Technological infrastructure policy (TIP): Creating capabilities and building markets

Accelerated technological development and the globalization of trade and investment have increased the importance of technological capabilities as a source of competitive advantage, creating new needs and new opportunities for building technological infrastructure. This calls for new policy approaches able to supply new categories of public goods. In this paper we suggest a conceptual framework for a technological infrastructure policy (TIP) that addresses this need in the context of structural change. Basic TIP for conventional industries is a market-building approach to the assimilation of technological progress that stimulates the supply of technological services while promoting the articulation of their demand. Advanced TIP for leading-edge technologies emphasizes the importance of user cooperation and coordination when user-need determination cannot be separated from capability creation. In both modes, TIP defines a catalytic role for government that emphasizes institutional innovation rather than price-based measures, a role that is fully consistent with economic liberalization.