Administered Invention in France

Abstract

France presents the closest model of a soi-disant “entrepreneurial state,” including both centralized and decentralized administered innovation institutions. Scholars have argued that these approaches were superior to market transactions. However, their unrepresentative case studies have underestimated or ignored the costs of politically biased economic strategies, including greater uncertainty, incorrect relative prices and the misallocation of resources, and lower incentives for investments in inventive activity. A society based on special privileges for the few provided disproportionate benefits for elites and those with personal connections, disadvantaged creativity that threatened existing interests, and encouraged rent-seeking rather than returns from meeting market demand.