingproductsorprocesses,higherproductivitylevelsforthefirmand

successattheintroductionofnewproductsorfirm-basedinnovations.Whiletheimmediatebenefits

foundbyexistingstudieshavebeenmodest,thecomprehensivereviewofexistingevidenceconcluded

thatthecumulativeeffectsoftheseservicescanbesignificant,particularlyinthecaseofSMEsandthat

theycanoftenmakethedifferencebetweenthesurvivalordeclineoffirmsaffected(Edler,etal.

2013,22–25;ShapiraandYoutie2013).

Moresignificantly,thereviewalsofoundsubstantialevidencetosupporttheconclusionthat

directsubsidyprogramsworkedmoreeffectivelywhentheywerecombinedwithsomeformof

complementaryadvisoryservices,suchasexpertadvice,trainingonvariousaspectsofbusinessand

managementpractice,andsupportformarketing.Thereasonidentifiedforthegreatereffectivenessof

thesubsidyincombinationwiththecomplementaryserviceisthecontributionmadetodeveloping

increasedmanagerialandtechnicalcapacityinthefirmsreceivingsupporttotakefulladvantageofall

aspectsoftheprojectbeingfunded.Theevidencealsosuggeststhatthetransferofthesekindsof

enhancedskillstofirmsislikelytohavelongertermimpactsonthefirm’sfutureR&Dandinnovation

projectsbecausetheskillsdevelopedcanbetransferredfromoneprojecttoanother.Thereisalso

evidencetosuggestthatthecombinationofdirectsupportinvolvingtheuseofadvisoryserviceswith

fiscalincentivesrepresentsadesirablepolicymixforprogramsaimedatenhancingindustryR&Defforts

(Cunningham,Gök,andLaredo2013,27–28).

ItisworthnotingthattheseconclusionsdrawuponanumberofCanadianstudiesthathave

investigatedtheimpactofcombiningdirectsubsidyprograms,suchasIRAPgrants,withtheSR&EDtax

credits.Thesestudiesfindstrongevidencefortheconclusionthatfirmswhichwererecipientsofboth

formsofsupportperformedbetteronmostmeasuresofinnovativebehaviourthanfirmsthatwerejust

recipientsofindirecttaxsupports.Thereasonsattributedbytheauthorstothisresultwasthe

combinationofadvisoryservicesintheIRAPprogramwiththedirectsubsidy(BérubéandMohnen

2009;BérubéandTherrien2016).

SupportforCollaborativeR&DTherelationshipbetweenthegenerationofnewknowledgeanditssuccessfuladoptionanduseinthe

developedeconomieshasbecomeinfinitelymorecomplexinrecentdecades.Thechangesthathave

occurredincludegreaterreliancebyestablishedfirmsonexternalsourcesofR&Dthroughresearch

consortiaandcollaborationwithfocusedtechnologyfirms;theglobaloutsourcingofR&Dthrough

expandedperformanceofR&Dinforeigncountries;andtheproliferationofuniversity-industry

collaborationandresearchcentres.Thisshifthasbeendrivenbyincreasedcompetitivepressures,

difficultiesinfirms’abilitytocapitalizeonthebenefitsofinternalresearchandchangesingovernment

policytopromotecollaborativeresearchwithuniversities.Interdependenceamongnetworksof


33

institutionshasincreasedasfewerfirmsorpublicsectoractorsareabletoinnovateontheirown.As

partnershipsandcollaborationsbetweencompanies,organizationsandthepublicsectorhavebecomea

morecriticalpartoftheinnovationlandscape,awiderangeofnewpoliciesandprogramshavebeen

introducedbygovernmentstopromote,networking,clustersandR&Dcollaboration.Therangeof

programsandpolicyinstrumentstosupportcollaborationincludescience-industryresearchcentres,

collaborativeresearchandexchangeprograms,suchaspubliclysupportedR&Dconsortia,and

collaborativeknowledgeexchangeinitiatives.Recentpublicinitiativesalsoinvolveanexpansionofthe

