Main actors in the innovation process (Government)

Government intervention in the innovative process is often motivated by ‘market failure’. Due to limited appropriability of the results of R&D, the private returns to R&D are lower than the public returns, leading to under-investment. This justifies financially supporting R&D in firms with public money, but also IPR regimes and R&D by government branches. Other reasons for innovation policy rely on: • Fear of international competition and building national champions • Failures in national innovation systems Beside innovation policy governments contribute to innovation with monetary and fiscal policies, education, competition policies, immigration policies, industrial relations, procurement.