hypotheses are tested and updated rationally over
time. Even when signals are obvious, biases or
misaligned incentives can skew expectations and
lead to irrational beliefs. A part of the solution is
to ensure that successful innovation intervention
is not defined solely by the output, such as
delivering technologies to the deployment stage
(Fig. 7).
The deployment of synfuel capacity in the
USA illustrates the issues that can arise when
targets are rigid and not updated with new
information. The US synfuel project committed
itself to developing capacity that would no longer
be viable in the intended time frame, rather than
shifting the focus to developing alternative
technologies that would be more valuable in the
new context (Table 7).
(2) Monetary interventions
One of the avenues of innovation policy is to
provide direct monetary support. This action can
be in the form of funding assistance, where the
government enters the innovation market as a
funder of primary R&D, or as an investor; or it
can be non-direct assistance to help improve the
investment ecosystem, create long-term incentives for investment and develop mid-stream
Fig. 5 Denmark successfully delivered innovation in wind power
Fig. 6 Germany eventually successfully deployed wind capacity
Special Report 3: A Study of China’s Technology Revolution
299
time. Even when signals are obvious, biases or
misaligned incentives can skew expectations and
lead to irrational beliefs. A part of the solution is
to ensure that successful innovation intervention
is not defined solely by the output, such as
delivering technologies to the deployment stage
(Fig. 7).
The deployment of synfuel capacity in the
USA illustrates the issues that can arise when
targets are rigid and not updated with new
information. The US synfuel project committed
itself to developing capacity that would no longer
be viable in the intended time frame, rather than
shifting the focus to developing alternative
technologies that would be more valuable in the
new context (Table 7).
(2) Monetary interventions
One of the avenues of innovation policy is to
provide direct monetary support. This action can
be in the form of funding assistance, where the
government enters the innovation market as a
funder of primary R&D, or as an investor; or it
can be non-direct assistance to help improve the
investment ecosystem, create long-term incentives for investment and develop mid-stream
Fig. 5 Denmark successfully delivered innovation in wind power
Fig. 6 Germany eventually successfully deployed wind capacity
Special Report 3: A Study of China’s Technology Revolution
299