roleofpublicresearchinstitutionstopromotemoreextensiveformsofnetworkingandinteractionwith

privateactors.5

CollaborativeR&Dprogramsaimtocompensateforbothmarketandsystemfailuresbylinking

researchpersonnelacrossprivatesectororganizationsorbetweenpublicandprivateresearch

organizations.Insodoing,theseinitiativesattempttoreducetheriskinherentinundertakingcomplex

researchprogramswithuncertainoutcomes,facilitateknowledgeexchangeandskillstransferamong

theparticipants,andacceleratethepaceofresearchandthediffusionandapplicationoftheresulting

knowledge.Sincethe1980s,awidenumberofcollaborativeresearchinstitutions,suchasprovincialand

nationalCentresofExcellenceinCanadaorEngineeringResearchCentersintheUS,havebeen

establishedtosupportinteractionandfacilitateknowledgeflowsbetweenpublicresearchinstitutions

andprivateindustry(NationalAcademyofEngineering2003,59–60).

AleadingexampleofasuccessfulandmuchstudiedprogramintheUSinvolvedtheEngineering

ResearchCentres(ERCs),createdinthe1980stofostergreateruniversity-industrycollaboration.

Individualcentreswereco-sponsoredbytheNationalScienceFoundation,universitiesandindustry.The

ERCsweredesignedtodevelopbasicknowledgeinareascriticaltothecompetitivenessofUSfirmsin

worldmarketsbyconcentratingonresearchareasofmajorindustrialimportancethatcutacross

disciplinaryboundaries.Astudyof355firmsparticipatingin18differentERCs,usingbothsurveysand

interviews,foundthatfirmsparticipatinginthecentresweremoreinterestedingainingaccessto

upstreamformsofknowledge,ratherthandevelopingspecificproductsandprocesses,afinding

consistentwiththeresultsoftheYaleandCarnegieMellonsurveysofindustrialresearchmanagerscited

above.Consistentwiththeiroriginalmotivation,themostcommonlyreportedbenefitsincludedaccess

tonewideas,know-howandtechnologiesthroughinteractionwiththeERC(Feller,Ailes,andRoessner

2002,462–64).

Therecentreviewofevidenceontheimpactofinnovationpoliciesandprogramsassessedthe

resultsofawiderangeofpolicystudiesandacademicarticlesoncollaborativeR&Dinitiatives.The

5Afullerdiscussionofthewiderangeofinitiativesintroducedbygovernmentsthatfallwithinthiscategorycanbefoundin(Wolfe,Bramwell,andMunro2011).


34

resultsofthestudiesconfirmthepositiveimpactsthattheygenerateincreasedcollaborationbetween

researchinstitutesandfirmsintermsofagreaterinvestmentofresources,timeandattentiontothe

researchprojectsundertaken.Whiletheoutputeffectswerehardertoquantify,thestudiesnotedthat

theeffectsincludedenhancinglearningamongparticipants,achangeinorientation,increasedcreativity

andgreaterinvolvementininternationalactivities.Thestudiesalsoreportedpositiveeconomicbenefits

forthefirmsinvolvedintermsofhigheremploymentlevelsandmorevalueaddedproducts,aswellas

directR&Doutcomesobservableinincreasedpatenting.Theavailablestudiesalsoidentifysomeofthe

factorsthatmakeforsuccessfulcollaborations,includingasuitableprogramdesign,effective

managementforthecollaboration,aflexibleapproachtotheinteractionandtheneedtobuildlong-

termrelationshipsandtrustamongthepartners(Edler,etal.2013,26–30;CunninghamandGök2013).

ACanadianstudyofcollaborationbetweenuniversityandindustryresearchersconcludedthatacritical

factorinthesuccessofthecollaborationswastheamountoftimeandresourcesinvestedbytheprivate

sectorpartnertothecollaboration(WolfeandLucas2001).

