The storybook view of the new economy features all sorts of nifty tools - the computer, the microchip, the internet, the mobile phone, the personal digital assistant. The story tells us they were invented by (sometimes mad) scientists and teenage geniuses cloistered in garages and attics. It is to these individuals, operating far from the intrusive hand of big governments, that we owe thanks for today's technological bounty.

That's a nice tale but, sadly, it's pure myth. Technological innovation is largely nested in particular countries, at particular times. For example, during the cold war, the US and the Soviet Union were both technologically advanced nations.

But why is it that the so-called global economy arose among the capitalist democracies and not the communist dictatorships? Why did money fly from New York to London at close to the speed of light, while one could hardly make a phone call from Moscow to Warsaw? Because the commercial technologies that emerged in each bloc were a reflection of their differing political-economic systems.

Consider the US and France. Years before Americans even dreamt of the web, France had created a system of e-commerce in the "Minitel". These computer terminals were installed, free of charge, in almost every French home and office, by the then telephone monopoly France Telecom.

Consumers had a direct, secure method for conducting household and personal business. The Minitel, like the TGV (fast trains), Airbus planes and nuclear power plants, exemplified the French state's ability to carry out big, technologically sophisticated projects.

So why didn't France also become home to the burgeoning internet? Why did this technology take off in the US? Because the US, with its decentralised system of political and economic power, was a more conducive environment for the development of such an open technological solution.

One often hears in Europe the argument that "we must become more like the US". But Europe has a very different political and economic structure. In some cases, the difference has been an advantage, as with mobile telephony. Its success is largely due to the fact that European countries were able to agree on a single standard, GSM.

Europeans are now entering their third generation of mobile telephony, while Americans struggle to use their phones at various points across the country, due to the multiplicity of competing standards.

It is the relative centralisation of political and economic power, and the institutions that mediate public and private sector relationships, that provide important signals to entrepreneurs about the sorts of technological solutions that will be rewarded. This does not mean every country should seek to imitate the US.

It means that public officials who want to provide incentives for entrepreneurial activity must understand the strengths and weaknesses of their political-economic systems. It is only by capitalising on the strengths (such as human capital in Europe) and minimising the weaknesses (such as crushing bureaucracy) that countries can begin to unleash the creative power of their citizens.

Ethan B Kapstein is Stassen professor at the Humphrey Institute of Public Affairs, University of Minnesota and the author of Hegemony Wired: American Politics and the New Economy (IFRI, 2000)