Government efforts to steer innovation waste money and distort markets, say Christian Sandström and colleagues
Mature economies in the west face challenges from sluggish growth, low innovation and weak job creation in high-tech industries. Enhancing innovation is crucial to keeping Europe’s economies competitive and to addressing challenges such as sustainability and security.
In recent years, efforts to boost innovation have increasingly taken the form of active industrial policies, where policymakers create ambitious development plans and support programmes targeting specific technologies, industries or companies. One example is the European Green Deal Investment Plan proposed by the European Commission in January, which advocates mobilising at least €1 trillion in EU investments over 10 years. Many countries have similar initiatives.