Introduction

How do countries' technology policies differ? What impact do these differences have on innovation performance and, more generally, on industrial structures? These questions are the central concerns of this paper.

Innovation involves the use of human, technical and financial resources for the purpose of finding a new way of doing things. As an inherently uncertain process, it requires experimentation with alternative approaches, many of which may prove technically unsuccessful. Even fewer will survive the test of diffusion, where ultimate economic returns are determined.

The capitalist system's historical success as an engine of growth arises from its superiority at each of these levels: generating the resources required for innovation, allowing the freedom to experiment with alternative approaches and providing the incentives to do so.

Though relying primarily on market forces, the system has interacted with government at two essential levels. The first relates to the harnessing of technological power for public purposes. Nation-states have long been major consumers of new products, particularly for military uses; and the need to compete against other nation-states provided an important early rationale for strengthening national technological capabilities. Whether this rationale persists as the primary motive for government action is a major factor shaping each country's technological policies.

The second arises from the system's dependence on its social context.