Mariana Mazzucato

University College London | UCL · Institute for Innovation and Public Purpose

US drug companies turn taxpayer-funded innovation into astronomical profits. A new agency focused on health innovation could shift the rewards of medical advances to benefit public health.

Este documento trata sobre cómo aprender de la experiencia pasada y cómo avanzar hacia las nuevas formas de capitalismo que deben estar en el centro de un sistema impulsado por la misión, en el que los grandes problemas de nuestro tiempo, como la brecha digital, los sistemas sanitarios y el cambio climático sean centrales, y cómo trabajar juntos pa...

This paper is about how to learn from past experience and how to move towards the new forms of capitalism that must be at the heart of a mission-driven system, in which the big issues of our time such as the digital divide, health systems and climate change are central, and how to work together to address them. This paper is about how to design a p...

There is increasing consensus that modern capitalist economies suffer from excessive rent extraction in both the financial and real economy sectors. However, scholars have yet to develop a coherent analytical framework for identifying the common characteristics of modern economic rents. In particular, there has been little attention paid to disting...

Attempts by governments to curb the market power of ‘Big Tech’ (Alphabet, Amazon, Apple, Meta Platforms, and Microsoft) are impeded by limited public information on their diversified digital platform ecosystems. Big Tech’s annual 10-K financial reports disclose little about their globally dominant ‘free’ services, platform user numbers, and monetiz...

The corporate community has rediscovered an old idea: stakeholder value. The concept’s history is rooted in the literature on varieties of capitalism. Within that scholarship it has served to delineate institutional and relational differences between capitalist systems and forms of corporate governance. Today, stakeholder value is being used to arg...

One of the biggest lessons of the COVID-19 pandemic is that public sector capacity to manage a crisis of this proportion is dependent on the cumulative investments that a state has made, especially to bolster dynamic capabilities. For South Africa, an array of institutional weaknesses and governance failures at the municipal and national levels hav...

This commentary from the Journal Editorial Board sets out the research agenda for the journal and invites contributions. We want to elicit and synthesize research- and practice-based knowledge toward the goal of resilient, equitable cities in a world with less than 1.5°C of warming, focusing on the transformational change needed to achieve this goa...

Green transition is a 'wicked' problem in that it is complex, systemic, interconnected, and urgent. In this paper we advance a 'mission-oriented' approach to reconceptualize energy megaprojects within a systemic, cross-sectoral, and challenge-driven policy framework for energy transition. This approach is operationalized through a discussion of pro...

In conventional economics, value creation occurs in the private sector with the state limited to correcting for “market failures”. Public management scholars have developed the term “public value” to describe how public sector managers can engage citizens in shaping effective policy. A more ambitious concept of public value rejects the “market fail...

Inequitable access to the fruits of research during the COVID-19 pandemic highlights the urgency — and feasibility — of overhauling the R&D system. Inequitable access to the fruits of research during the COVID-19 pandemic highlights the urgency — and feasibility — of overhauling the R&D system.

The sixth and most recent comprehensive report by the Intergovernmental Panel on Climate Change (IPCC) confirms that cataclysmic climate change is now “inevitable” and “irreversible” at present trajectories. The IPCC’s stark warning suggests that we have only a decade to radically restructure our relationship with nature if we are to avoid the most...

The market size and strength of the major digital platform companies has invited international concern about how such firms should best be regulated to serve the interests of wider society, with a particular emphasis on the need for new antitrust legislation. Using a normative innovation systems approach, this chapter investigates how current antit...

A public option is a government-provided social good that exists alongside a similar privately provided good. While the public option is typically identified with health care policy, public options have been a longstanding feature of American life in a variety of sectors, ranging from libraries to swimming pools. Public schools, for example, coexis...

Through well-defined objectives, or more specifically «missions» focused on solving important societal challenges, policymakers have the opportunity to determine the direction of growth by making strategic investments in many different sectors and fostering new industrial landscapes, which the private sector can further develop and, as a result, in...

Enhancing research and development and ensuring equitable pricing and access to cutting-edge treatments are both vital to a biopharmaceutical innovation system that works in the public interest. However, despite delivering numerous therapeutic advances, the existing system suffers from major problems: a lack of directionality to meet key needs, ine...

This paper investigates the determinants of economic growth from both a theoretical and an empirical perspective. The paper combines the supermultiplier model of growth with the Neo-Schumpeterian framework that emphasises the entrepreneurial role of the state. We aim to detect the macroeconomic effect generated by alternative fiscal policies: gener...

This paper investigates the determinants of economic growth from both a theoretical and an empirical perspective. The paper combines the supermultiplier model of growth with the Neo-Schumpeterian framework that emphasises the entrepreneurial role of the state. We aim to detect the macroeconomic effect generated by alternative fiscal policies: gener...

There is increasing consensus that modern capitalist economies suffer from excessive rent extraction. The neoclassical approach sees rents as emerging from market imperfections—often created by state intervention—which lead to prices above the optimum equilibrium level. Using a mark-up pricing framework, we argue instead that rising rents—which inc...

