Telecommunications and Economic Development by Robert J. Saunders,Jeremy J. Warford and Bjorn Wellenius, (Johns Hopkins University Press for the World Bank,Baltimore, 1983) pp. 395, $US32.50 (hb), $14.95 (pb), ISBN: 0-801-82828-7 (hb), 0-801-82829-3 (pb)

The economic justification for government support for science and technology has been commonly based on the concept of market failure. The general theoretical argument is that governments should intervene in cases where the free market fails to achieve an efficient allocation of resources. In this paper, the inadequacies of the concepts of market failure as they apply to policy are outlined. Its use in the political process, given these restrictive shortcomings, is also considered. Examples are drawn from Australian experience in science and technology policy over the past few years to support the claim that the concept is neither a sufficient basis nor an adequate guide for government intervention. Rather it has been used to justify politically determined decisions. Special reference is made to the Australian Industrial Research and Development Incentives Scheme.