The Entrepreneurial State Summary

Mariana Mazzucato’s The Entrepreneurial State, published in book form in 2013, challenges the popular belief that private companies create innovation while government merely regulates or slows them down. Mazzucato argues that governments have frequently financed the earliest and riskiest stages of technological development. Public institutions supported advances connected with the internet, satellite navigation, biotechnology, renewable energy and many technologies later used by successful private companies. The private sector remains essential for commercialising inventions and producing useful products, but it often enters after the greatest uncertainty has already been absorbed by public investment. Mazzucato therefore calls for governments to develop technical expertise, pursue ambitious public missions and receive a fair return when publicly funded innovation becomes profitable. Her argument is not that every government programme succeeds, but that intelligent public investment can actively create new markets.

1. The state can create markets: Governments do not merely correct existing market failures; public investment can develop entirely new technologies and industries.

1. Early innovation is highly uncertain: Private investors often avoid projects requiring long research periods, uncertain returns and expensive experimentation.

1. Public institutions can provide patient capital: Governments can support research for many years without demanding immediate commercial profit.

1. Major technologies received public support: Research underlying the internet, GPS, biotechnology and several digital technologies benefited from government programmes.

1. Private companies remain important: Businesses combine technologies, improve design, organise production and bring products to consumers.

1. Innovation is collective: Scientific discoveries normally result from cooperation among universities, public laboratories, government agencies, workers and private companies.

1. Risks and rewards should be shared: When taxpayers finance risky research, the public should receive benefits through affordable products, reinvestment or financial returns.

1. Government needs expertise: Effective innovation policy requires skilled public institutions capable of selecting missions, evaluating progress and accepting intelligent failure.

1. Main lesson of the book: Sustainable innovation requires a confident, capable and accountable state working with the private sector rather than remaining a passive observer.

1. Important quotation: Countries should “do as the United States actually did, not as they say they did.” Mazzucato means that America’s success involved active public investment, despite its free-market language.