Building Effective "Innovation Systems" Versus Dealing With "Market Failures" As Ways Of Thinking About Technology Policy

In this paper the author compares two different theoretical frameworks in economics for orienting analysis of issues in technology policy. One is a neoclassical framework that sees appropriate policies as dealing with "Market failures". The other framework is provided by an evolutionary and institutional approach to economic analysis that sees appropriate policies as building or maintaining an effective "Innovation system". It should be no surprise that the author believes the latter framework is the more useful one. Finally, the author comments on the general question of the role of economic theories in framing policy analysis.