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Professor Mazzucato calls for public sector to lead the charge in shaping post-COVID economies

BRIDGETOWN, Barbados, (CDB) – The state should not be shy about taking a leading role in driving innovation and the current COVID-19 pandemic means that now is the time for bold action by governments to make this happen.

This was the call from Professor Mariana Mazzucato, one of the world’s foremost thinkers on innovation and public purpose, on Tuesday morning when she delivered the Caribbean Development Bank’s (CDB) William G. Demas Memorial Lecture.

Speaking at the curtain raiser of CDB’s 51st Annual Meeting, Professor Mazzucato, the director of the institute for innovation and public purpose at the University College London, called for a radical rethink of the role of the public sector.

“We have tended to frame the role of the state in this … kind of inertial way as though at best all it can do is fix different types of market failures. So, by definition our state structures whether it’s a public bank, an innovation agency or a department of health, it doesn’t have within its remit this more proactive framing that I believe we need in order to confront the challenges that we have; which I call co-creating and co-shaping of markets, not just fixing them.”

She asserted that this school of thought has left governments and public institutions “filling the gap of something that the private sector is not doing” and has impacted the quality and output of state-run public goods.

During her lecture, delivered virtually to conference attendees and streamed live on CDB’s Facebook and YouTube platforms, Professor Mazzucato noted that the COVID-19 pandemic has been a “big wake up moment” which showed how much the capacity of many states had been outsourced and how critical it is to redevelop that capacity.

“This isn’t a coincidence. This is a natural outcome of thinking that our public institutions aren’t really important. [That] they don’t create value, they simply redistribute it, they don’t create and shape markets, they just fix market failures, [that] they don’t take risks, they are to de-risk someone else. Why should you invest within government institutions and public sector capacity if you’re just there to pick up the mess?” she queried rhetorically.

However, she asserted that the pandemic also presents a chance “to redesign the social contract between the public and the private sector” and pointed to governments which have “put bold conditionalities” such as carbon reduction commitments “at the centre of recovery schemes and bailout schemes”.

To this end, she called for a reorientation towards bold public policy to spur innovation, and used the example of the Apollo Programme, the human spaceflight endeavour the US.government launched in the 1960s aiming to put a man on the moon.

The programme unearthed many lessons which are still applicable today she outlined, including the need to eliminate organisational silos in government, the benefits of building “partnerships with a common purpose” with innovative businesses and working in a way that brings in as many different sectors as possible.

She advocated for a “mission-oriented approach” to meet the challenges of the current moment, with clear, specific goals to help focus policy and efforts.

She noted that the “moonshot” of the sixties was a simpler challenge than many of the current challenges or “earth shots” faced by the world now as outlined in the United Nations’ Sustainable Development Goals.

Acknowledging that the current challenges are hard is the first step, Professor Mazzucato insisted.

“If you look at the speeches that president Kennedy gave in the early 1960s, he … said things like ‘we have to do it because it’s hard, not because it’s easy.’ Many of the challenges that [we face], are harder than getting to the moon.

But we have to at least admit they are hard. We will confront them in a way that will require us to welcome uncertainty, to be willing to experiment, to invest in our ability to learn by doing.”



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