INTRODUCTION

Bengt-Åke Lundvall

1.1. Introduction

Theories in the social sciences may be regarded as 'focusing devices'. Any specific theory brings forward and exposes some aspects of the real world, leaving others in obscurity. That is why a long lasting hegemony of one single theoretical tradition is damaging both in terms of understanding and policy-making. In the field of economics, the dominating neo-classical paradigm puts its analytical focus upon concepts such as scarcity, allocation, and exchange, in a static context. Even if these concepts reflect important phenomena in the real world, they only bring forward some aspects of the economic system. One aim of this book is to demonstrate the need for an alternative, and supplementary, focusing device which puts interactive learning and innovation at the centre of analysis.

Through more than a decade, a group of economists at Aalborg University, the IKE-group, has worked together studying industrial development and international competitiveness from such a perspective. This book presents results from this work in relation to one specific subject; national systems of innovation.

Our choice of perspective and subject is based upon two sets of assumptions.

First, it is assumed that the most fundamental resource in the modern economy is knowledge and, accordingly, that the most important process is learning. The fact that knowledge differs in crucial respects from other resources in the economy makes standard economics less relevant and motivates efforts to develop an alternative paradigm.

Second, it is assumed that learning is predominantly an interactive and, therefore, a socially embedded process which cannot be understood without taking into consideration its institutional and cultural context. Specifically, it is assumed that the historical establishment and development of the modern nation state was a necessary prerequisite for the acceleration of the process of learning which propelled the process of industrialisation, in the last centuries. Finally, it is recognised that the traditional role of nation states in supporting learning processes is now challenged by the process of internationalisation and globalisation.

These ideas are reflected in the overall structure of the book which is divided into three main parts. The first part presents the theoretical framework, the second part analyses the most important elements of the system of innovation and the third part is devoted to the opening of national systems through internationalisation and globalisation. This introductory chapter presents basic definitions, theoretical starting points, a road map for the book as a whole and, finally, references to other attempts to analyse national systems of innovation.

1.2. National Systems of Innovation

1.2.1. A First Definition

According to Boulding (1985), the broadest possible definition of a system is 'anything that is not chaos'. Somewhat more specifically, a system is constituted by a number of elements and by the relationships between these elements. It follows that a system of innovation is constituted by elements and relationships which interact in the production, diffusion and use of new, and economically useful, knowledge and that a national system encompasses elements and relationships, either located within or rooted inside the borders of a nation state.

Using the terminology of Boulding, it is obvious that the national system of innovation is a social system. A central activity in the system of innovation is learning, and learning is a social activity, which involves interaction between people. It is also a dynamic system, characterised both by positive feedback and by reproduction. Often, the elements of the system of innovation either reinforce each other in promoting processes of learning and innovation or, conversely, combine into constellations blocking such processes. Cumulative causation, and virtuous and vicious circles, are characteristics of systems and sub-systems of innovation. Another important aspect of the innovation system relates to the reproduction of the knowledge of individuals or collective agents (through remembering).

1.2.2. Nation States and National Systems

The concept, national systems of innovation, presumes the existence of nation states and this phenomenon has two dimensions; the national-cultural and the étatist-political. The ideal, abstract, nation state is one where the two dimensions coincide, i.e. where all individuals belonging to a nation – defined by cultural, ethnical and linguistic characteristics – are gathered in one single geographical space controlled by one central state authority (without foreign nationalities).

It is difficult to find any nation states, in this strict sense, in the real world. Countries differ both in the degree of cultural homogeneity and in the degree of political centralisation. In some cases it is not even clear where to locate the borders of a 'national' system of innovation. This might be true both for 'multinational' states as Belgium, Canada and Switzerland and for single-national but federal states such as Germany. At the extreme, a country might be solely constituted by a joint foreign policy with little in common in terms of it's institutional set up and culture. In such cases, the concept of a...