TheConceptandRoleofPolicyMixesRecentworkundertakenfortheEuropeanUnion(EU)andtheOECDhasintroducedtheconceptofthe

”policymix”whichprovidesanaddeddimensiontoourunderstandingandanalysisoftheimpactof

R&Dandinnovationpolicies.Theideabehindtheconceptisthatevaluationsoftheimpactandeffectof

individualpolicyinstrumentsonafirmorsector’sR&Dandinnovationperformancewillfailtocapture

theeffectsthatmayarisefromtheinteractionamongseveraldifferentpolicyinstruments.Assuch,they

mayattributeachangeinfirmperformancetotheimpactofasinglepolicyinstrument,ratherthan

recognizingthattheobservedeffectresultsfromtheinteractionofanumberofdifferentinstruments.

Forthisreason,theydefineapolicymixas“thecombinationofpolicyinstruments,whichinteractto

influencethequantityandqualityofR&Dinvestmentsinpublicandprivatesectors”(Nauwelaers

2009,3).ThepolicymixapproachwasalsointroducedanddiscussedextensivelyintheOECD’s2010

InnovationStrategy(OECD2010a).

Whiletheconceptofthepolicymixaddsanimportantdimensiontoourunderstandingofthe

wayinwhichmultiplepoliciescanaffectthebehaviourofanindividualfirmoreconomicactor,itdefies

easyapplicationfromaprogramorpolicyevaluationperspective.ThecomplexityofR&Dandinnovation

systemsandthehighdegreeofvarietythatexistsacrossnationalsystemsmakesitchallengingto

identifyandisolatetheparticularelementsofthesystem,aswellasexternalprogramsthatinfluence

firmperformance.Forpurposesofapolicymixanalysis,relevantprogramsaredeemedtoinclude:all

economy-wideandsectorally-specificpoliciesaimedatstimulatinghigherlevelsofR&D,includingboth


35

direct(subsidy)instrumentsandindirect(taxincentiveinstruments);skillsandtrainingpoliciestargeted

atincreasingtheavailablesupplyofhighqualifiedlabourforR&Dandinnovationrelatedactivities;a

widerangeofpolicyinstrumentstargetedatincreasingR&Dandinnovationactivities;andpoliciesthat

aimtoincreaselinkagesamongactorsintheR&Dandinnovationdomain,includingprogramstosupport

collaborativeR&Dandpoliciestostimulateincreasedusageofintellectualpropertyandstandardsetting

regimes.Thestudycitedaboveprovidesacomprehensivetypologyofrelevantpoliciesforthepolicymix

approach(Nauwelaers2009,7–8).Thepolicymixapproachhighlightstheneedformoreeffective

coordinationacrossadiverserangeofpolicyfieldsthatareoftentheresponsibilityofdifferent

governmentlinedepartmentsorministriesinacomplexpublicadministration.Thepolicymixapproach

alsorecognizesandattemptstotakeaccountofthecomplexitiesofanalyzingtheinteractingeffectsof

thepolicymixacrossmultiple,andsometimescompeting,jurisdictionswithinafederalsystemora

multilevelgovernanceregime,suchastheEU.

Acentralfocusoftheapproachistheneedforthepublicauthoritiesresponsiblefortheoverall

performanceoftheinnovationsystemtomonitorandassessthepotentialimpactofnewandemerging

technologiesonexistingindustriesandsectorsthroughtheacquisitionofstrategicintelligence

concerningdevelopmentsinotherpartsoftheworldandtheperiodicuseoftechnologyforesightand

technologyroadmapexercises.Somegovernmentshavemadeeffectiveuseofsystem-widepolicy

initiativestosupportthedevelopmentandadoptionofnewandemergingtechnologies.Noteworthy

examplesincludetheUSNationalNanotechnologyInitiativeandtheGermanyHigh-TechStrategy,which

