Stephen Gordon thinks that the term “innovation” is well on the way to being just another way of saying “corporate handout”:
The theory of economic growth includes roles for such well-defined concepts as investment, human capital, research and development, productivity, and technical progress. I don’t know where innovation fits into this. My guess would have been that innovation is another name for R&D, but apparently there’s an ineffable distinction between innovation and R&D.
There are well-known policy instruments at the government’s disposal for increasing investment in human and physical capital and for increasing R&D activities. (Their relative effectiveness is another question.) But so far, the only proposals I’ve seen for an innovation policy consist of programs in which governments give money to deserving firms. This is problematic on a couple fronts.
Firstly, there are already many — too many — ‘economic development’ programs whose purpose is to channel public money to companies that enjoy the favour of the government. It’s hard to believe we need more of them.
