Power and Policy in innovation: Mariana Mazzucato and the Entrepreneurial State

imagesWhen you talk about innovation, it always comes to mind the image of entrepreneurs who create new products and scientists who develop upcoming technologies. We take in as a premise that major innovations come from individual efforts or from private companies. Because of this belief, the work of Professor Mariana Mazzucato becomes important, as it demystifies some ideas about the main institution that generates innovations and suggests a new practice of innovation funding.

In her book “The Entrepreneurial State – Debunking Public vs. Private Sector Myths” (Anthem Press), Mazzucato shows that the risk-taking investor and the bold entrepreneur are important for technological development. However, the social worker responsible for taking major risks and, consequently responsible for major innovations, is the often forgotten State. In her own words: “From Silicon Valley to Singapore, the innovation risk is public but the profits are privatized. It’s time for the private sector to give something back.”

The work presented by this author shows very solid examples, including the discovery of new molecules; the development of search engines used by Google, the discovery of the technology that created touch-screens (used in smartphones and tablets) and voice recognition systems. She claims that the State’s role is crucial because it bears the costs and high levels of uncertainty associated with scientific innovations. As consequence of this lack of awareness of the role of the State, there are myths about the State-obstacle.

Mazzucato attempts to destroy this perception when she alerts to the existence of the Entrepreneur State. This argument has not only raised an important debate on the beneficiaries of technological development but also addressed the need for these companies to give back to the State financially for the innovations in which they have benefited from. That is, private companies should financially compensate national States due to the funding of cutting-edge technologies, which is the opposite of what is currently being done where the State pays for the risky and expensive development of basic technology (that benefits all society) and private companies fund the development of applied technology (less risky and whose economic benefit is restricted only to the company itself).

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Professor Mariana Mazzucato defends an interesting theory with solid arguments that annoy authors with liberal tendencies (like this blogger, for example). What she postulates deserves to be heard and discussed even if it causes discomfort.

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  1. Do you think we have a State-obstacle or a State-entrepreneur in Brazil?
  2. Is there any Brazilian case where the State developed technology that was used by a private company (national or not)?
  3. Do you agree with the theory that private companies must cooperate with the funding of basic research? If yes, how can it be done?

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