Mazzucato, Mariana; Ryan-Collins, Josh; (2024) IIPP written evidence submission on 'Sustainability of the UK’s National Debt Inquiry'. UCL Institute for Innovation and Public Purpose: London, UK.

Preview

PDF MAZZUCATO_Deposit publication_IPP written evidence submission.pdf - Published Version Download (113kB) | Preview

Abstract

There is no magic number when it comes to debt sustainability. The sustainability of public debt depends on what the government is investing in. In other words, how debt is being used is more important than the level of debt. Contrary to the discredited argument of economists Carmen Reinhart and Kenneth Rogoff, which linked government debt to weaker economic growth and promoted austerity policies, it is critical to understand that government spending can take the form of investments in the long-range drivers of productivity and growth. These drivers include, for example, education and training, research and development, and wider factors that are critical to building an innovative, resilient, sustainable and inclusive economy. Investment-led sustainable and inclusive economic growth can expand the productive capacity of the economy, which can in turn contribute to a fall in the debt-to-GDP ratio. How this investment is structured is also important. Mission-oriented policies can turn big challenges like climate change into market opportunities, catalyzing cross-sectoral innovation and investment oriented around tackling these challenges, leading to spillovers (Mazzucato, 2021). This can in turn generate a multiplier effect (i.e., where the growth enhancing impacts of government investments are greater than the increase in debt) (Deleidi et al., 2019).

Download activity - last month

Export as CSVXMLJSON

Download activity - last 12 months

Export as JSONXMLCSV

Downloads by country - last 12 months

Export as JSONXMLCSV

Archive Staff Only

View Item