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From market-fixing to market-creating: a new framework for economic policy

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posted on 2023-06-09, 02:07 authored by Mariana Mazzucato
Many countries are pursuing innovation-led ‘smart’ growth, which requires certain types of long-run strategic investments. This paper argues that such investments require public policies that aim to create markets, rather than just ‘fixing’ market failures (or system failures). Such ‘mission-oriented’ investments have led to men walking on the moon (which created spillovers across the economy) and are today catalyzing investments to tackle climate change around the world. In the two above mentioned cases, public agencies not only ‘de-risked’ the private sector, but also led the way in terms of shaping and creating new technological opportunities and market landscapes. Only then was the private sector willing to invest. This paper considers four key questions that arise from a ‘market creating’ framework: (1) decision-making on the direction of change; (2) the nature of (public and private) organizations that can welcome the underlying uncertainty and discovery process; (3) the evaluation of mission oriented and market-creation policies; and (4) the ways in which both risks and rewards can be shared so that ‘smart’ innovation-led growth can also result in ‘inclusive’ growth.

Funding

DOLFINS - Distributed Global Financial Systems for Society; G1530; EUROPEAN UNION; 640772

Finance and the Entrepreneurial State; G0786; FORD FOUNDATION; 1125 1696

History

Publication status

  • Published

File Version

  • Published version

Publisher

SPRU Working Paper Series

Pages

23.0

Department affiliated with

  • SPRU - Science Policy Research Unit Publications

Institution

University of Sussex

Full text available

  • Yes

Legacy Posted Date

2016-07-11

First Open Access (FOA) Date

2016-07-11

First Compliant Deposit (FCD) Date

2016-07-11

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