Innovation as Growth Policy: The Challenge for Europe

32 Pages Posted: 7 Mar 2016

See all articles by Mariana Mazzucato

Mariana Mazzucato

University College London - Institute for Innovation and Public Purpose

Carlota Perez

University of Cambridge

Date Written: July 9, 2014


The advanced world is facing a crucial moment of transition. We argue that a successful outcome requires bringing innovation to the centre of government thinking and action and that, in order to do this, we must apply our knowledge of how innovation occurs and how to repair what has gone wrong. We look first at the role that innovation has always played as the driver of economic growth, and at its relationship with finance. Arguing that the challenge today is not to ‘fix’ finance while leaving the economy sick, but rather to change the way that the real economy works, we then identify the solution: a policy direction that is smart, inclusive and takes advantage of ‘green’ as the next big technological and market opportunity. We then explain why the role of the State is key to ensuring that such opportunities are taken, and the importance of direct public investment for promoting the creation of public goods and courageous risk-taking in research and innovation in both the public and private sectors. Paying particular attention to Europe, we then examine the potential of such innovation-oriented policies to promote inclusive growth. We consider concrete steps that could be taken, both at the national and EU levels, to create the ‘smart governance’ necessary to implement such a direction. The chapter closes with suggestions for policies that aim to construct collective competitiveness across the European Union.

Suggested Citation

Mazzucato, Mariana and Perez, Carlota, Innovation as Growth Policy: The Challenge for Europe (July 9, 2014). SWPS 2014-13, Available at SSRN: or

Mariana Mazzucato (Contact Author)

University College London - Institute for Innovation and Public Purpose ( email )

Montague Street
London, WC1B 5BP
United Kingdom

Carlota Perez

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

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