Many of the strategies governments use were based in the Industrialization Age where hard products were created. The modern age is more technological and service oriented. It is my perspective that better online collaborative communities are likely to spark that innovation at a fraction of many of the previous programs.
The methods in use service specific functions such as either sparking, transferring, or rewarding innovation. The author cites the following approaches:
Copy-write and Patent Protection: Legally protecting new developments to reward the inventor. While not cited in the article it is beneficial to reign in infringements in nations like China.
High speed Internet: Local governments are creating high speed Internet infrastructure that encourage increasing information transference.
Tax Credits: Property for relocation, sales and research tax credits.
Investments: Encouragement of investment into regional research centers, new technology and investment loans. There are some governments which invest public pension funds.
Prizes and Rewards: Offer prizes and rewards for entrepreneurs, innovators and inventors that work for the government or contract through them.
Knowledge Transfer: Universities that received federal funds will transfer their new technology to the private sector to encourage greater innovation.
Jaknis, N. (2011) Government's Role In Facilitating An Innovative Economy. International Journal of Innovation Science, 3 (3).