More than 100,000 downloads of new industrial policy book
The research anthology "Questioning the Entrepreneurial State", with Christian Sandström, Assistant Professor at Jönköping International Business School, Jönköping University, as one of two editors, has been downloaded 106,000 times in two weeks. In the anthology, several leading economists warn against the state's industrial and innovation policy – which they claim lacks scientific support and costs billions of tax dollars.
30 leading international researchers have contributed chapters discussing entrepreneurship, innovations, markets, and policy measures in the book. The book is widely seen as a response to Italian-American professor Mariana Mazzacuto's book "The Entrepreneurial State". She argues in the book that the state has been the main driving force behind innovation and technological development. This idea has gained a significant foothold, particularly in European politics.
According to the researchers behind the anthology, however, these are ideas built on an uncertain scientific basis, but which are behind huge increases in contributions to companies at both national and EU levels. The state, a generalized term, goes ahead, and points out the way forward. Industry and academia are then involved in developing practical solutions required to achieve the desired goal. This is a kind of large-scale attempt to solve societal problems by organizing the economy around various missions.
According to the authors, this is a return to large-scale industrial policy, which risks distorting healthy competition and brings to mind the industrial subsidies of the 1970s.
“When politicians put 100s of billions of euros at the disposal of companies, the money ends up in the hands of the already powerful companies. What on paper should contribute to sustainable development becomes, in practice, a form of disguised support for large corporations. History is full of examples of state interventions in the economy going crazy. During the 00s, an ethanol bubble was blown in Sweden with the help of grants, legislation, and subsidies. Politicians believed that ethanol was the fuel of the future. When the bubble collapsed, private individuals found themselves left with broken engines, and municipalities had built mountains of debt on projects that did not create any milk and honey,” says Christian Sandström.
According to the researchers, the resources spent on this type of project could instead be spent on addressing structural problems, such as low productivity growth, high unemployment, and lack of community investment in the necessary infrastructure, rather than organizing, as today, parts of the economy into specific projects where selected large companies and partners are handpicked.”
Historically, large-scale industrial policies have led to ossified economic structures, not environmental or economic development. The researchers believe that research-based knowledge and independent evaluations of public investment are necessary. As an example, they mention that a cheaper and better path to reaching renewal is likely to facilitate the ability of new entrepreneurs to challenge established structures and become the real agents of change.
Positive response from the world's leading economists
Christian Sandström is co-editor of the anthology along with Karl Wennberg, professor at the Stockholm School of Economics, . The anthology is published by SpringerLink and was released on April 25 this year. The book has aroused great interest, and as of today, has been downloaded 106,000 times from the publisher's website - and has gained positive reviews from well-renowned economists.
Former Minister for Finance of Sweden, Anders Borg, calls industrial policy and state-owned companies a "boulevard of broken dreams and unrealised visions" and means that the book convincingly demonstrates this. Josh Lerner of Harvard Business School says the book's essays "highlight the many obstacles that aggressive government efforts to boost entrepreneurs can encounter and provide a healthy corrective to naïve prescriptions by academics and policymakers alike."
Also, the blog Marginal Revolution, run by economists Tyler Cowen and Alex Tabarrok and recognised as one of the foremost economist blogs in the world, recommend the book.
“Of course, it’s an honor that several leading economists tip off about the book and that one of the top economics blogs in the world links to it. Maybe it's also an indication that our book is right in time and has a global message," says Christian Sandström.
"Not even my mother usually reads my research, but now I feel like an Influencer with grey hair and mortgages," he concludes with a smile.
Find out more about Christian Sandströms research here: https://ju.se/en/research/news/news-archive/2020-06-05-innovation-policy---is-transformative-change-really-possible.html