Innovation is by definition a complex process, but policies geared towards stimulating innovation have tended to focus too narrowly on the production of new knowledge—on the funding and performance of research and development. Successful innovation is a matter of the identification, application and diffusion of knowledge—of creativity. It is therefore not simply a function of gross investments in science nor is it a function of the new production of knowledge. Innovation becomes more than a matter of ‘science policy’ and increasingly a matter to be integrated into trade, investment, monetary, industrial, labor, tax and competition policies. Yet this is extremely problematic for governments interested in creating a ‘knowledge‐based economy’. The integration of innovation into the core

of traditional policy is key.