The State's role in technological revolutions

This research area analyses the role of the state in driving innovation to generate innovation-led, inclusive economic growth.

The research will build听on the work of Carlota Perez on the role of the co-evolution of the role of the state and the role of finance during听 technological Revolutions, and the work of Mariana Mazzucato on the Entrepreneurial State in being the 鈥榠nvestor of first resort鈥� and lead risk-taker, during recent waves of innovation.

This research area will explore questions such as:

How have technology and economic growth intersected, from the first Industrial Revolution to the present day?
What has been the role of public policy in actively investing in new areas, beyond just facilitating and de-risking?
How can the lessons from past technical revolutions, and the role played by the State in the deployment periods, inform future policy direction?
How can the State best harness the potential of 鈥榯urning points鈥� to deliver 鈥榞olden ages鈥� of growth and stability, at individual, country and global levels, instead of periods stagnation and social unrest?
What has been the distribution of risks and rewards across the innovation chain amongst different actors?
How have different actors (public, private and third sector) combined their activities across the innovation chain?

Beyond 鈥榯urning points鈥�

Carlota Perez鈥檚 research explores how the five major technological and economic upheavals since the start of the Industrial Revolution in the 1770s have each heralded 鈥榞olden ages鈥� of productivity and radically shifted the centres of industrial and global power. .

Historically, 鈥榯urning points鈥� occur when new technologies and infrastructures have been installed, but their potential has yet to be deployed. They can be marked by income inequality, 鈥榮ecular stagnation鈥� and social unrest. But if the right choices are made, and if the State is active in setting a direction, they also have the potential to be periods of flourishing industry and growth.

IIPP research in this area will look at the historical role played by the State during these turning points, and address questions such as:

Are fears of secular stagnation justified or short-sighted?
Can we foresee the impact of ICT and globalisation on full global employment?
Are there peaceful alternatives to the crises and wars that have marked previous Turning Points?
What are the roles of finance, government and the social economy?
What is the potential for 鈥榮mart green growth鈥� to direct resource-efficient innovation in the age of ICT?
What role might lifestyle change play in shaping demand and innovation trajectories?

The Entrepreneurial State

Mariana Mazzucato鈥檚 work on the Entrepreneurial State has explored the role of the state in fostering long run, innovation-led growth.听 Her 2013 book, "", set out a series of case studies of the state's critical impact in developing sectors including IT, biotech, nanotech and today鈥檚 emerging green tech. Mazzucato also shows how the technologies that make the iPhone 鈥榮mart鈥� were publicly funded: the Internet, GPS, its touch-screen display and the voice-activated Siri.

Orthodox economics limits the state's role to fixing market failures.听 Mazzucato's book showed how a decentralised network of public sector actors had made risky investments, along the innovation chain, critical to co-creating and shaping new markets.听 This insight prompts new questions that IIPP's research is addressing, including:

How can governments move on from fear of 鈥榩icking winners鈥� to focus instead on missions听which can bring about transformative change across many sectors?
How can governments embrace uncertainty and failure as part of the learning process, as innovative private sector organisations do?
What new tools are needed to measure and assess the dynamic impact of different types of public policies that aim to create markets not only fix them?
How can public and private sectors share both the risks and rewards of innovation so that growth is more inclusive?

Many of these questions are also being addressed through IIPP's work on mission-oriented innovation policy.听 Read more here.

Research publications

Mission-Oriented Innovation Policy: Challenges and Opportunities
Working Paper
Ref: IIPP WP 2017-01

Thinking About Technology Policy: 鈥楳arket Failures鈥� versus 鈥業nnovation systems鈥�
Working Paper
Ref: IIPP WP 2017-02

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