nature of capitalism in which the accumulation of knowledge is embedded in market processes. It cannot readily be managed, let alone accounted for. A world of innovation is in policy terms rather uncomfortable. However, in terms of economic development it is clear that innovation policy matters. I have suggested that what matters for STI policy is the creation of an innovation system and an associated innovation culture. Its role is not to innovate at the world frontier but rather to adapt and develop available technologies to meet the needs of local markets and resources. This is challenge enough.