Book Review Government'S Role In Enterprise Innovation

By Zheng Lei

The market is not perfect, the market will fail, and government intervention can help to alleviate the market failure. These views have been basically accepted by the mainstream economics. Even the Austrian school, which is relatively conservative on this issue, agrees that the joint efforts and complements of the market and the government are needed to solve the problem of market failure. They believe that the root cause of market failure is the failure of the institutional basis on which the market operates. The most important way to solve the market failure is to correct the institutional basis, reduce the transaction cost or coordination cost, and create space for the market subject to spontaneously seek and develop the way to solve the market failure, and the market may also generate more efficient solutions. In short, the government does not need to intervene in the market as much as possible, and its policy choice should be based on the basic principle of not hindering the market to seek better solutions spontaneously.

Innovative Government: building a symbiotic and win-win relationship between the public and private sectors is a new book by Mazu Cato, an economist who focuses on innovation. The author is very concerned about China's science and technology innovation mode. The viewpoint of government intervention in innovation proposed in this book has aroused great repercussions in western academic circles. The author compares the views of two economists: Smith proposed that the two major missions of the government are to provide public facilities / services and to maintain a low transaction cost social environment. He did not give specific suggestions on how to do so. Polanyi advocated the government's intervention in the market, and the reason was that "after the implementation of the free market, the need for management, regulation and intervention has not disappeared.". In fact, there is no essential contradiction between the two views.

The fundamental difference in academia is how the government should intervene in the market and how to delimit the boundary between the government and the market. If the government and the market are regarded as a complete set (this is a simplified model, the author advocates that the society, the government and the market should be considered together), then as long as we clearly define the behavior boundary of the government, the problem will be solved logically. So we need to answer: what are the essential characteristics of government? What constraints do they need to allocate public resources? What are the typical behaviors of government intervening in the market? What are special cases?

The government's involvement in enterprise innovation is similar to the formulation of industrial policies. There is no problem with the principle, but the key is the practice. The author puts forward the concept of "innovative government" and believes that it needs to bear the risk of innovation and create new vision. It is believed that innovative government should invest in the scenario where private enterprises have opportunities and resources but will not invest. In some countries and regions, private enterprises do not necessarily have such investment opportunities. First of all, they should open up the investment field completely and completely. In addition, too much government funding for specific enterprises in innovation will lead to unfair competition and may damage the enthusiasm of other enterprises. Developed countries have also been actively involved in enterprise innovation activities: the rise of Germany in the 19th century benefited from the country's vigorous development of technical education and training; The rise of large-scale production and internal R & D in the 20th century is the main reason for the rapid economic growth of the United States; However, the lack of investment in the information technology revolution started in the 1990s in the United States is directly related to the current economic decline of the United States. Japan's industrial policy is not the practice of "selecting winners" by the government, which is criticized by people, but coordinates internal industrial changes, inter departmental ties, inter company ties and private public cooperation, so as to enable economic growth to occur in a comprehensive and targeted way. The common point of the successful experience of these countries is that the government is committed to the construction and maintenance of the development and innovation system. Even if it involves more in the key key links, it will not replace the enterprises to carry out extensive innovation activities.

In the whole technology life cycle, the government should always pay attention to the long-term and effective investment of the whole society in the software and hardware driving productivity, which is difficult to implement in countries that overemphasize the market-oriented non intervention policy, and China's system just meets this requirement. Innovation network is full of feedback loops between technology and market, application and science. The government needs to mobilize resources so that knowledge and innovation can spread to various economic sectors, and achieve this goal by pooling existing innovation networks or promoting the development of new companies. Another concern is that the financial industry should not be allowed to develop excessively. The financial industry is good at extracting value from the real economy, but a lot of the value created is divorced from the real economy. This process may destroy the conditions for innovation in other industries.

From the perspective of enterprises, the government is an outsider and naturally has incomplete information. The innovation process of enterprises is more personalized, subtle and complex. For example, whether the enterprise has the conditions for innovation, whether the innovation ability matches the manufacturing and marketing capabilities of the enterprise, and only in the specific life cycle of the industry development can the high R & D investment be reflected in the rapid growth, otherwise, only the cost will be increased in the current period. These specific decisions should obviously be made by insiders. What the government can do is to provide the necessary help that enterprises need, and should consider whether its practice is fair, reasonable and beneficial to the whole innovation system. The government should pay more attention to and study the development law of these enterprises and provide timely and effective policy support.

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