This research project is led by the UCL Institute for Innovation and Public Purpose (UCL IIPP).
Explore all IIPP research projects here.
Dates of the project: 2017
The Challenge
Innovation-led growth often fails to deliver inclusive outcomes. While the public sector plays a critical role in funding early-stage, high-risk innovation, the rewards – such as profits, intellectual property, and market dominance and are frequently captured by private actors. The challenge is to ensure that both the risks and rewards of innovation are more equitably distributed, so that public investments lead to broader societal benefits.
Our Approach
UCL IIPP is researching how to design policies and institutions that enable inclusive innovation ecosystems. This includes:
- Mapping global examples of policy instruments that share financial returns with the public, such as equity stakes, royalties, and IPR retention.
- Exploring mechanisms like compulsory reinvestment in the real economy and tax or governance reforms that promote fairer reward distribution.
- Reframing the role of the state as a “market maker”, not just a market fixer – actively shaping new sectors and technologies through bold, mission-oriented investment.
This work builds on Mariana Mazzucato’s concept of the Entrepreneurial State, and her research with IIPP on how public-private partnerships can become more symbiotic.
Why This Matters
Inclusive growth requires recognising and rewarding the public sector’s role in value creation. By designing policies that ensure the public shares in the upside of innovation, this project supports a more equitable economy where innovation serves not just investors, but society as a whole. IIPP’s work helps build the strategic capacity of governments to lead innovation with purpose and fairness.
Resources
Industrial Policy with Conditionalities: A Taxonomy and Sample Cases
Mazzucato, M. and Rodrik, D. (2023). Industrial Policy with Conditionalities: A Taxonomy and Sample Cases. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2023-07).
Read the working paper
Rethinking the social contract between the state and business
Mazzucato, M. (2022). Rethinking the social contract between the state and business: A new approach to industrial strategy with conditionalities. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2022-18).
Read the working paper
The Entrepreneurial State and public options: Socialising risks and rewards
Mazzucato, M and Li, H. L. (2020). The Entrepreneurial State and public options: Socialising risks and rewards. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2020-20).
Read the working paper
Wealth Creation and the Entrepreneurial State
Mazzucato, M. (2016) “Wealth Creation and the Entrepreneurial State” in National Wealth: What is Missing and Why it Matters, Chapter 9. Eds. Hepburn, C. and Hamilton, K, Oxford University Press, Oxford, UK.
Read book chapter
The risk-reward nexus in the innovation-inequality relationship: who takes the risks? Who gets the rewards?
Lazonick, W. and Mazzucato, M. (2013), “The risk-reward nexus in the innovation-inequality relationship: Who takes the risks? Who gets the rewards?,” in special issue of Industrial and Corporate Change, M. Mazzucato (ed.), 22(4):1093-1128.
Read the article
Mariana Mazzucato: The market shaping forces of capitalism
Read the blog
This research project is led by the UCL Institute for Innovation and Public Purpose (UCL IIPP).
Explore all IIPP research projects here.
Contact
Professor in the Economics of Innovation and Public Value, University College London and Founding Director of the UCL Institute for Innovation and Public Purpose
Click to email. iipp-dir-comms@ucl.ac.uk