Mission-oriented or mission adrift? A critical examination of mission-oriented innovation policies

Abstract

This debate article provides a critical examination of the rationale for, and validity of, missionoriented innovation policies. It does so by providing a critique of the "mission-oriented" approach espoused for the new Scottish National Investment Bank (SNIB). The central contention put forward in this paper is that its mission-oriented approach constitutes "fuzzy" policy making which is highly opaque, lacking sufficient detail and fails to align itself properly with the demand conditions within the Scottish innovation system. Arguably, this policy approach could result in significant policy path dependencies which could further reinforce (rather than reverse) the inherent weaknesses within the Scottish innovation system. The paper outlines an alternative "diffusion-oriented" approach which seems better equipped at overcoming the entrenched "low productivity, low innovation equilibrium" evident in Scotland. Regional innovation policy must be properly customised to ensure new agencies are effectively tailored and aligned to the demand conditions within their local innovation and entrepreneurial ecosystems. In short, policy should be context-led rather than mission-led.

A Toolkit of Policies to Promote Innovation

“…Nevertheless, we hope that this framework at least prompts additional debate over what needs to be done to restore equitable growth in the modern economy. (1) Conclusiveness of evidence (2) Net benefit (3) Time frame (4) Effect on inequality (5) ■ For helpful comments on earlier drafts, we thank the editors (Timothy Taylor, Enrico Moretti, and Gordon Hanson) as well as Bronwyn Hall, Ben Jones, Josh Lerner, Petra Moser, and Jim Poterba. Research…”

“…For example, Kerr and Lincoln (2010) exploit policy changes affecting the number of H1-B visas and argue that the positive effects come solely through the new migrants' own innovation. 4 Using state panel data from 1940 to 2000, Hunt and Gauthier-Loiselle (2010) document that a 1 percentage point increase in immigrant college graduates' population share increases patents per capita by 9 to 18 percent, and they argue for a spillover effect to the rest of the population. Bernstein et al (2018) use the death of an inventor as an exogenous shock to team productivity and argue for large spillover effects of immigrants on native innovation.…”

“…The US federal government's introduction of immigration quotas with varying degrees of strictness in the early 1920s-for example, Southern Europeans, such as Italians, were more strongly affected than Northern Europeans, such as Swedes-has 4 Using H1-B visa lotteries, Doran, Gelber, and Isen (2014) estimate smaller effects than Kerr and Lincoln (2010). By contrast, Borjas and Doran (2012) document negative effects on publications by Americans in mathematics journals following the fall of the Soviet Union, although they do not attempt to estimate aggregate effects; their findings may reflect a feature specific to academic publishing, where there are ( short-run) constraints on the sizes of academic journals and departments.…”

Some Causal Effects of an Industrial Policy

“…Jones and Wren (2004) and Harris and Robinson (2005) look at differences in survival between RSA recipients and non-recipients. 6 A recent example is Zwick and Mahon (2017), who find substantial effects of temporary tax incentives on investment using shifts in accelerated depreciation. Interestingly, the results are especially large for smaller firms, which is broadly consistent with our findings as reported below.…”

“…Finally, there is a large literature on the impact of capital and labor taxes (e.g., Mirrlees 2010). 6 Unlike our RSA program, however, these general tax rules tend to be available nationwide rather than place-based, and automatic rather than at the discretion of an agency. They are also more likely to engender general equilibrium effects than the RSA policy that amounts to less than 0.1 percent of aggregate UK investment.…”