Can the Nelson-Arrow Paradigm Still Be the Beacon of Innovation Policy?

Manuel Trajtenberg

in The Rate and Direction of Inventive Activity Revisited

Published by University of Chicago Press

Published in print April 2012 | ISBN: 9780226473031
Published online February 2013 | e-ISBN: 9780226473062 | DOI:
Can the Nelson-Arrow Paradigm Still Be the Beacon of Innovation Policy?

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This chapter considers the broader legacy of the Nelson–Arrow paradigm, with its focus on appropriability and the role of government support for early-stage research on innovation policy. It highlights how many of the central challenges facing innovation policymakers cannot be addressed directly through the Nelson–Arrow framework—for example, while the framework assumes a single potential public funder, the question facing policymakers today is how much an individual country should fund, given the global nature of research and the potential to benefit from research conducted in other jurisdictions. The chapter focuses on the limited influence of rigorous economic analysis on actual policy, and suggests a focus on more policy-oriented research.

Keywords: Nelson–Arrow paradigm; innovation policy; public funder; policy-oriented research

Chapter.  2356 words. 

Subjects: Economic Development and Growth

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