- Which instruments are used, what is the cohesion between the instruments and do or don’t they
overlap? - What is the administrative burden of executing the instruments?
- What is the contribution of the instruments to the formulated objectives? What are (positive or
negative) side effects? - What’s the budgetary importance of instruments and why?
These questions can be extended giving specific circumstances. The question if alternatives are available
(with effects and costs) is a quite logic ex ante extension. A structured evaluation process ensures that
policy choices and objectives are transparent and that policy design is made accountable. In the
Netherlands, we have modified our budgetary framework in recent years to ensure that a structured and
accountable policy design is embedded in the decision making process. The goal is to improve the
quality of public finance with such a critical and continuous evaluation process. Given the scarcity of
public resources
7. Conclusion
With the formulation of the Lisbon and the Barcelona goal, Europe has shown ambition to increase its
innovation effort. At the same time this does not mean that we should also continue to focus our attention
on stimulating participation where considerable gains in GDP growth might be achieved. Authorities
should also bear in mind that a relative high productivity growth in a specific country will partly leak
away to other countries through terms of trade effects. Nevertheless, on a global level, productivity
growth remains the ultimate basis for growth in economic welfare.
From a theoretical point of view there are good reasons for innovation policy. External effects, imperfect
information, network effects and market power are some examples of possible market failures that may
occur. Innovation policy and stimulating productivity growth can therefore make an important
contribution to economic welfare. However, government failure and the risk of making the wrong
selections may lower the effectiveness of government intervention. Authorities should therefore only
interfere when market failures are most severe and when the risk of government failure is small.
At first sight, the Dutch economy is not characterized by great innovative strength. Total R&D intensity
remains on average in international perspective and R&D particularly takes place in public organisations.
However, based on some other indicators a more positive view emerges.Innovation policy in the
Netherlands is based on an economic analysis of the areas in which market failures potentially exist. The
design of innovation policy is linked to the identified problems and the instruments are chosen in such a
way that they can address the potential market failures. In theory, these instruments should thus be able
to make a contribution to an increase in social welfare. However the actual occurrence or size of the
market failures and the effectiveness of innovation policy to address these market failures is difficult to
ascertain and hampered by methodological problems.
In particular with specific policy, the less knowledge we have, the more important it is to make a careful
assessment if the potential benefits outweigh the higher risks of government failure. The use of
experiments and the creation of a structured evaluation framework would further increase accountability
and our knowledge about the impact of innovation policy. Future innovation policy would benefit from
such information, which would make a contribution to an increase in the quality of public finance.