The Revolutionary Power of Peripheral Agencies: Explaining Radical Policy Innovation in Finland and Israel
Forthcoming in Comparative Political Studies (Volume 46, Issue 10, Oct. 2013)
38 Pages Posted: 21 Dec 2012
Date Written: December 20, 2012
This paper challenges the long-standing emphasis in the developmental state literature on the powerful pilot agency as an essential component of industrialization. While a pilot agency may be able to facilitate growth in mature industries, we argue that policy-makers seeking to promote rapid innovation-based competition must instead rely on continuous, radical policy innovation. We argue that this kind of experimentation is more likely to occur at the periphery of the public sector, in agencies with few hard resources and limited political prestige. In addition to providing a novel interpretation of how states enter new, high technology markets, we explain why some successful countries become less innovative over time. As agencies successfully introduce radical policy innovations, their higher profile exposes them to greater political interference and reduces their entrepreneurial capacity. The argument is supported by within-case analysis of two historically low-technology economies that successfully promoted rapid innovation-based growth, Finland and Israel.
Keywords: Policy Innovation, Industrialization, Comparative Political Economy of Development, Developmental State, Innovation Policy, Finland, Israel
JEL Classification: D2, D6, D73, E61, H1, H4, L5, O1, O2, O38, P52
Suggested Citation: Suggested Citation