Mariana Mazzucato: Government -- investor, risk-taker, innovator

Summary

The speaker, an economist, challenges the narrative that the private sector is inherently more innovative than the public sector. She argues that the state plays a crucial role in funding and shaping markets, as evidenced by innovations like the Internet, GPS, and Siri, which were government-funded. She suggests that the state should be recognized as a risk-taker and potentially receive direct returns on its investments, such as equity, to fund future innovations like green technology.

Takeaways

• 🌐 The United States has been particularly successful in producing innovative companies like Apple, Google, and Facebook, which have had a significant global impact.
• 🧐 The speaker, an economist, explores the relationship between innovation and economic growth and works with policymakers to understand why certain regions excel in fostering innovation.
• 🤔 The question of why Europe hasn't produced companies with the same impact as Silicon Valley's is a common one among policymakers and is a key focus of the speaker's work.
• 💡 The traditional narrative contrasts market-driven innovation with state intervention, suggesting that the former is more dynamic and effective in fostering groundbreaking companies.
• 💼 The speaker challenges this narrative by highlighting that many of the technologies in innovative products like the iPhone were funded by government agencies, not just private enterprise.
• 🔬 The state plays a crucial role not just in fixing market failures but in shaping and creating markets through funding basic and applied research, and even acting as a venture capitalist.
• 💊 In the pharmaceutical industry, 75% of revolutionary new drugs were funded by the public sector, indicating that the state is a major driver of groundbreaking innovations.
• 🌐 The state's role in innovation is often overlooked, and there's a need to rethink the public-private partnership model to better acknowledge and leverage the state's contributions.
• 💭 The speaker suggests that the state should receive a more direct return on its investment in innovation, possibly through equity stakes, to fund further innovation and address societal needs.
• 🌿 There's a call to action to rethink the state's role in innovation and economic growth, with the potential for more inclusive and sustainable outcomes, such as in the green technology sector.

Q & A

Why does the speaker suggest that innovative companies like Apple, Google, and Facebook predominantly emerge from the United States?

The speaker implies that the United States has a unique environment that fosters innovation, including market-making mechanisms and a culture that encourages risk-taking and out-of-the-box thinking.

What is the role of venture capital in supporting innovative companies according to the speaker?

Venture capital plays a crucial role by providing high-risk finance to innovative companies, which traditional banks are often reluctant to do.

What does the speaker mean by the 'Death Valley period'?

The 'Death Valley period' refers to the challenging early stages of a company's life where many businesses fail due to the high risks and financial strains involved in bringing innovative products to market.

How does the speaker challenge the common narrative about the private sector being more innovative?

The speaker challenges this narrative by pointing out that many of the revolutionary technologies in products like the iPhone were actually funded by the government, suggesting that the state plays a significant role in innovation.

What is the significance of the speaker mentioning Steve Jobs' Stanford commencement speech?

The mention of Steve Jobs' speech serves to contrast the public's perception of innovation as being driven by dynamic, private individuals with the reality that much of the foundational technology was government-funded.

Why does the speaker criticize the portrayal of the state as a 'Leviathan'?

The speaker criticizes this portrayal because it downplays the state's essential role in fostering innovation and creating markets, which is crucial for technological advancements and economic growth.

What does the speaker mean when she talks about the state 'shaping and creating markets'?

The speaker means that the state is actively involved not just in fixing market failures but also in funding and guiding the development of new technologies and industries, which in turn shapes entire markets.

Why does the speaker argue that the state should receive a reward for its investments in innovation?

The speaker argues that because the state takes on significant risks by funding innovative projects, it should receive a direct return on these investments, beyond just tax revenue, to support further innovation.

What is the role of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (SDTR) programs mentioned by the speaker?

The SBIR and SDTR programs provide early-stage financing to small companies and have been crucial in supporting innovation, often more effectively than private venture capital due to their longer-term focus.

How does the speaker suggest that the state could receive a more direct return on its investments?

The speaker suggests that the state could receive a more direct return through equity in the companies it funds, similar to how some public funding agencies in other countries retain equity and profit from their investments.

What broader implications does the speaker see for rethinking the state's role in innovation and economic growth?

The speaker sees implications for public spending, public services, and the potential for more inclusive growth that benefits a wider range of society, not just the innovators and entrepreneurs.