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Financing innovation: creative destruction vs. destructive creation

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  • Mariana Mazzucato

Abstract

Although the 2007 financial crisis, and the ensuing world-wide recession, has caused policy makers to want to 're-stabilize' the financial sector as well as 'rebalance' economies away from finance toward the 'real' economy, this article claims that to bring finance back to serve the real economy, it is fundamental to (a) also de-financialize companies in the real economy, and (b) think clearly how to structure finance so that it can provide the long-term committed patient capital required by innovation. Without this, the risk is that current policy produces a healthy financial sector (bailed out, ring-fenced, and re-structured) in a deeply sick economy, which continues to reward value extraction over value creation activities. Copyright 2013 The Author 2013. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Mariana Mazzucato, 2013. "Financing innovation: creative destruction vs. destructive creation," Industrial and Corporate Change, Oxford University Press, vol. 22(4), pages 851-867, August.
  • Handle: RePEc:oup:indcch:v:22:y:2013:i:4:p:851-867
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    File URL: http://hdl.handle.net/10.1093/icc/dtt025
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    Citations

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    Cited by:

    1. García-Quevedo, José & Segarra-Blasco, Agustí & Teruel, Mercedes, 2018. "Financial constraints and the failure of innovation projects," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 127-140.
    2. Alberto Botta & Eugenio Caversazi & Daniele Tori, 2016. "The macroeconomics of shadow banking," Working Papers PKWP1611, Post Keynesian Economics Society (PKES).
    3. Mariana Mazzucato & Caetano C.R. Penna, 2014. "Beyond Market Failures: The Market Creating and Shaping Roles of State Investment Banks," Working Papers Series 7, Institute for New Economic Thinking.
    4. Lee, Neil & Sameen, Hiba & Cowling, Marc, 2015. "Access to finance for innovative SMEs since the financial crisis," Research Policy, Elsevier, vol. 44(2), pages 370-380.
    5. Ian Clark, 2016. "Financialisation, ownership and employee interests under private equity at the AA, part two," Industrial Relations Journal, Wiley Blackwell, vol. 47(3), pages 238-252, May.
    6. Lee, Neil & Brown, Ross, 2016. "Innovation, SMEs and the liability of distance: the demand and supply of bank funding in peripheral UK regions," LSE Research Online Documents on Economics 66215, London School of Economics and Political Science, LSE Library.
    7. repec:eee:tefoso:v:127:y:2018:i:c:p:23-37 is not listed on IDEAS
    8. Athena Roumboutsos & Stéphane Saussier, 2014. "Public-private partnerships and investments in innovation: the influence of the contractual arrangement," Construction Management and Economics, Taylor & Francis Journals, vol. 32(4), pages 349-361, April.
    9. Giovanni Dosi & Valérie Revest & Alessandro Sapio, 2016. "Financial regimes, financialization patterns and industrial performances : preliminary remarks," Post-Print halshs-01418040, HAL.
    10. repec:eee:tefoso:v:127:y:2018:i:c:p:70-84 is not listed on IDEAS
    11. Paola D’Orazio & Marco Valente, 2018. "Do Financial Constraints Hamper Environmental Innovation Diffusion? An Agent-Based Approach," SPRU Working Paper Series 2018-10, SPRU - Science and Technology Policy Research, University of Sussex.
    12. repec:eee:crpeac:v:42:y:2017:i:c:p:59-73 is not listed on IDEAS
    13. Dutta, Sourish, 2015. "Financing Innovation: A Complex Nexus of Risk & Reward," MPRA Paper 75584, University Library of Munich, Germany.
    14. Marc Cowling & Weixi Liu & Maria Minniti & Ning Zhang, 2016. "UK credit and discouragement during the GFC," Small Business Economics, Springer, vol. 47(4), pages 1049-1074, December.
    15. Mariana Mazzucato, 2015. "From Market Fixing to Market-Creating: A New Framework for Economic Policy," SPRU Working Paper Series 2015-25, SPRU - Science and Technology Policy Research, University of Sussex.
    16. F.H.J. Polzin & M.W.J.L. Sanders & Florian Täube, 2017. "A diverse and resilient financial system for investments in the energy transition," Working Papers 17-03, Utrecht School of Economics.
    17. Mariana Mazzucato & Gregor Semieniuk, 2016. "Financing Renewable Energy: Who is Financing What and Why it Matters," SPRU Working Paper Series 2016-12, SPRU - Science and Technology Policy Research, University of Sussex.
    18. Anabela Marques Santos & Michele Cincera, 2017. "Access to finance as a pressing problem: Evidence from innovative European firms," iCite Working Papers WP2017-022, ULB -- Universite Libre de Bruxelles.
    19. Valerie Revest & Alessandro Sapio, 2016. "The creation function of a junior listing venue: An empirical test on the Alternative Investment Market," LEM Papers Series 2016/32, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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