Schumpeter and the Knowledge-Based Economy: On Technology and Competition Policy

This paper discusses some of the new policy challenges raised by the trend towards the knowledge based economy. It is argued that this trend signals a further weakening of old "market failure" arguments in guiding public action in the field of science, technology and innovation policy. Rather a Schumpeterian perspective on technical change recognizing the intrinsic differences in the nature of the accumulation process across sectors and industries appears more and more warranted. Such an approach does, however, require from policy makers to pay much greater attention to the effectiveness of their policy tools with a focus on policy and institutional learning, rather than following a set of simple normative guidelines about market failures. While such policy and institutional learning can and has to some extent already been implemented in most of Dutch technology policy and is a focal point of OECD comparative analysis (best practice, bench marking), it is much more difficult to introduce at the European level.