A new theory of wealth creation must underpin inclusive growth, Mariana Mazzucato, RM Philips Professor in the Economics of Innovation, told a United Nations meeting of Finance Ministers from across Latin America & the Caribbean on Thursday 26th May, 2016.
Professor Mazzucato spoke during the opening session of the High Level Seminar of the thirty-sixth session of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). Her talk followed the presentation of ECLAC’s 2030 Agenda ‘Horizons 2030: Equality at the Centre of Sustainable Development’ by Executive Secretary Alicia Bárcena, and comments from Luis Videgaray Caso, Secretary of Finance and Public Credit of Mexico.
The 36th Session of ECLAC was opened by the President of Mexico, Enrique Peña Nieto, on Tuesday 24th May 2016.
During her presentation of the Horizons 2030 document, Alicia Bárcena said:
“The dominant development pattern is unsustainable. We are undergoing a change of era, with profound tectonic changes that humanity has not been able to absorb in full. That is why our proposal is to make a structural change on the basis of a big environmental push.
“To confront these challenges, we propose a progressive structural change that increases the incorporation of knowledge in the economies. New coalitions, new institutions and public-private alliances are required. It is about changing the conversation.”
In her response, Professor Mazzucato stated: “As ECLAC says in its document, we need to foster inclusive growth and new dynamic public-private associations. New contracts must be generated, a new relation between both sectors.”
Professor Mazzucato discussed the three “efficiencies” that the publication addresses (the Schumpeterian, on the role of entrepreneurship and innovation; Keynesian, on the expansion of aggregate demand and the role of active fiscal public policies; and environmental, to generate growth with less carbon production), saying that ECLAC was at the forefront of international economic debate.
Professor Mazzucato said:
“A more inclusive model of growth requires policy-makers to think beyond the standard policy instruments focused on redistribution through the tax system. We must first challenge the popular myth of business as the main engine of wealth creation to understand the real story: wealth creation is a collective process – the outcome of dynamic interactions between different actors in the economy, including business, but also the public sector, civil institutions and many individuals.
“This insight is key to free policy-makers from the idea that they must be ‘business-friendly facilitators’ and enable them to instead think about the kind of dynamic mutualistic relationships between public and private sectors that can drive productive, long-term growth. Governments must shape and create markets, not only fix them, learning from successful mission-oriented innovation policies of the past — which today can focus on societal challenges including climate change.
“A new era of sustainable, innovation-led and inclusive growth will require not only investment in ‘infrastructure’ but bold thinking about the state’s role in the economy which socialises both risks and rewards. A better definition of public and social value will be key to this process.”
Professor Mazzucato recently visited Chile and Argentina in April 2016, by invitation of ECLAC, to deliver the prestigious Raúl Prebisch lecture. She was the first woman to deliver the lecture. Previous speakers have included Nobel Laureate in Economics Joseph Stiglitz and Professor of International Political Economy at Harvard University’s John F Kennedy School of Government Dani Rodrik.
Speaking after Professor Mazzucato’s Raul Prebisch lecture, Alicia Bárcena said:
“Professor Mazzucato has stormed the global economic debate as a fresh, clear and rigorous voice and, armed with data, has dismantled orthodoxy’s discursive device, unveiling the State’s role not as simply correcting ‘market failures’ but as a powerful creator of new markets.”
The ECLAC document prepared by the Secretariat, ‘Horizons 2030: Equality at the Centre of Sustainable Development’, examines the main challenges facing Latin America and the Caribbean in the economic, social and environmental spheres. On the basis of the Sustainable Development Goals and in light of global economic trends, ECLAC considers the policies and partnerships that the region will need in order to move towards a development path capable of ensuring greater equality and environmental sustainability. The document prepared by the secretariat argues that new global public goods are required to guarantee stable growth with inclusion, the creation of good-quality employment and environmental stewardship. It also makes regional and national policy proposals geared towards an environmental big push, in the framework of a renewed relationship between the State, the market and society.
Read an excerpt from ‘Horizons 2030: Equality at the Centre of Sustainable Development’ or view the seminar programme.
Read about Professor Mazzucato’s Raúl Prebisch Lecture.
Photo: Adrián Orozco/SRE via Flickr.