isacomprehensivepolicyapproach,refinedoveralong-termperiodbythefederalgovernmentto

enhancepublicandprivateR&Deffortsinthefederalrepublic.Akeyinsightderivedfromthepolicymix

approachistheneedtoidentifyandaddresspotentialimbalanceswithinthenationalinnovationsystem

betweendifferentcomponentsofthesystem.Theseimbalancescanleadtosystemmismatches

betweentheallocationofresourcesamongpublicandprivatesectoractorsoracrossdivergent

industrialsectorswithinthenationaleconomy.Reviewsoftheeffectivenessofthepolicymixwithinan

individualcountrysuggestthatitishighlydependentontheoverallgovernancemechanismsthatarein

placefortheresearchandinnovationsystemandthedegreeofcoordinationthattheyprovideacross

therangeofbothpublicandprivateactorswhopopulatethesystem.HighlevelScienceandInnovation

Councils,withresponsibilityforoverseeingandassessingtheeffectivenessoftheinnovationsystemand

advisingtheelectedexecutiveareviewedasonemechanismforimprovingcoordinationacrossthe

policymix.Theanalysisofpolicymixescanalsofocusondifferentstrategiesthatcanbeadoptedto

promoteindustrialrestructuringinolderindustrialeconomies,rapid-innovationbaseddevelopmentin

economiesthatarecatchinguporR&Dintensificationineconomiesthatarefocusedonraisingthe

levelsofR&Dandinnovationactivityacrossarangeofeconomicsectors(Nauwelaers2009,32).


36

TheCompendiumofEvidenceonImpactsofR&DandInnovationcompiledbyUniversityof

ManchesterresearchersforNESTAalsocontainsareviewoftheexistingevidenceontheeffectiveness

oftheinnovationpolicymixandtheinteractionofpolicyinstruments.Itsurveysanumberofaspectsof

thisconcept,includingevaluationsthatexaminehowindividualpolicyinstrumentsinteract,studiesor

reviewsthatassesstheexistingpolicymixatanindividualcountryorsystemlevel,andcaseswhere

individualinstrumentshavedeliberatelybeendesignedaspartofapolicymixacrossseveraldifferent

innovation-relatedinstitutionsortheportfoliosofrelevantoperatingagencies.Akeyfindingofthe

reviewisthatthevastmajorityofpolicyandprogramevaluationsthatareundertakenexamine

individualpoliciesinisolationfromeachother;itisraretoseeaconsciousattemptinthesestudiesto

assessorevaluatetheinteractioneffectsamongthem.Amongthenotableexceptionstothisruleare

thekindofstudiesnotedabovethatevaluatethecomplementaryeffectsofbothfiscalincentivesand

directsubsidiesontheinnovationperformanceofindividualfirmsorthebenefitstofirmsofdrawing

uponadvisoryservicesincombinationwithotherformsofR&Dsupport.However,fromacountry-wide

perspective,noanalyseswerefoundthatdealdirectlywiththeoveralleffectsofpolicymixes.The

reviewsalsofailedtofindevidenceofanycommonorconvergingpatternsfortypicalexamplesofpolicy

mixes,astheparticularpatternsobservedinindividualcountries“appearstobehighlypathdependent

andresultsinquitedivergingtrends”(Cunningham,etal.2013,18).Thisfindingisconsistentwithalong

standingobservationaboutthevariationinregionalinnovationsystems,namelythat“onesizedoesnot

fitall”(TödtlingandTrippl2005).

Theoneapproachthatwasrepeatedlysingledoutfordiscussioninvariousreportsfromthe

ManchesterCompendiumofEvidencewastheGermanHighTechStrategyoriginallyadoptedin2006as

aninitialsteptowardsdevelopingacomprehensiveapproachtoR&DandInnovationpolicy.Intheinitial

phaseoftheprogram,asubstantialproportionoffundingfromthefederalMinistryofResearchand

Educationwaschanneledthroughthestrategywhichachievedgreatercoordinationofexistingactivities

andanumberofnewinitiatives.Forthisreason,theStrategyisfrequentlysingledoutasanexampleof

anationalpolicyapproachthatproducedamoreeffectivedegreeofcoordinationamongtheactivities

ofarangeofdifferentfederalministries(Cunningham,etal.2013,22–23).

