The article examines the variables which preclude or facilitate shifts or change in patterns of budgeting within governments. Emphasis is placed upon the connection between systems of budgeting and underlying structures of ideas and values which constitute organisational ‘myths’. Drawing upon the literatures of political science and organisational analysis the paper identifies a combination of factors which facilitate the erosion of the legitimacy of prevailing myths and lead to their displacement. This thesis is empirically examined using data from twenty English local authorities.

Traditional regional policies largely failed to attract a balanced range of skills to the regions, leaving them deficient in all but ‘blue collar’ craft skills. Thus, regional policies have hardly equipped the regions to survive during a period when technology is becoming an increasingly important element in competitiveness. In most countries, industry in the regions is composed mainly of mature companies producing traditional products and which often experience great difficulty in adapting to the rapidly changing requirements of the latter part of the twentieth century. Small firms, and especially new small firms appear, in contrast, better able to adapt. Regional policies should, therefore, be directed more towards the creation and growth of technology-based new small firms in the regions. Technology-based large firms are, of course, less dependent on the local environment than on their smaller counterparts and are better able to overcome local technical and market deficiencies. In order to stimulate the growth of innovative small firms, it is necessary to create an innovation infrastructure in the development regions, which, generally, have only limited innovation potential. This infrastructure will comprise a set of policy instruments on both the supply side and the demand side, while at the same time attempting to create a fiscal and regulatory climate conducive to innovatory endeavours by local firms. Perhaps the potentially most powerful element in this environment would be the establishment of local innovation oriented procurement procedures. A number of guidelines for the development of a viable system of innovation-oriented procurement are provided in the final section of this paper.

The awareness of the structural rather than cyclical nature of economic problems caused a fundamental rethinking of the institutions and instruments of industrial policy in most OECD countries. However, studies have concentrated on a limited number of large countries, with only marginal use being made of the experience of the smaller OECD countries. The need for comparative material becomes relevant since the large economies are increasingly facing the same structural problems as the smaller ones. This article analyses the experience of the Netherlands in comparison with other small European economies. The Netherlands economy is highly intertwined with the other economies of the European Community, particularly Germany. Multinationals (many home-based in the case of the Netherlands) dominate certain sectors of the economy and exports, but smaller companies provide the bulk of employment. The loss of employment since 1970 has mostly resulted from the restructuring of large firms. Government subsidies grew considerably, and proliferated in form, in the 1970s and most went to industries experiencing structural problems. Large firms have tended to benefit most. Criticisms have been made of rescue operations, the risky nature of development credits, the obstacles to the use of schemes by small firms and the cost and ineffectiveness of the investment subsidy account. Because of declining domestic investment, public subsidies accounted for 82 per cent of all private investment by 1982. In the 1980s there has been a move away from tripartite arrangements for discussing and administering industrial subsidies to commissions of ‘independent’ experts, and the degree of organisation in labour unions in the Netherlands, already low, has declined considerably in recent years. The prevalence of centre-right governments in recent years has made it easier to reduce support for individual firms, though large grants for modernisation are made to large firms. The Netherlands appears to be one of the small open countries in which the basic linkages in the model proposed by Cameron have been broken.

This paper examines the arguments for the nationalisation in 1982 of much of the privately owned banking sector in France, on the grounds that this would restore the power of money creation to the “collectivity’ and produce a better economic policy. The paper concludes that the French government's case was grounded more in elections than economics.