National Innovation Systems and Innovation in Nations

Abstract

Selective case studies of the post–World War II economy have given rise to claims that national innovation systems, or dirigiste linkages between the state, universities, and industry, are required for technological change and economic growth. The long-run patterns of innovation in the leading nations of Britain, France, and the United States suggest otherwise. Administered systems, where key economic decisions were made by elites, the state, and other privileged groups, typically were associated with monopsonies and the misallocation of resources and talent. By contrast, the American experience highlights the central role of markets in ideas and decentralized incentives for innovation, in concert with flexible open-access adjacent institutions, in promoting useful knowledge and sustained technological progress.