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

Dosi, Giovanni; Lamperti, Francesco; Mazzucato, Mariana; Napoletano, Mauro; Roventini, Andrea; (2023) Mission-oriented policies and the “Entrepreneurial State” at work: An agent-based exploration. Journal of Economic Dynamics and Control , 151 , Article 104650. 10.1016/j.jedc.2023.104650. Green open access

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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.

Type: Article
Title: Mission-oriented policies and the “Entrepreneurial State” at work: An agent-based exploration
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jedc.2023.104650
Publisher version: https://doi.org/10.1016/j.jedc.2023.104650
Language: English
Additional information: Published under a Creative Commons Attribution-Non Commercial-No Derivs 4.0 International licence (CC BY-NC-ND 4.0) (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Keywords: Innovation policy; Mission-oriented R&D; Entrepreneurial state; Agent-based modelling
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose
URI: https://discovery.ucl.ac.uk/id/eprint/10175810
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