Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1334: Political Failure: A Missing Piece in Innovation Policy Analysis

Anders Kärnä (), Johan Karlsson (), Erik Engberg and Peter Svensson
Additional contact information
Anders Kärnä: Research Institute of Industrial Economics (IFN), Postal: Stockholm, and Örebro University,
Johan Karlsson: Ratio Institute, Postal: and Jönköping International Business School
Erik Engberg: Örebro University, Postal: and Jönköping International Business School

Abstract: Within the field of innovation studies, researchers have identified systematic failures that hamper investment in R&D, innovation, and growth. Accordingly, researchers in this field often seek to provide policy recommendations on how to alleviate these failures. However, previous discussions have often been lacking considerations to the risks of political failures, meaning that policies fail to achieve their stated goals in a systematic manner. In response to this gap, this article aims to illustrate the concept of political failure and its relevance for innovation research. This is done by both discussing how political failure can impact innovation policy and by reviewing the prevalence of any discussions of political failure among top-ranked journals on innovation for the period 2010–2019, a total of 7,161 articles. The results show that consideration of political failure is scarce, with a small number of papers that have a substantial analysis of political failures. If the awareness of political failures could be increased, this could lead to better policy recommendations with a more nuanced discussion of the risks and limitations of public policy.

Keywords: Innovation policy; Political economy; Political failure; Market failure; Public choice

JEL-codes: G28; H81; L26; L52; O38; P16

Language: English

55 pages, First version: May 5, 2020. Revised: April 21, 2022.

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