SPRU - Science Policy Research Unit

The Entrepreneurial State

There is a widespread view of the State as a large bureaucratic organization that can at best facilitate the creative innovation that is developed in the dynamic private sector. This view is associated with an economic theory that sees government intervention as only justified in cases of 'market failures’.

entrepreneurial stateThe Entrepreneurial State, led by Professor Mariana Mazzucato, investigates whether such view and theory of the State are supported by evidence. It explores the actual role of governments in the innovation process, and develops a careful critique of the market failure view of government intervention.

The key result is that the few regions in the world that have achieved ‘smart’ innovation led growth have been driven by a ‘mission oriented’ well funded public sector, able and willing to directly invest along the entire innovation chain. Not only in areas of ‘public goods’ (the typical market failure) and not only as a ‘facilitator’. Indeed, the State (through its decentralized network of agencies) has been a direct investor and risk-taker, making things happen that otherwise would not have: including every technology that makes the iphone so ‘smart’. 

Methodology

The project has passed through two phases, and is currently in its third phase. The first, exploratory phase (2010-2012) began as a collaboration with the UK think tank DEMOS. The second phase (‘Finance and the Entrepreneurial State’, 2012-2014), funded by the Ford Foundation’s Reforming Global Finance Initiative (2012-2014), gathered evidence, through in-depth case studies, on the role of the State as a key source of finance for radical innovation development. The third phase (‘The Entrepreneurial State: value creation, value extraction, and inclusive growth’, 2014-2016), is also financed by the Ford Foundation (2014-2016), and focusses on the relative roles of private and public agents in the innovation process, and investigates how the State may devise policies to socialize not only risks but also rewards, in order to promote growth that is both smart and inclusive.

Findings

Key research findings from phases 1 and 2 have been published in a book; ‘The Entrepreneurial State: Debunking Public vs. Private Sector Myths (Anthem, 2013), by Professor Mariana Mazzucato. Detailed case studies expose the ways in which States have, through the direct funding of high-risk areas and mission-oriented policies, provided the courageous, high-risk investments that have led to the development of new technologies and sectors, creating new opportunities that later the private sector has seized.

The project also highlights the need for policy makers to consider how to finance the next wave of innovation and growth. Such risk-taking by entrepreneurial states should be rewarded, but with so many new companies paying very little tax, policy makers need to consider specific mechanisms such as income contingent loans to generate funds for future investment in innovation.

Impact and Influence

The project is changing political and public discourse throughout the world on how governments should drive innovation. The book, The Entrepreneurial State: debunking private vs. public sector myths, has been reviewed positively in the Financial Times, Forbes, New York Times, and The Economist, as well as in 200 international outlets, and on the top books of the year lists of Financial TimesForbes and the Huffington Post. It is being translated in 6 languages

In 2013 the New Republic called Professor Mariana Mazzucato one of the '3 most important thinkers about innovation', her TED Global talk has been viewed by over 600,000 people worldwide.

UK Parliament

Minister of State for Universities and Science, the Rt Hon David Willets, has credited Professor Mariana Mazzucato’s work with introducing into the UK the concept of the state shaping markets. He also acknowledged the influence of her work on the government’s approach to ‘picking’ technologies for investment, in changing his understanding of technologies needing direct support (the basis of his ‘8 Great Technologies’ initiative), and influencing the UK’s Life-Sciences Strategy. Times Higher Education article by WillettsBBC Newsnight interview with Willetts 

The project has also influenced the growth strategy
 of Secretary of State for Business, Innovation and Skills (BIS), the Rt Hon Vince Cable, highlighted in the CBI’s Business Voice magazine. The work was referenced in BIS’s key 2012 growth paper that underpinned the government’s growth agenda. Cable cited Mazzucato in his August 2013 speech on why he set up the Catapult Centres.

Similarly, the work has impacted
 on the Labour Party’s Shadow BIS Strategy, with Special Advisor to Shadow Business Secretary, Chuka Umunna MP, stating that their flagship ‘Active State’ agenda was greatly influenced by this project’s insistence on a new framework for government-led innovation growth, Chuka Umunna MP Speech at CIPFA (June 2013). The Labour Party has also claimed, in an article in Research Fortnight, that Professor Mazzucato’s points about risks and rewards have been influential in how they think about innovation and inequality.

Professor Mazzucato has also directly advised recent reports, including Lord Heseltine’s No Stone Overturned and the LSE Growth Commission.

USA

At the US Senate Committee on Appropriations meeting on ‘Driving Innovation Through Federal Investments’ (29.04.14) NIH Director Francis Collins, in his speech on the necessary funding for biomedical research, cites Professor Mazzucato's book, ‘The Entrepreneurial State’. Collins specifically refers to the impressive reviews it has received from the financial press, that have concluded there is a strong economic case for the federal government’s role as the US economy's indispensable entrepreneur'.

In March 2014 Professor Mazzucato was invited to give a key note speech at ARPA E - The Advanced Research Projects Agency-Energy, the organization that advances high-potential, high-impact energy technologies that are too early for private-sector investment, and which have the potential to radically improve U.S. economic prosperity, national security, and environmental well being.

Global

Professor Mazzucato has given presentations to various ministries around the world, including The Dutch Ministry of Economic Affairs, the Norwegian Research Council, the Danish Ministry for Innovation, Italian Parliament and the Chinese Ministry for Science and Technology.

The work of this project has also had a significant impact on the European Commission where Mazzucato sits on two high level panels influencing EC innovation policy. The EC chose an interview with Mazzucato on her thinking to launch its new Horizon 2020 magazine, and the FINNOV project which she led as PI (2009-2012, with SPRU as partners) was chosen as one of the EC’s  “success stories”.

Professor Mazzucato speaks regularly about her work, including three talks at the World Economic Forum in Dalian China (9/2013), and the World Bank’s ‘Making Growth Happen: Implementing Policies for Competitive Industries’ (10/2013). In the first 6 months of 2014 Professor Mazzucato has given over 25 keynotes. 

Partners and links

The project began as a collaboration with the UK think tank DEMOS, and is now part of a new project funded by the US Ford Foundation (as part of its Reforming Global Financial Governance initiative).

US Senate Committee on Appropriations (starts at minute 45)

All written and visual media, including those cited above, and much more can be found on www.marianamazzucato.com

Contact

Visit Professor Mariana Mazzucato's Sussex staff profile 

Email: M.Mazzucato@sussex.ac.uk

View Professor Mariana Mazzucato's CV