In the case of legislation limiting economic activity I think it's hard to argue that reducing options can ever be an encouragement to innovation and technological progress, although it can potentially redirect it in politically favoured directions.

Hmmm... spending tax money to directly fund basic research doesn't count? (If you have to, assume that the people whose money was taxed would have spent it on something generally unrelated to technological progress - say, tobacco cultivation and consumption.)

In theory, eliminating or discouraging options that result in not creating progress should result in more progress...