This paper proposes a new model for innovation policy that clearly distinguishes it from industrial policy. We challenge the idea, implicit in much existing practice, that governments operate levers that affect innovation in predictable ways, and argue that innovation policy should instead be conceived as a process of discovery, required because the creation and exploitation of new ideas by entrepreneurs is by nature radically uncertain.
This calls for an institutional role we term the ‘experimental state’: where experimental processes are embedded in publicly supported innovative activity – without constraining the innovators within the rigid, pre-ordained coordinates of a traditional industrial ‘plan’ or ‘growth strategy’ – and where public activities are designed to ensure that the private discoveries they support are codified and disseminated, thereby reducing entrepreneurial uncertainty.
