Grand Challenges, Industrial Policy, and Public Value

Policymakers are increasingly embracing the idea of using industrial and innovation policy to tackle societal ‘grand challenges’ such as climate emergency. In this article we argue that challenge-led policies require a new conceptual and analytical framework that has at its core the idea of confronting the direction of growth—growth that is, for example, more inclusive and sustainable. Such framework should focus on public value creation through market co-shaping rather than simply fixing market failures. This is both a question of theory as well as of policy practice. In theory, challenge-driven industrial and innovation policy questions both established neoclassical as well evolutionary concepts. In policy practice, directed policies require rethinking what is meant by vertical industrial policies. In this article we argue that through well-defined goals, or more specifically ‘missions’, that are focused on solving important societal challenges, policymakers have the opportunity to determine the direction of growth by making strategic investments and coordination actions across many different sectors and nurturing new industrial landscapes.

Grand Challenges, Industrial Policy, and Public Value

Mariana Mazzucato
Rainer Kattel
working paper 29/2020