In a recent working paper⁽¹⁾, “A Complexity-Theoretic Perspective on Innovation Policy,” the author argues that innovation policies based on notions of market failure or system failure are too limited in the context of current societal challenges, The path dependence of economic development explains the tendency to diversity into related rather than unrelated activities.

A government pursuing solely market and system failure policies will generally de facto lead to a stimulus for large manufacturing firms to diversify into related industries. Innovation policy, thus, de facto is rather directed towards certain actors and sectors, rather than truly generic including startups and small firms and including creative industries and service sectors.

The combination of a broad coalition, a clear objective and tentative governance are the means to cope with the inherent complexity of modern-day innovation.

(…) given the inherent complex, contested and behavioral nature of societal challenges, a return to technology-push strategies in the tradition of “man-on-the-moon” projects is undesirable except in rare cases. Instead, I suggested to translate challenges into concrete objectives and then to build dedicated “temporary innovation systems”.

Good to hear that complexity thinking is aiming to the ivory towers of economic policy, but plenty of work ahead…

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(1) Frenken, Koen, and others. ‘A Complexity-Theoretic Perspective on Innovation Policy’. Utrecht University, Department of Innovation Studies, 2016.

“if we can land a man on the moon, why can’t we solve the problems of the ghetto?” was a question asked by Professor Richard R. Nelson in 1974: “Intellectualizing about the moon-ghetto metaphor: A study of the current malaise of rational analysis of social problems.” Policy Sciences 5: 375–414