February 24, 2014 | Contribution by
MARIANA MAZZUCATO Mariana Mazzucato is the R.M. Phillips Professor in the Economics of Innovation, SPRU, at University of Sussex.
Biofuels. Photo credit: Flickr @ Steve Jurvetson (http://www.flickr.com/photos/jurvetson/)
What role should governments play in securing not only "smart" growth — which reflects innovation-led growth — but also "inclusive" growth? To learn more, the JKP recently spoke with Mariana Mazzucato, the R.M. Phillips Professor in the Economics of Innovation, SPRU, University of Sussex — one of the speakers at the World Bank's recent conference on Making Growth Happen: Implementing Policies for Competitive Industries.
In Part 1 of this series, she stresses that the problem with achieving inclusive growth isn't just one of skill bias in innovation, as commonly suggested, but also one of value extraction — certain agents within the system (and not just financial ones) have been extracting more than they've actually been contributing. This occurs, for example, when companies invest an increasing percentage of net earnings in share buybacks rather than human capital formation and R&D. Although Mazzucato welcomes industrial strategy, she insists that it can't be disassociated from issues of governance. In addition, she contends, governments can play a vital entrepreneurial (risk-taking) role.
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