Innovation systems: from fixing market failures to creating markets

Resumen

This paper presents a critique of the market failure theory, focusing on its limitations
for explaining the creation of new markets. From a review of the literature on the subject
and several examples, I argue that the state has an essential role in fostering innovation.
Therefore, the challenges for innovation in the future should be less focused on the worries
about ‘picking winners’ and ‘crowding out’. Instead, we must open up the discussion
towards four key questions: 1) directions; 2) evaluation; 3) organisational change; 4) risks
and rewards.