WhilethepolicymixapproachhasnotbeenwidelyappliedinCanada,itisworthnotingthatas

partoftheoriginalstudyconductedfortheEUPolicyMixproject,twoindividualcountryreviewswere

commissionedforCanada.Thefirstreportprovidedacountryoverviewoftheexistingpolicymixin

CanadaandthesecondfocusedonthegovernanceaspectsoftheinnovationsysteminCanadaand

presentedadetailedcasestudyoftherangeoffederalandprovincialprogramstargetedatanindividual

sectorinaspecificregion—whattheapproachcalleda“mini-mix”.Thecountryreviewsurveyedsome

ofthekeychallengesconfrontedbytheinnovationsysteminCanada—therelativelylowofR&D

intensity,especiallyinthebusinesssector,thesmallershareofR&D-intensivesectorsinCanada


37

comparedtootherleadingOECDcountries,theweaksurvivalratesforinnovativeCanadianfirmsand

start-upsandthelowerlevelofpatentingthanothercountries.Itnotedthattherewerelimitedstudies

oftheinteractioneffectsofCanadianR&Dandinnovationpoliciesfromabroaderperspective(Hansen

2007;Creutzberg2007).

PolicyAlignmentacrossLevelsofGovernmentAkeychallengeforevaluatingtheeffectivenessofinnovationpolicieswithinafederalsystemof

governmentistheneedtotakeaccountoftheoverlappingandsometimeduplicativeeffectsofboth

federalandprovincialpolicies.NowhereisthismoreevidentinCanadathaninthefundingofresearch

inthehighereducationsectorwherebothjurisdictionallevelsshareresponsibilityforpolicy(Wolfe

2005).Thisisalsoincreasinglythecasewithrespecttotheprovisionofcomplementaryservices,where

severaloftheprovincesorregionalagencieshavedevelopedextensivenetworksoforganizations,such

asOntario’sNetworkofEntrepreneurs(ONE)orSpringboardfundedbyACOAinAtlanticCanada,aimed

atsupportingentrepreneurshipandthetransferofresearchfromitspostsecondaryinstitutionsintothe

handsoffirmsthatcancommercializeandapplyit.

AnexpansionandintensificationoftheformaltieswithintheEuropeanUnionsincetheearly

1990shaveledtoadeeperinvestigationintoandunderstandingofthechallengesthatariseinpolicy

regimeswithmultipleinteractingjurisdictions.Multilevelgovernanceisatermdevelopedtoreflecta

newmodelofpoliticalarchitecturewherepoliticalauthorityandpolicymakinginfluencesaredispersed

acrossthedifferentlevelsofthestateaswellastonon-stateactors.Theconceptemphasizes

cooperationamongdifferentlevelsofgovernmentintheEU,wherethecreationofathirdtierofpolicy

making,theEuropeanUnion,andtheadoptionoftheprincipleofsubsidiarityasacentraltenetofthe

SingleEuropeanActof1992,hadaprofoundimpactontherelativepowersofbothnationaland

subnationalorregionallevelsoftheEuropeanstates.HoogheandMarksarguethatthecoreoftheidea

ofmultilevelgovernanceisthatthenationallevelnolongermonopolizespolicymakingandinstead

engagesincollectivedecision-makingwithotherlevelsofgovernmentandrelevantactors,andinso

doing,cedescontrolofthepolicy-makingprocess.Decision-makingcompetenciesarethereforeshared

amongallactorswithnoonelevelexercisingmonopolyoveranother.Accordingly,subnationallevels

aresaidtobeinterconnectedtonational,andattimes,supranationalarenasratherthannestedwithin

thenationalstate(HoogheandMarks2001,4).

