Systems failure, market failure, or something else? The case of skills development in Australian innovation policy

Many innovation theorists assume innovation policy-making is driven by the theoretical apparatus of market failure and argue the superiority of the systems failure approach. We look at the inclusion of skills development in Australian innovation policy to assess what drives innovation policy. This is done by examining the inclusion of vocational education and training (VET) in major analyses and reports on Australiau0027s innovation system and membership of the boards of innovation councils. We found that both of the major Australian political parties and the major reports on Australiau0027s National Innovation System (NIS) present skills development as a principal driver of the NIS – indicating a clear market/system failure concern. Notwithstanding this, we found the VET system is excluded in both government studies of Australiau0027s NIS and innovation councils. This indicates the drivers of innovation policy may not be market failure or system failure. Contrary to the presumption of innovation academics, policy ma...