The paper argues that to govern a pandemic, governments require dynamic capabilities and capacity—too often missing. These include capacity to adapt and learn; capacity to align public services and citizen needs; capacity to govern resilient production systems; and capacity to govern data and digital platforms.

Policy makers are increasingly embracing the idea of using industrial and innovation policy to tackle the ‘grand challenges’ facing modern societies. This article argues that through well-defined goals, or more specifically ‘missions’, that are focused on solving important societal challenges, policymakers have the opportunity to determine the dire...

This outlook provides a focused assessment of the state of public capital in the major European countries and identifies areas where public investment could contribute more to stable and sustainable growth. A European Public Investment Outlook brings together contributions from a range of international authors from diverse intellectual and professi...

We develop a framework for analyzing the role of public agencies in making high-risk investments along the innovation chain and ask how both the risks of innovation and the rewards can be shared between public and private actors. We build on a new approach to innovation policy, which we call market co-creating and shaping, in which the state is not...

Institute for Innovation and Public Purpose, University College London

Rapid structural change towards a low-carbon energy supply requires significant additional investments into innovative but high-risk low-carbon technologies. Mobilising greater private investments requires applying the right policy instruments, but while fiscal measures and regulation have been well researched, systematic quantitative evidence abou...

Rapid structural change towards a low-carbon energy supply requires significant additional investments into innovative but high-risk low-carbon technologies. Mobilising greater private investments requires applying the right policy instruments, but while fiscal measures and regulation have been well researched, systematic quantitative evidence abou...

The Sustainable Development Goals (SDGs) and the Paris Agreement on Climate Change call for deep transformations in every country that will require complementary actions by governments, civil society, science and business. Yet stakeholders lack a shared understanding of how the 17 SDGs can be operationalized. Drawing on earlier work by The World in...

Innovation has not only a rate but also a direction: the twenty-first century is becoming increasingly defined by the need to respond to major social, environmental, and economic challenges. This chapter looks at how innovation policy can be reframed around ‘missions’, to guide both innovation policy and industrial strategies around key societal ch...

While investments into renewable energy technologies are growing almost everywhere, the chances to meet ambitious emission and climate targets, as those envisaged in the Paris Agreement, are scant. To speed up the transition, policy makers need to design and implement a policy mix that could affect not just the quantity of green finance, but its qu...

To finance the transition to low-carbon economies required to mitigate climate change, countries are increasingly using a combination of carbon pricing and green bonds. This paper studies the reasoning behind such policy mixes and the economic interaction effects that result from these different policy instruments. We model these interactions using...

Governments and international organisations have recognised the potential of science, technology and innovation (STI) to enable and accelerate the transition towards the Sustainable Development Goals (SDGs). There is a need to re-align and streamline public policies and investments to harness the benefits of STI for the SDGs more effectively. This...

Dieser Beitrag befasst sich mit dem Verständnis des Staates in der traditionellen Wirtschaftstheorie, die dessen Rolle auf die Stabilisierung der Märkte sowie auf Fördermaßnahmen oder die Risikominimierung für den Privatsektor beschränkt. Tatsächlich jedoch hat der Staat oft ganz aktiv Märkte (mit)geschaffen und hohe Risiken dafür in Kauf genommen,...

Debates over value in health innovation in the U.S. and Europe have become increasingly dominated by “value-based pricing”. We examine this prevailing narrative and its weaknesses and then present an alternative framework for rethinking value in health. Drawing on scholarship from the political economy of innovation, we argue that value in health m...

Market creation is moving to the centre of mission-oriented innovation policy. This is particularly visible in the space sector. Agencies such as the National Aeronautics and Space Administration (NASA) and the European Space Agency (ESA) are developing market-creating innovation policies in response to (a) the increasing emphasis on societal grand...

This article focuses on the broader lessons from mission-oriented programs for innovation policy- and indeed policies aimed at investment-led growth. While much has been written about case studies on missions, this has not resulted in an alternative policy making toolkit. Missions-in the least- require those tools to be just as much about market co...

This article contextualizes the reemergence of mission-oriented innovation policies in the broader search for a new type of innovation policies-and the appropriate organizational forms-that can tackle "grand societal challenges," and focuses on our knowledge gaps in designing and implementing such innovation policies. We identify the concept and pr...

This paper surveys the current state of financing green growth in the energy sector, based on the insight that there are different qualities of finance. In past transformational changes in other sectors, public monies played a key role across the innovation landscape. Public financing was central also in a number of past national energy transitions...

The European Commission, through Carlos Moedas, Commissioner for Research, Science and Innovation, invited Professor Mazzucato to draw up strategic recommendations to maximise the impact of the future EU Framework Programme for Research and Innovation through mission-oriented policy. This report is the result of Professor Mazzucato’s reflections ba...

