Both types of reforms are decisive elements of the economic process of change, namely what Joseph Schumpeter once described as “creative destruction". It is certainly a core task of general government to eliminate competitive distortions and repair market failure. Moreover, economic policy-making overall needs to create an environment which is conducive to growth.
Research is one area in which general government can provide a boost through targeted promotional measures. Basic research is often the first step in the chain of innovation. It yields new knowledge on which firms can later build. This area of research is not only expensive but also entails a high degree of uncertainty.