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UCL professor plays key role in Scotland’s new public investment bank

28 February 2018

A leading UCL professor, who has been advising the Scottish Government on establishing a new public investment bank (launched today), is excited by the social and economic opportunities it can deliver.

Professor Mazzucato

Professor Mariana Mazzucato, Director of UCL's Institute for Innovation and Public Purpose (IIPP), has been part of the Scottish Government’s Council of Economic Advisors since 2016.

In this capacity, Professor Mazzucato advised First Minister Nicola Sturgeon on the role that a new national investment bank could play in supporting the Scottish Government’s vision for smart and inclusive growth.

With this advice, in September 2017, the Scottish Government announced plans to establish a new Scottish National Investment Bank. Benny Higgins, CEO of Tesco Bank, was appointed to lead the work to develop an evidence-based implementation plan, and convened a small Advisory Group, which included Professor Mazzucato.

The implementation plan, launched at a press conference in Edinburgh today (Wednesday February 28), sets out a roadmap for creating a new Scottish National Investment Bank that will play a leading role driving growth and innovation, helping to transform Scotland’s economy.

The plan has been shaped by Professor Mazzucato’s path-breaking research on different types of ‘patient finance’, including two reports co-authored with IIPP Research Fellow Laurie Macfarlane, which examine how state investment banks are driving economic growth and innovation in different countries around the world. The reports look at both opportunities for such banks as well as the challenges they face, learning mistakes from the past.

A key innovative aspect of the bank is its ‘mission orientation’, focused on providing strategic finance to organisations who want to invest in innovative technologies and solve global issues, which will help boost economies, while also solving problems that don’t fall into traditional market sectors. In this respect it builds on the ideas behind ‘mission oriented’ innovation which Carlos Moedas, EC Commissioner for Research, Science and Innovation launched in Brussels last week.

Speaking after the launch of the plan, Professor Mazzucato, said: “Innovation requires patient strategic finance, and there is simply not much of that in the UK. Yet around the world state investment banks are taking centre stage in providing such finance for key social and environmental challenges of the twenty-first century.

“By making strategic investments and nurturing new industrial landscapes, the new bank will support the Scottish Government’s ambition to deliver smart and inclusive growth while transitioning to a low carbon economy.

“Importantly, the bank will not just seek to simply correct market failures. It will help steer the path of innovation towards overcoming key challenges by creating and shaping new markets and catalysing activity that otherwise would not take place.”

Laurie Macfarlane, UCL IIPP Research Fellow, said: "To be successful, public investment banks must be structured and governed effectively. That's why in supporting this implementation plan we drew on international evidence and leading academic research to inform the design of the bank.

"Scotland has the potential to demonstrate global leadership in areas such as transitioning to a low carbon economy and promoting inclusive growth. By providing the patient strategic finance needed to drive innovation, the new bank will become a key institution in Scotland's economic landscape working to meet this potential."

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Henry Killworth

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Email: h.killworth [at] ucl.ac.uk