The paper investigates the determinants of private investment and economic growth from a theoretical perspective. We start with a critical analysis of the crowding-out effect and we present a new version of the Sraffian Supermultiplier: a model that accounts for both the multiplier and accelerator effects. We focus on different types of fiscal poli...

Research and innovation strategies are the pillars of Europe’s 2030 strategy: achieving growth that is smart, inclusive and sustainable. Key to this process is providing a direction for change, while also enabling bottom up experimentation and exploration. Directions for innovation can be guided towards the grand challenges facing societies, whethe...

In this paper, we discuss the state of the art in research and policy making related to the dynamics of financing innovation, highlighting gaps in the literature and setting up the objectives of this Special Issue. We also provide a discussion of methodological issues and future directions for the stream of studies aiming at the evaluation of the e...

Successful financing of innovation in renewable energy (RE) requires a better understanding of the relationship between different types of finance and their willingness to invest in RE. We study the ‘direction’ of innovation that financial actors create. Focusing on the deployment phase of innovation, we use Bloomberg New Energy Finance (BNEF) data...

U.S. public activities in space directed via NASA are undergoing change. While NASA has historically been able to drive market creation, through its procurement policy (which is much weaker in Europe), the past decade has seen a visible shift in US space policy, away from NASA-directed developments in low-Earth orbit (LEO) towards an ecosystem with...

Economic theory justifies policy when there are concrete market failures. The article shows how in the case of innovation, successful policies that have led to radical innovations have been more about market shaping and creating through direct and pervasive public financing, rather than market fixing. The paper reviews and discusses evidence for th...

Three fundamental problems have led to Western capitalism's current weak performance: weak and unstable growth; stagnant living standards and rising inequality; and environmental risk and climate change. A more innovative, sustainable, and inclusive economic system is possible. We need a richer characterization of markets and the businesses within...

Will more state-funded R&D lift the UK's post-Brexit economy, asks Mariana Mazzucato

U.S. public activities in space directed via NASA are undergoing change. While NASA has historically been able to drive market creation, through its procurement policy (which is much weaker in Europe), the past decade has seen a visible shift in US space policy, away from NASA-directed developments in low-Earth orbit (LEO) towards an ecosystem with...

The paper develops a typological framework of the roles of state investment banks (SIBs) in the economy. The typology identifies four different roles: countercyclical; developmental; venture capitalist; and challenge-led. The paper conceptually elaborates the typology by first providing a historical overview of SIBs, and then discussing how the mai...

Successful innovation policies are those that actively create and shape markets, not only fix them. In the past this has been achieved through “mission-oriented” policies aimed not at fixing market failures or minimizing government failures, but rather on maximizing the transformative impact of policy. Countries around the world are currently striv...

This chapter calls for an approach to economic policy that takes evolutionary and complex systems theories into account. Such an approach alters the way that economic policy is framed and how policy co-depends on understanding markets as outcomes of nonmarket interactions, incomplete information, path dependency, and coordination failures. Using se...

As guest editors of this Special Issue of PE/JEP we have selected a small number of rather detailed assessment of contemporary history of domestic industrial policies in the international context. The four papers included in this Special Issue can be seen as three case studies of “sectoral” innovation policies (broad band, wind energy, biotechnolog...

Why government must negotiate a better deal for publicly funded research The investigation by The BMJ and Cambridge and Bath universities into the availability of breakthrough hepatitis C drugs raises important questions for NHS England about access to lifesaving drugs.1 However, the main question is why medicines are so expensive in the first pl...

Accelerating innovation in renewable energy (RE) requires not just more finance, but finance servicing the entire innovation landscape. Given that finance is not ‘neutral’, more information is required on the quality of finance that meets technology and innovation stage-specific financing needs for the commercialization of RE technologies. We inves...

Many countries are pursuing innovation-led “smart” growth, which requires long-run strategic investments and public policies that aim to create and shape markets, rather than just “fixing” markets or systems. Market creation has characterized the kind of mission-oriented investments that led to putting a man on the moon and are currently galvanizin...

Western capitalism is in crisis. For decades investment has been falling, living standards have stagnated or declined, and inequality has risen dramatically. Economic policy has neither reformed the financial system nor restored stable growth. Climate change meanwhile poses increasing risks to future prosperity. In this book some of the world’s l...

This paper presents a critique of the market failure theory, focusing on its limitationsfor explaining the creation of new markets. From a review of the literature on the subjectand several examples, I argue that the state has an essential role in fostering innovation.Therefore, the challenges for innovation in the future should be less focused on...

The paper considers the direct, strategic investments that have been made by international public institutions creating and shaping (not only fixing) green technology. It builds on the key themes found in the The Entrepreneurial State: debunking public vs. private sector myths.

This paper focuses on the rise of state investment banks (SIBs) as lead funders of mission-oriented innovation in various countries’ agendas regarding smart (innovation-led) growth, and not just fixers of ‘market failures’. The market failure justification for public finance fails to capture the active mission-oriented role that such banks are play...

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...