Policy Review Section

Abstract

It is increasingly recognized that the production of new products and the development and diffusion of new production and organizational techniques are central to the competitiveness of both national and regional economies. Governments and agencies at all spatiallevels have therefore become involved in seelung to stimulate innovation. In the UK Government’s White Paper on Science and Technology and in the D T 1’s Competitiveness initiative, the promotion of innovation is given a central role. The available evidence does suggest that innovating firms both outperform non-innovators in terms ofprofitability and growth, and are more cyclically stable (GEROSKI and MACHIN, 1992). This would appear to provide prima facie justification for intervention. However, a recent comprehensive survey and analysis by the present authors of the innovation performance of Scottish manufacturing industy suggests that current UK innovation policy is largely irrelevant. In this article, we seek to explain why that is the case. In the next section we describe the main instruments ofUK innovation policy then briefly outline the main views on innovation policy drawn from a survey of, and interviews with, Scottish manufacturing firms. This is followed by a critique of the policy in the light of the experience of Scottish firms. Finally, the article concludes with some recommendations for changes to innovation policy in the UK.