An Innovation Policy Framework: Bridging the Gap between Industrial Dynamics and Growth

43 Pages Posted: 14 Jan 2015

See all articles by Pontus Braunerhjelm

Pontus Braunerhjelm

Royal Institute of Technology (KTH) - Department of Infrastructural and Urban Planning (INFRA); Örebro University - Swedish Entrepreneurship Forum

Magnus Henrekson

Research Institute of Industrial Economics (IFN)

Date Written: January 12, 2015

Abstract

This paper examines policy measures that foster the creation of innovations with high inherent potential and that simultaneously provide the right incentives for individuals to create and expand firms that disseminate such innovations in the form of highly valued products. In so doing, we suggest an innovation policy framework based on two pillars: (i) the accumulation, investment, and upgrading of knowledge and (ii) the implementation of mechanisms that enable knowledge to be exploited such that growth and societal prosperity are encouraged. Knowledge is a necessary but far from sufficient condition for growth. To secure industrial dynamics and growth in the long term, institutions must be designed both to encourage sophisticated knowledge investments and to stimulate the creation, diffusion and productive use of knowledge in all sectors of the economy. We argue that the latter area has been overlooked in the policy discussion and that a coherent innovation policy framework must include tax policy, labor market regulation, savings channeling, competition policy, housing market regulation, and infrastructure to foster growth and future prosperity.

Keywords: Entrepreneurship, Innovation, Institutions, Innovation policy, R&D, Technology transfer, University-industry relations

JEL Classification: J24, O31, O32, O57

Suggested Citation

Braunerhjelm, Pontus and Henrekson, Magnus, An Innovation Policy Framework: Bridging the Gap between Industrial Dynamics and Growth (January 12, 2015). IFN Working Paper No. 1054, Available at SSRN: https://ssrn.com/abstract=2548540

Pontus Braunerhjelm

Royal Institute of Technology (KTH) - Department of Infrastructural and Urban Planning (INFRA) ( email )

SE-100 44 Stockholm
Sweden
+46 8 790 9114 (Phone)
+46 8 411 7436 (Fax)

Örebro University - Swedish Entrepreneurship Forum ( email )

Södra Kungstornet
Kungsgatan 33, 7tr
Stockholm, 11156
Sweden

Magnus Henrekson (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

P.O. Box 55665
Grevgatan 34
Stockholm, SE-10215
Sweden
+46-8-6654502 (Phone)
+46-8-6654599 (Fax)

HOME PAGE: http://www.ifn.se/mh

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