IntheNorthAmericancontext,wherethreetiersofgovernmentisthenorm,theconceptof

multilevelgovernancehelpsusrecognizetheinterdependentnatureoftheirrespectiverolesand

jurisdictionalresponsibilities.Regionalandlocalactorsareanecessarysourceofknowledgeinlocal


38

learningnetworks,assistingintheprocessofcollectivelearningthatisvitaltotheinnovationprocessin

knowledge-intensivefirms.ThispointisreinforcedinrecentworkfromtheOECD.Maguireand

Nauwelaers(2009)outlineseveraltrendsevidentinrecentpolicyapproachestoregionalinnovation.

Concernsaboutpolicyfragmentationandincoherenceisdrivingincreasedemphasisontheprocessof

takingstockofpolicyinstrumentsdeliveredbyalllevelsofgovernmentinordertoanalyzeandfillin

gapsinnationalandregionalpolicymixes.Theseconcernshaveresultedinagrowingemphasison

providingpolicysupportatdifferentstagesoftheinnovationvaluechaintoimprovetheabilityoffirms

tocapitalizeonbothpublicandprivateinvestmentsinemergingtechnologies,andprioritiesareshifting

frombuildingstocksofknowledgetopromotingflowsofknowledgeinregionalinnovationsystemsand

theabsorptivecapacitiesoffirms.Therehasalsobeenapolicyshiftfromthetendencytoimportbest

practicesfromotherregionalcontextstowardsdevelopingcontext-specificsolutionsfromtheground

upthataretargetedspecificallytodifferentregionalinnovationsystems,andfromstandardpolicy-

makingtopolicy-makingasaniterativelearningprocesssupportedbystrategicregionalintelligence.

Akeychallengeforevaluatinginnovationpolicyinsystemswithmultiplelevelsofjurisdictionis

toensureabetterintegrationandcoordinationofavailableprogramsandpolicyinstruments.

Increasingly,noonelevelofgovernmenthasamonopolyonthepolicyinstrumentsthatcomprisethe

overallR,D&Istrategyoffederalandprovincialgovernments.Multilevelgovernanceisnolongeran

interestingacademicconcept,buthasbecomehighlyrelevanttothechallengeofeconomic

developmentintheCanadianfederation.OneillustrationofthisdilemmaistheCanadaFoundationfor

Innovation,whichmakesmajorinfrastructuralinvestmentsinexpandingtheresearchcapacityofpost-

secondaryinstitutionsandhospitalsacrossthecountrywithlittleregardtotheintegrationofthese

importantnewfacilitiesintotheexistingoremergingindustrialstructureorlocalclustersofthose

regions.Thisraisesthecriticalpolicyquestionofwhethereffortsbythetwolevelsofgovernment

reinforceandsupporteachotherorwhethertheycreateanunnecessarylevelofduplicationand

spilloversthatreducestheoverallpolicyeffectiveness.Effectiveevaluationofinnovationpolicymust

notbeconceivedastheexclusiveresponsibilityofonelevelofgovernmentjurisdictionortheother,but

rather,mustassesstheinteractingeffectsofthecomplexpolicymixthatexistsintendifferent

jurisdictionsacrossthecountry.

ConclusionTheprecedinganalysisprovidesahighleveloverviewofsomeoftherecentthinkingandanalysisonthe

rationalefor,thedesignofandevaluationofawiderangeofpolicyinstrumentsdeployedacrossboth

industrialandmorerecentlydevelopedcountriestopromotetheirR,D&Istrategies.Mostofthe

innovationpoliciesconsideredwithinthisreviewcontinuetobeframedwithintherationalesprovided

bythetwodistinctparadigmsconsideredattheoutset—theneoclassicalapproachwithitsemphasis


