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Socializing the risks and rewards of public investments: Economic, policy, and legal issues

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  • Laplane, Andrea
  • Mazzucato, Mariana

Abstract

We develop a framework for analyzing the role of public agencies in making high-risk investments along the innovation chain and ask how both the risks of innovation and the rewards can be shared between public and private actors. We build on a new approach to innovation policy, which we call market co-creating and shaping, in which the state is not only fixing markets but actively co-creating them. We also look at the legal institutions that determine (and are determined by) the relationship between public and private actors. Policy measures to institutionalize rewards in a way that promote more equitable public–private partnerships can be understood as attempts to mediate asymmetric power relations, tensions and conflicting views among multiple stakeholders, as well as building a shared notion of the value and legitimacy of the role of the state. We conclude by outlining analytical and policy implications and identifying avenues for future research.

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  • Laplane, Andrea & Mazzucato, Mariana, 2020. "Socializing the risks and rewards of public investments: Economic, policy, and legal issues," Research Policy, Elsevier, vol. 49(S).
    • Handle: RePEc:eee:respol:v:49:y:2020:i:s:s2590145120300025
    DOI: 10.1016/j.repolx.2020.100008
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    More about this item

    Keywords

    Innovation policy; Risk capital; Entrepreneurial state; Portfolio; public–private partnerships; Legal institutions;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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