Scholars are beginning to develop theoretical analyses of the different forms of government funding that promote innovation. These analyses indicate the need for extensive empirical research into the comparative advantages and various abilities of differing governmental and private institutions. Currently, empirical analyses are lacking, as data for such studies is rarely obtained. Worse yet, analyses of the ways funding decisions are actually made indicate that research and development funding decisions are not governed by a theory of comparative innovation advantage. Accordingly, we can expect a substantial mismatch between actual funding choices and desired innovation policy.

This Article identifies practical considerations that affect innovation-funding policy choices. It describes why theories about the preferred form of funding for particular contexts are not likely to govern the actual practice of our policy-making decisions. The Article concludes with the need to reinforce the political economy of our innovation decision-making infrastructure by compelling greater information collection and by requiring increased transparency in and documentation of the reasons for our government funding decisions.