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

Mazzucato, Mariana (2015) From market-fixing to market-creating: a new framework for economic policy. Working Paper. SPRU Working Paper Series.

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Abstract

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.

Item Type: Reports and working papers (Working Paper)
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Subjects: H Social Sciences
H Social Sciences > HB Economic theory. Demography
Depositing User: Caroline Cooper
Date Deposited: 11 Jul 2016 15:12
Last Modified: 11 Jul 2016 15:35
URI: http://sro.sussex.ac.uk/id/eprint/61970

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Project NameSussex Project NumberFunderFunder Ref
Finance and the Entrepreneurial StateG0786FORD FOUNDATION1125 1696
DOLFINS - Distributed Global Financial Systems for SocietyG1530EUROPEAN UNION640772