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The State and National Systems of Innovation: A Sympathetic Critique

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  • Giovanna Vertova

Abstract

This paper starts with a review of the literature about National Systems of Innovation (NSI), by linking the origin of the concept to the evolutionary theory of the firm and innovation. The first point reviews the flaws of the NSI concept by looking at the pioneering works of Chris Freeman, Bent-Ake Lundvall, and Richard Nelson. These authors' definitions of NSI contain some striking aspects: (1) the definitions are so broad that they can encompass almost everything; (2) although all definitions share the central role played by institutions, the state and its policy are not explicitly mentioned; and (3) it is not clear if the NSI concept is a descriptive or a normative tool. The second point we would like to make is that, when the role of the financial system was finally recognized by evolutionary traditions, it was just added as a "new" element within the NSI. The main aim became one of including the financial system within the NSI and looking for the "right" financial system for the "right" type of innovation. After addressing the weaknesses of the conceptualization of the state within the NSI and the difficulty of the evolutionary theory in understanding the financialization of the economy, our third and last point refers to a new way to view innovations. As Mariana Mazzuccato shows, the state has always been a fundamental, though indirect, actor for the development of certain innovations in certain sectors. Yet this is not enough, especially in a period of crisis. The state should direct innovative activities toward more basic and social needs, thus becoming an "innovator of first resort."

Suggested Citation

  • Giovanna Vertova, 2014. "The State and National Systems of Innovation: A Sympathetic Critique," Economics Working Paper Archive wp_823, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_823
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    References listed on IDEAS

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    1. Nelson, Richard R & Winter, Sidney G, 1974. "Neoclassical vs. Evolutionary Theories of Economic Growth: Critique and Prospectus," Economic Journal, Royal Economic Society, vol. 84(336), pages 886-905, December.
    2. Giovanni Dosi, 2000. "Finance, Innovation and Industrial Change," Chapters, in: Innovation, Organization and Economic Dynamics, chapter 21, pages 621-641, Edward Elgar Publishing.
    3. Paul Gompers, 2002. "Corporations and the financing of innovation: The corporate venturing experience," Economic Review, Federal Reserve Bank of Atlanta, vol. 87(Q4), pages 1-17.
    4. Hsu, Po-Hsuan & Tian, Xuan & Xu, Yan, 2014. "Financial development and innovation: Cross-country evidence," Journal of Financial Economics, Elsevier, vol. 112(1), pages 116-135.
    5. James R. Brown & Steven M. Fazzari & Bruce C. Petersen, 2009. "Financing Innovation and Growth: Cash Flow, External Equity, and the 1990s R&D Boom," Journal of Finance, American Finance Association, vol. 64(1), pages 151-185, February.
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    Cited by:

    1. Cirillo, Valeria & Martinelli, Arianna & Nuvolari, Alessandro & Tranchero, Matteo, 2019. "Only one way to skin a cat? Heterogeneity and equifinality in European national innovation systems," Research Policy, Elsevier, vol. 48(4), pages 905-922.
    2. Lee, Sungjoo & Lee, Hakyeon & Lee, Changyong, 2020. "Open innovation at the national level: Towards a global innovation system," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    3. Reynolds, Elisabeth B. & Uygun, Yilmaz, 2018. "Strengthening advanced manufacturing innovation ecosystems: The case of Massachusetts," Technological Forecasting and Social Change, Elsevier, vol. 136(C), pages 178-191.
    4. Pedro López-Rubio & Norat Roig-Tierno & Francisco Mas-Verdú, 2022. "Assessing the Origins, Evolution and Prospects of National Innovation Systems," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(1), pages 161-184, March.
    5. Radosevic, Slavo, 2022. "Techno-economic transformation in Eastern Europe and the former Soviet Union – A neo-Schumpeterian perspective," Research Policy, Elsevier, vol. 51(1).

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    More about this item

    Keywords

    Government Intervention; Innovator of First Resort; National Systems of Innovation; Supply-side Economics;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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