Special emphasis must be put on the robust basis for economic methodology one applies, supply of necessary data, comprehensivity of the analysed impacts and implementation of the results throughout the subsidy administration. The government organs responsible for evaluation procurement and supervising must not be of legal or moral incapacity. MTI has launched and nearly completed a project aimed at developing the suitable principles for evaluation of the subsidy programmes. The project report lays down the main principles of appropriate methodology, surveys the recent economics discussion on the role of government, briefly presents current state of subsidies in Finland, discusses the reasons for applying subsidy programmes for good and worse, presents the requirements of a good evaluation report and proposes a possible structure for the administration of evaluation work. Theoretical foundations are based on both standard neoclassical economics, with strong emphasis on intertemporal optimization and industrial organization, and new growth theory, i.e. especially the importance of ideas and human capital.
Political processes get also some weight.
The work has been carried out at the Industrial Financing Policy Division of MTI by the present writer. A final report will be published in November 1997. The Act, however, needs more backing from practical administrative guidelines which still wait to be formulated. Role of government and the instruments for industrial policy Finnish industrial policy was long very traditional sectoral policy and aimed at creating a large national industrial basis. The 1990s have changed the picture remarkably.