Entrepreneurial government spurs innovation and creates new growth opportunities

DUBAI, 9th February, 2015 (WAM)–On the opening day of the Government Summit, Dr. Mariana Mazzucato, Professor of Science and Technology at the University of Sussex in the United Kingdom, led a workshop titled: The Entrepreneurial Government. Dr. Mazzucato outlined that governments are vital to creating new markets and growth opportunities, and play an equal role with the private sector in spurring innovation.

“There is a persistent misconception that innovation begins only in the private sector. While the government does exist to ensure a fair and level playing field and to solve market failures in the public’s best interest, it also serves a much more interesting role,” said Dr. Mazzucato.

The most significant technological milestones of recent decades, she explained, from the Apollo moon landings to the creation of the internet, benefitted significantly from public sector research funding.

While the government’s role includes intervening in failing markets to bring about greater economic efficiency, its role includes a responsibility to set the vision and mission for private sector growth.

Dr. Mazzucato also explained that while private sector companies played an important role in packaging technology to make it more accessible, most venture capital investments in Silicon Valley – which is home to some of the world’s most well-known high tech companies – took aantage of government-led research. The internet and GPS for example, she argued, would not have been possible without research programmes initiated by the US Department of Defence.

She also outlined challenges faced by markets that are guided solely by private sector agendas. One problem is prioritising short-term profit over longer term national priorities, she noted. Quick value extraction, she argued, is too often rewarded above activities focused on longer term value creation.

“Private capital’s agenda is largely built on an exit strategy,” she stated. “Whether the finish line is an IPO or a buyout, the end goal is to generate a healthy return and then move on. Government plays an important role in setting a longer term vision for the public and private sector, and supporting economic growth that is sustainable for years and decades to come.” While many economists argue that free markets are in fact created by government policy, Dr. Mazzucato concluded that governments should not operate solely within the confines of existing markets, but instead should create evidence-based policy that fosters long-term innovation.

“Though subsidies and financial incentives are always welcomed by the private sector, they are not enough to move the needle. Significant, direct public investment in new technology shifts the landscape and creates new market opportunities, which nurtures long-term innovation and growth.” The third Government Summit is held under the patronage of Vice President and Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum. It features insights from 100 speakers in a three-day programme focusing on ‘Shaping Future Governments.’ The Summit hosts more than 3,000 delegates from 87 countries in diverse sessions related to education, technology and healthcare, among others.

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SOURCE: Wam