The conventional view of what governments should do to foster innovation is simple: get out of the way. But economist Mariana Mazzucato argues that view is as wrong as it is widespread. In countries that owe their growth to innovation, she says the state has served not as a meddler in the private sector but as a key partner—and often a more daring one, willing to take the risks that businesses won’t.
Across the entire innovation chain, from basic research to commercialization, governments have stepped up with needed investment that the private sector has been too scared to provide. Today, however, it has become harder for governments to think big. Across the globe, policymakers have targeted public debt, arguing that cutting government spending will spur private investment. As a result, the state agencies that have been responsible for the technological revolutions of the past have seen their budgets shrink.