Creating innovation markets: government venture capital in Europe

Thesis

Under what circumstances do government venture capital programmes (GVCs) successfully catalyse the growth of entrepreneurial ecosystems? Debates have long raged in political science and economics on the role of the state in innovation. The rise of GVC introduces new data points and examples on the effectiveness of industrial policy. Through four case studies, this thesis looks in depth at what models of GVC have or have not worked in the European setting, which has been one of the most active laboratories for trialling such policies. It argues that GVC in continental Europe has been most effective when the state invested public resources to create innovation markets. These government agencies, it is argued, take on the role of a “Market Creator State,” which is a highly interventionist approach, but one which does not “pick the winners” nor directs top-down public investment towards “missions.” Instead, the Market Creator State invests alongside private actors, with a focus on developing horizontal innovation capabilities. This theory thus introduces a new model of state intervention. It argues that this industrial policy in Europe has not sought to create technologies to be exploited by existing market forces, but rather has created institutions to make innovation markets work. This “third model” transcends the dichotomy in the literature between a neoliberal “laissez faire” approach relying on existing comparative advantages and traditional industrial policies where states picked winners and target industries. This theory of the state as Market Creator thus has practical implications for policymakers, both for designing effective GVC programmes and for envisioning the role states can have in tackling the grand technological challenges that Europe faces.

Authors: Moretti, L

• DOI: 10.5287/ora-b79kn2xjk
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English
• Keywords: innovation; political economy; venture capital; public policy