For example, see Jad Mouawad (2009), "Exxon to Invest Millions to Make Fuel From Algae" New York Times (July 14, p. B1) http://www.nytimes.com/2009/07/14/business/energy-environment/14fuel.html.
John Stuart Mill's call for an "infant industry" exception to free trade is in Book V, Chapter X of his Principles of Political Economy, with Some of Their Applications to Social Philosophy. See the 1909 Ashley (7th) edition published in London by Longmans, Green: http://www.econlib.org/library/Mill/mlPCover.html:
The only case in which, on mere principles of political economy, protecting duties can be defensible, is when they are imposed temporarily (especially in a young and rising nation) in hopes of naturalizing a foreign industry, in itself perfectly suitable to the circumstances of the country. The superiority of one country over another in a branch of production, often arises only from having begun it sooner. There may be no inherent advantage on one part, or disadvantage on the other, but only a present superiority of acquired skill and experience. A country which has this skill and experience yet to acquire, may in other respects be better adapted to the production than those which were earlier in the field: and besides, it is a just remark of Mr. Rae, that nothing has a greater tendency to promote improvements in any branch of production, than its trial under a new set of conditions. But it cannot be expected that individuals should, at their own risk, or rather to their certain loss, introduce a new manufacture, and bear the burthen of carrying it on until the producers have been educated up to the level of those with whom the processes are traditional. A protecting duty, continued for a reasonable time, might*89 sometimes be the least inconvenient mode in which the nation can tax itself for the support of such an experiment. But it is essential that the protection should be confined to cases in which there is good ground of assurance that the industry which it fosters will after a time be able to dispense with it; nor should the domestic producers ever be allowed to expect that it will be continued to them beyond the time necessary for a fair trial of what they are capable of accomplishing...
For Alexander Hamilton, see:
Alexander Hamilton (1791), Report on Manufactures: Communication to the House of Representatives, December 5, 1791, from Alexander Hamilton, Secretary of the Treasury, on the Subject of Manufactures (Washington: U.S. Treasury): http://books.google.com/books?id=gCk5AAAAMAAJ&dq=alexander+hamilton+report+on+manufactures&printsec=frontcover&source=bn&hl=en&ei=FfHlSubKBpDasQOe6t2sAw&sa=X&oi=book_result&ct=result&resnum=4&ved=0CBoQ6AEwAw#v=onepage&q=&f=false.
Note that for our argument to be relevant, we do not require that attempts to pursue innovation-capturing industrial policies succeed. We expect the bulk of them to fail. The point is that such attempts are likely to take place, and are likely to be negative sum for the world as a whole. As economist Lant Pritchett puts it, the true curse is the pursuit of state-led development by what are nearly invariably anti-developmental states.