The reform of higher education includes portfolio management, fostering strengths and profiles, and allocation of much university investment to a few selected fields. Targeted investments of the Federal Institutes of Technology and National Research Programmes have a long tradition. The Innovation Promotion Agency (CTI) also engages in funding priority areas in key technologies such as nanotechnology and medical technologies. Experience with P/PPs for research and innovation indicates that they can be an effective focusing device for the allocation of resources with industry participation, and thus contribute to priority setting in new ways. The approach may be (partly) top-down, e.g. defining certain thematic areas (sometimes in rather broad terms), or it may adopt thematically open, bottom-up procedures which have proven fruitful in revealing developments within the innovation system, e.g. through the appearance of multidisciplinary consortia engaging in novel types of joint research.