XClose

UCL Institute for Innovation and Public Purpose

Home
Menu

Industrial strategy

IIPP's work on mission-oriented innovation policy is shaping global discussions about what a modern industrial strategy should look like.

Mariana Mazzucato - keynote to lunch

IIPP Director Mariana Mazzucato gives keynote speech in Beijing on green growth to meeting of global energy ministers

Our research on mission-oriented innovation policy offers a new way to approach industrial strategy - one that focuses on directing innovation policy towards societal challenges that cause structural transformation across the entire economy.

IIPP is currently helping both the UK government and the European Commission to think about how to transform grand challenges into mission-oriented policies. The UK government released a White Paper on its Industrial Strategy on 26 November 2017. The White Paper specifically cited IIPP’s first Working Paper, on Mission-Oriented Innovation Policy: Challenges and Opportunities

“[We will] direct the government’s convening power, promote exports and inward investments, and build consumer trust in new technologies. Where appropriate, teams will develop ‘missions’ to tackle the Grand Challenges. They involve tackling specific problems, such as reducing carbon emissions by a given percentage over a specific year period, using well defined and concrete goals to allow progress to be monitored and assessed, and the option to change course when appropriate.”

From 1 January 2018, IIPP Director Professor Mazzucato will become the Special Advisor of Carlos Moedas, the European Commissioner for Research, Science and Innovation, to help lead the thinking about mission oriented innovation in the Framework 9 for the Horizon 2020 programme.  

Research

Traditional industrial policy picks particular sectors for investment and incentives, often aimed at encouraging incremental changes and with a focus on individual technologies. By contrast, a mission-oriented approach focused on societal challenges - such as climate change or social care – can stimulate innovation across many different sectors, which both public and private actors interact to solve. This creates the potential for greater spillovers than a sectoral approach, whilst avoiding the risks of government capture by specific interests.

This new approach to industrial strategy starts with the insight that innovation and economic growth not only have a rate but also have a direction. A successful industrial strategy, focused on missions, can help steer economies in the direction of innovation-led, sustainable and inclusive growth.

Achieving societal transformations of this magnitude, however, requires rethinking public sector organisations and governance, so that they can be more “mission-driven”. Strategic public investments, capacity building and the ability to experiment and learn within innovation agencies are critical.

IIPP is currently directing a project in Latin America, funded by the Inter-American Development bank exploring how to use mission-oriented policies to spur innovation-led growth in Mexico, Chile and Columbia. A new project funded by Innovate UK on the Macroeconomic implications of mission oriented policies began in November 2018.

Lessons for industrial strategy

In Professor Mazzucato's 2017 submission to the UK Department for Business, Energy and Industrial Strategy's consultation on its Industrial Strategy green paper, she considers past attempts to use “Industrial Strategy” to rebalance economies, highlighting a number of key principles for implementing a mission-oriented approach:

  • successful industrial strategy that transforms an economy requires a systemic approach;
  • industrial strategy should be seen as an interaction between multiple actors in both public and private sectors;
  • public actors should be positioned strategically along the entire innovation curve, not restricted to Research & Development;
  • mission-oriented strategies should be directed at solving concrete societal and/or technological challenges which spark innovation across a variety of sectors;
  • industrial strategy can be a key driver to steer economic growth in optimal directions - for example towards a green growth agenda; and
  • patient public finance, for example via public investment banks, can play a key role in financing innovative companies and projects.

Policy impact

IIPP's ideas are influencing policy discussions about industrial strategy, including:

  • The UK Business, Energy and Industrial Strategy Select Committee's First Review of the Government's Industrial Strategy cited Professor Mazzucato's evidence and recommended that "the Government reconsider giving sectoral strategies priority and instead focus on horizontal policies and specific ‘missions’ to meet UK-wide and local public policy challenges. This will make clear that the function of the Government’s industrial strategy – and of industry itself – is to solve societal problems and it will provide a clear focus for activity across Government and industry." (p. 3). Read more.
     
  • The UK Labour Party's Shadow Industrial Strategy, "Richer Britain, Richer Lives" cites Mariana Mazzucato's work on "a mission-oriented industrial strategy, whereby the public sector makes strategic investments to catalyse the private sector to innovate across different sectors to meet the key public policy challenges of our age — from climate change to changing care needs in the context of an ageing population". The report says that "Labour’s industrial strategy will adopt this approach, setting two initial missions - one focussed on outputs related to the green economy, and one focussed on the inputs necessary to make the UK an innovation nation." Rebecca Long-Bailey (Shadow Secretary of State for Business, Energy and Industrial Strategy) and Chi Onwurah (Shadow Minister for Science, Innovation and Industrial Strategy) have also frequently spoken about the influence of Mazzucato's work on Labour's industrial policy as set out in their 2017 manifesto, including here.
     
  • European Commissioner for Research, Science and Innovation, Carlos Moedas, has also endorsed a mission-oriented approach, saying in a recent speech, "We need to define [innovation] missions that breakdown silos... We need to set our eyes on a specific target, and drive our scientific efforts towards reaching that target. And we need to be ambitious about it. As Mariana Mazzucato says: 'Innovation-led growth is not just about fixing a market failure but also about setting direction and creating new markets. If you just tackle the market failure you can head into the wrong direction.' So we need to set direction for the future, and having a clear mission is a way of doing that.
     
  • In 2017, Mazzucato was appointed a member of the EC Horizon 2020 Commission expert group Economic and Societal Impact of Research and Innovation which is using a mission-oriented framework to inform the Horizon programme. Her paper, Mission Oriented Policies: Challenges and Opportunities, published by the RSA and as an IIPP working paper, was used as a founding document for the ESIR group.
     
  • Mazzucato’s work has also informed the Scottish Government's plans for a Scottish National Investment Bank. Mazzucato has advised on the policy as a member of the Scottish Government's Council of Economic Advisers and has been appointed to the new Advisory Group on the Implementation Plan for a Scottish National Investment Bank. IIPP has also established a new working group to map out the details of how such a bank would work. See related research stream on patient and public finance.
     
  • Professor Mazzucato was invited to discuss how a mission-oriented approach can inform industrial strategy in a roundtable hosted by the Rt Hon Greg Clark, Secretary of State for Business, Energy and Industrial Strategy (BEIS), on 14 November 2016, and presented her work to BEIS officials at a special seminar on 14 July 2017. 

Policy papers and submissions

Response to the Department for Business, Energy and Industrial Strategy's Green Paper, "Building our industrial strategy". Mariana Mazzucato (04/2017)

Evidence to the Business, Energy and Industrial Strategy Select Committee's Inquiry into Industrial Strategy. Mariana Mazzucato and Jim Watson (09/2016)

Mission-oriented innovation policy: challenges and opportunities. Mariana Mazzucato. Published jointly by the RSA and as IIPP working paper 01-2017 (25/09/2017) 

'A mission-oriented approach to building the Entrepreneurial State'. Mariana Mazzucato's 2015 'think-piece' for Innovate UK. (29/03/2015)

In the media

These are the five myths about Labour’s industrial strategy
Shadow Minister for Industrial Strategy Chi Onwurah, Independent, 3 September 2017

Only Labour can create an entrepreneurial Britain
Rebecca Long-Bailey (Shadow Secretary of State for Business, Energy and Industrial Strategy) and Chi Onwurah (Shadow Minister for Science, Innovation and Industrial Strategy), The Times, 15 February 2017

May moves on with bid to be business friendly
Anthony Hilton, Evening Standard, 22 November 2016

A strong industrial strategy has many benefits
Mariana Mazzucato, Financial Times, 3 August 2017