Illustration: Istock.
During the pandemic and now during the Ukraine crisis, companies have been dependent on state aid. But according to the book's authors, there is a risk that state aid will be permanent even after the acute phase of the crisis in which it has fulfilled an important function. The fact that states have been given a more substantial role and have formulated an increasingly detailed industrial policy is attributed mainly to the Italian-American economics professor Mariana Mazzucato. In 2013 her book The Entrepreneurial State was published. She argues that the state has been the main driving force behind innovation and technological development. Since the book was published, she has been an advisor to the European Commission and several governments; thereby, she has been very influential.
In Questioning the Entrepreneurial State, IFN researchers Niklas Elert and Magnus Henrekson contribute with a chapter on innovative collaborative blocks. A theory that innovative entrepreneurship takes place in blocks consisting of several nodes with entrepreneurs, inventors, early and late-stage financiers, key personnel, and customers. The different types of actors provide the skills and resources needed for an entrepreneurial project to succeed. Elert and Henrekson believe that these competencies are just found in the economy to a sufficient extent to ensure that innovations have a good chance of flourishing and are utilized in the form of valuable goods and services. According to Elert and Henrekson, Mazzucato's view of innovation and economic growth is too mechanical.
If the state controls in too much detail how an industry should design its production or how it should be financed, the collaborative bloc risks weakening. The state industrial policy of the kind that Mazzucato advocates may, however, be necessary but is more likely to succeed when it considers the innovation bloc's importance, argue Elert and Henrekson. According to them, it is imperative to
- refrain from trying to select winners by politically supporting individual companies and organizations
- embrace market learning by learning from successes and failures
- appreciate the roles in the collaboration bloc by taking into account the unique importance of the different competence bearers for the whole
In connection with the book's release, several of the authors wrote an opinion piece in Swedish daily Dagens Nyheter calling for a critical discussion of the return of industrial policy and calling for research-based knowledge and evaluations of public investment. The anthology is part of this and contains contributions from around 30 leading international economists. It is also available to download free of charge in an open access version. The authors address both successful and unsuccessful attempts at innovation policy in Europe, the United States, and China and provide policy-design suggestions.