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Mission-oriented policies and the “Entrepreneurial State” at work: An agent-based exploration

Author

Listed:
  • Giovanni Dosi

    (SSSUP - Scuola Universitaria Superiore Sant'Anna = Sant'Anna School of Advanced Studies [Pisa])

  • Francesco Lamperti

    (RFF-CMCC European Institute on Economics and the Environment (Milan))

  • Mariana Mazzucato

    (UCL - University College London [UCL])

  • Mauro Napoletano

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur, SSSUP - Scuola Universitaria Superiore Sant'Anna = Sant'Anna School of Advanced Studies [Pisa])

  • Andrea Roventini

    (SSSUP - Scuola Universitaria Superiore Sant'Anna = Sant'Anna School of Advanced Studies [Pisa], OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

We study the impact of alternative innovation policies on the short- and long-run performance of the economy, as well as on public finances, extending the Schumpeter meeting Keynes agent-based model (Dosi et al., 2010). In particular, we consider market-based innovation policies such as R&D subsidies to firms, tax discount on investment, and direct policies akin to the "Entrepreneurial State" (Mazzucato, 2013), involving the creation of public research-oriented firms diffusing technologies along specific trajectories, and funding a Public Research Lab conducting basic research to achieve radical innovations that enlarge the technological opportunities of the economy. Simulation results show that all policies improve productivity and GDP growth, but the best outcomes are achieved by active discretionary State policies, which are also able to crowd-in private investment and have positive hysteresis effects on growth dynamics. For the same size of public resources allocated to market-based interventions, "Mission" innovation policies deliver significantly better aggregate performance if the government is patient enough and willing to bear the intrinsic risks related to innovative activities.

Suggested Citation

  • Giovanni Dosi & Francesco Lamperti & Mariana Mazzucato & Mauro Napoletano & Andrea Roventini, 2023. "Mission-oriented policies and the “Entrepreneurial State” at work: An agent-based exploration," Sciences Po Economics Publications (main) hal-04530983, HAL.
    • Handle: RePEc:hal:spmain:hal-04530983
    DOI: 10.1016/j.jedc.2023.104650
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-04530983v1
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    2. Eliana Villa-Enciso & Walter Ruiz-Castañeda & Jorge Robledo Velásquez, 2023. "Agent-Based Model to Analyze the Role of the University in Reducing Social Exclusion," Sustainability, MDPI, vol. 15(16), pages 1-29, August.
    3. Domenico Delli Gatti & Roberta Terranova & Enrico Maria Turco, 2024. "Industrial Policy in Times of Market Power," CESifo Working Paper Series 11544, CESifo.
    4. Amendola, Marco & Pereira, Marcelo C., 2025. "State-dependent impulse responses in agent-based models: A new methodology and an economic application," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).
    5. Pallante, Gianluca & Russo, Emanuele & Roventini, Andrea, 2023. "Does public R&D funding crowd-in private R&D investment? Evidence from military R&D expenditures for US states," Research Policy, Elsevier, vol. 52(8).

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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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