Government policy and technological innovation—a suggested typology

Reports on the effects of government's role in stimulating technological development provide a mixed picture. Some policies have had the expected, stimulating effect and other policies have not. We suggest that specific characteristics of technologies that government has sought to stimulate have not been taken into account when governments formulated and implemented innovation policies. While technologies can be characterized according to more dimensions, we focus on two highly relevant characteristics. Technologies either develop in a discrete manner, independent of what specific knowledge has been developed in the past, or develop cumulatively. In addition, network effects may be present or absent in the market anticipated for the products for which a technology is used. A 2×2 typology of technological development ensues. We suggest that governments should consider developing policies to stimulate technological change keeping these characteristics in mind.