Innovation system dynamics and sustainable development - Challenges for policy

This paper argues, that it is necessary to rethink policymaking in the emerging era of a more socially responsible market economy. Creating synergies between RTD policies and environmental policies plays a crucial part in this but it is no easy endeavour. The paper discusses whether the (national) innovation systems theory perspective (NIS) may provide an appropriate analytical framework that may align RTD and environmental policies.

Rather than going into a detailed discussion of policy options, the paper seeks to capture the essence of the innovation system approach and the main policy implications this represents. The innovation system approach while well established in innovation policy is only emerging within environmental policy and research.

It is therefore important to consider the underlying assumptions and perception of the industrial dynamics involved. The paper claims that the NIS perspective represents a new rationale in environmental policy making, particularly concerning the goals, notably the treatment of competitiveness and the delimitation of the system or actors involved.

Applying the NIS approach points to the possible trade-off between aiming at (urgent) environmental goals and aiming at building up a (long term) high green innovative capacity. The NIS perspective points to policy programmes with a much stronger focus on knowledge, both when it comes to pulling the demand, pushing technology and making companies’ strategic market makers on eco-innovation.

And policy programmes that specifically aim to reduce the system failures related to eco-innovation. There are also some limitations in applying the NIS approach to environmental issues. There tends to be quite a strong focus on technology push perspectives, while market development perspectives are neglected.

The NIS perspective forwarded in this paper has sought to overcome this issue by arguing for a three pillar approach, simultanousy focusing on building well-functioning markets, organizational development and coordinated technology development. The NIS perspective is also important because it places eco-innovation within the wider context of the knowledge economy and the changing competitive conditions it represents.

In so doing it helps bring in a more dynamic perspective on societal development, which has so far been treated as a black box in environmental policy. The NIS approach is only emerging in the environmental field, but it carries promising perspectives for a renewal of environmental policy.