The well renowned professor Mariana Mazzucato visited Stockholm on September 30 and October 1 to speak at seminars arranged by Swedish Entrepreneurship Forum, VINNOVA (Sweden’s innovation agency) and Statistics Sweden. Mariana Mazzucato’s research on the relationship between financial markets, innovation and economic growth, and her book – The Entrepreneurial State: debunking Private vs Public Sector myths – have reached several “best-book-of-the-year-top-lists”. In the book, she argues for the need to develop new ways to understand the state’s role in innovation and economic growth.
– This idea that I am talking about, is about re-balancing the economy with new industrial policies, Mazzucato said in the beginning of her speech.
She was referring to the degree of which companies and pharmaceuticals are spending much more on share buy-backs and other such actions. More so than on R&D. This rate is a problem in itself. In what way policy should tackle this has not yet been solved, she said. It could in fact create a parasitic eco-system.
– Let´s be careful about the eco-system term by the way, it can be either mutualistic or parasitic. The key is to build symbiotic ecosystems, which could be one of many of the re-balancing acts. National policies are another factor within that, Mazzucato continued.
According to Mazzucato, the growth needs to be more inclusive and sustainable. It is all over the EU 2020 programs and UN . If we want to achieve this, we have to be very hands on. The market alone will not necessarily ensure this on its own. We also need to talk about the role of the state. In what way do we even talk about the economy of the state? It is fundamental, Mazzucato said.
So what is the state’s role in the economy? Is it to set level playing field and get out of the way, to solve market failures or something more? This notion that the governments only intervenes to fix things is somewhat flawed. There is a role for the government more than just being in the background; we need to move away from a constant depiction of the state as not instrumental in creating innovation-systems.
– If we look at the data and patterns, we have had a lack of willingness to innovate in the market.
The entrepreneurial state has a place for entrepreneurship in the way of taking risks, moving away from the economic market failure-state. The goal is to create a different framework, trickling down a new way of evaluating innovation and future investments.
– I am focusing on indicators that fail to capture the whole picture, Mazzucato said.
Mazzucato took Silicon Valley as an example and the objective to continue to emulate this area in other places. Countries that have had an active government across the entire chain, which includes massive capital, have succeeded to quite a large degree. Mazzucato thought that it was fascinating that this had not been recognized more.
– The notion that you have to teach entrepreneurship is silly. Entrepreneurs mostly use existing technology and the “genius-ness” is the way that they combine different innovations; that is the basis for much of the smartness of new product or services.
Mazzucato concluded with the remark that government programs have shaped innovations, even though there are plenty of programs that are unsuccessful as well. Seemingly Sweden has only direct funding (as a percentage of GDP). Spain has cut their publicly funded spending R&D in order to be more competitive through indirect spending, which is mad, Mazzucato explained. You tend to find a correlation between countries that have indirect as well as business spending, where Sweden is at the top.