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

By Mariana Mazzucato. Innovation Systems, Policy and Management, 2016

623 citations recorded by the source corpus.

Abstract 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 galvanizing green innovation. Mission-oriented innovation has required public agencies to not only “de-risk” the private sector, but also to lead the direct creation of new technological opportunities and market landscapes. This paper considers four key issues that arise from a market-creating framework for policy: (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 growth can also result in inclusive growth.

Subfields: Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/5ac3cc0d5f8770107a9016b8ab706282213c56c3

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Citations in the corpus

Public financing of innovation: new questions (2017, methodology): “2.2 Decentralised mission-oriented agencies Crucial to this public funding was the nature of the organisations themselves: a decentralised network of strategic mission-oriented agencies (Mazzucato, 2016).”
Financing Renewable Energy: Who is Financing What and Why it Matters (2018, neutral): “…that aim to address “great challenges” such as climate change mitigation and adaption (Mazzucato and Penna, 2016; Schapiro, 2012) and promoting certain industries (Shimada, 2017; Griffith-Jones and Cozzi, 2016; Mazzucato, 2016b), jointly with a network of other public institutions (Shimada, 2017).”
Putting value creation back into “public value”: from market-fixing to market-shaping (2019, background): “Such goals can only be achieved through collaboration between both private and public sectors, which together, via the process of innovation, co-create and co-shape markets (Mazzucato 2016).”
Shaping selection environments for industrial catch-up and sustainability transitions: A systemic perspective on endogenizing windows of opportunity (2019, background): “…55 system-level effect building simultaneously on top-down interventions from government (Weber 56 and Rohracher, 2012; Mazzucato, 2016; Jacobs and Mazzucato, 2016) and bottom-up strategies 57 entertained by industrial companies, civil society actors, professional associations and researchers 58…”
Industrial policy for sustainable human development in the post-Covid19 era (2020, neutral): “A greater directionality in innovation policy fostering a sociotechnical transition towards sustainability is often connected with a mission- or challenge-oriented approach (Mazzucato, 2016), which is operationally translated into new public missions.”
Mobilizing private finance for low-carbon innovation – A systematic review of barriers and solutions (2017, neutral): “Effective measures include public-private RD&D partnerships [10], advocacy coalitions with financiers [22], mission-driven public investments [144,167], demand stimulus [120] and a (RD&D) tax-system reform [17,57,137].”
Assessing the Opportunities and Challenges of Green Finance in Italy: An Analysis of the Biomass Production Sector (2019, background): “At the same time, policy makers should encourage the long-term orientation of GF instruments by means of the active involvement of national institutional actors, who can play a key role in de-risking the private sector, leading the way to new technological opportunities [58].”
Four dangers in innovation policy studies – and how to avoid them (2016, background): “Calls for mission- or challenge-oriented approaches (Mazzucato 2016; this issue) reflect this truism.”
Three frames for innovation policy: R&D, systems of innovation and transformative change (2018, background): “Mazzucato (2015; 2016) stresses the need for actively shaping and creating.”
Challenge-Driven Innovation Policy: Towards a New Policy Toolkit (2019, background): “This approach emphasises the idea that, given certain assumptions, individuals pursuing their own self-interest in competitive markets gives rise to the most efficient outcomes (Samuelson 1947; Mas-Colell et al. 1995: 539-40).”
Innovation in and from emerging economies: New insights and lessons for international business research (2021, background): “…matter, not only as enforcers and creators of institutions but also as direct participants in innovation systems through public organizations, such as research institutes and universities, and as orchestrators of industrial and innovation policy (Laursen & Santangelo, 2017; Mazzucato, 2016, 2018).”
Circular futures: What Will They Look Like? (2020, background): “…targeting complex, multi-dimensional and systemic societal problems to influence the directionality of innovation activities (Hekkert et al., 2020; Mazzucato, 2016; Wanzenböck et al., 2019), articulate them with the demand side (Boon and Edler, 2018) and break up path-dependencies in the existing…”
Mission impossible? Entrepreneurial universities and peripheral regional innovation systems (2016, background): “In terms of potential future policy instruments, some have argued for a more entrepreneurial role for the state (Mazzucato 2016, this issue).”