39

oninformationasymmetriesandmarketfailureandtheevolutionarysystemsapproachwithits

emphasisontheimportanceofdevelopingcumulativecapabilitieswithinthefirmandidentifyingand

fillinggapsthatarisefromsystemfailures.Whilethereisacertainamountoftensionbetweenthetwo

approachesfromananalyticalperspective,theybothcontinuetoplayanimportantroleintermsof

framinganddesigningspecificpolicyinstruments.Thepolicyevaluationprocesswillbenefitfromfrom

payingcloserattentiontowhentherationaleforaspecificpolicyinstrumenthasbeenprovidedbyone

paradigmortheotherandassessingitseffectivenessintermsoftheeconomicproblemthepolicy

instrumentisdesignedtoaddress.

Thereviewalsopaidparticularattentiontoincrediblerangeofvariationthatexistsacross

distinctivenationalinnovationsystems,rangingfrommission-basedtodiffusion-basedtorapid-

innovation-basedapproaches.Thedistinctivenationalstylesidentifiedinthispartofthereportfocuses

attentionontherelativedegreeofemphasisplacedondifferentpolicyinstrumentswithinthese

nationalsystems.Italsodrawsattentiontotheneedtoevaluatetheeffectivenessofparticularpolicy

instrumentswithinthecontextoftheoverallnationalapproachtoR,D&I,ratherthantoevaluatethe

policyinanisolatedframeofreference.Italsohighlightstheimportanceofassessingthewayinwhich

differentnationalapproachestoR,D&Ihavebeensuccessfulorhavefailedtoalterthetrajectoryof

technologicaldevelopmentwithintheireconomies.Italsodrawsattentiontotheimpactthatdifferent

administrativestructuresordeliveryagenciescanhaveontheeffectivenessofpolicies.Thereviewthen

summarizessomeofthelatestfindingsfromboththeacademicandpolicyresearchliteratureonthe

effectivenessandimpactofarangeofpolicyinstruments,includingtaxincentives,directsubsidies,

supportforventurecapitalandotherformsoffinancing,advisoryorcomplementaryservicesand

collaborativeresearchinitiatives.Thebalanceofevidencesurveyedsupportstheconclusionthatonthe

whole,themajorityoftheseinstrumentscontributetoanincreaseininput,outputandbehavioural

additionality,butthatitmaynotbesufficienttoconsidertheireffectivenessinisolationfromeach

other.

Forthisreason,thereviewintroducedthemorerecentconceptofthepolicymixwhich

underlinestheneedtolookattheeffectivenessofarangeofpolicyinstrumentsintermsoftheir

relationtoeachotherand,inparticular,lookattheinteractioneffectsamongarangeofpolicy

instruments.Inthisrespect,thepolicymixconceptismoreconsistentwiththeevolutionaryand

innovationsystemsperspectiveinitsemphasisontheneedtoevaluatetheeffectivenessofpolicies

fromabroadersystemsperspective.Finallythereviewconcludeswithabriefdiscussionoftheneedto

considerthechallengeofpolicyalignmentwithinafederalsystemwithsomedegreeofmultilevel

governance.Theexistenceofmultiplelevelsofjurisdictionwithsometimesoverlappingandduplicating

policyeffortssuggeststheneedtoidentifynotonlywhichspecificpolicyisgeneratingtheobserved

outcomeorimpact,butalsowhetherpotentialsystemgapsthatariseinthepolicymixresultfroma


40

failuretoadequatelycoordinatepolicyeffortsacrosstwolevelsofjurisdiction,ratherthanfromagapin

thepolicymixatonelevelortheother.Finally,thereviewsuggeststheneedtotakealong-term

perspectiveinevaluatingpolicyimpact.Thosecountriesthathavebeenmostsuccessfulininfluencing

thetrajectoryoftheirtechnologicaldevelopmenthavebeentheoneswhichhaverefinedandpursueda

consistentapproachoveraconsiderablylongertimeframethanasingleelectoralcycle.

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