Discussion: Building the Developmental State: Achieving Economic Growth Through Co-operative Solutions: A Comment on Bringing Politics Back I

Drawing on the insights of game theory and East Asian experience, this short note argues the importance of co-operative solutions in achieving economic development. To realise these, even genuine developmental states must convince a sceptical private sector of their commitment to economic development. Because of this, credibility should be added to the mix of ingredients necessary for a successful developmental state.     

The Regional Innovation Paradox: Innovation Policy and Industrial Policy

This paper explores the regional innovation paradox and its policy implications. The regional innovation paradox refers to the apparent contradiction between the comparatively greater need to spend on innovation in lagging regions and their relatively lower capacity to absorb public funds earmarked for the promotion of innovation and to invest in innovation related activities compared to more advanced regions. Empirical analysis of the nature of the paradox shows that there are strong complementarities between business, education and government spending on R&D and that technology/innovation policy and industrial policies tend to work in opposite directions. Our analysis suggests that resolution of the paradox requires policies that: (i) increase the innovation capacity of regions by working both on the demand and the supply side of the system to increase both private and public sector investment in innovation activity; and (ii) integrate technology policy and industrial policy by encouraging expenditure on innovation activity within mainstream industrial policy programmes. The penultimate section of the paper outlines and assesses policy initiatives/experiments along these lines and suggests how they might be developed in the future.