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Economist Mariana Mazzucato says pandemic has raised many challenges related to health and digital divide
A top economist has urged the government to build on its challenge-led industrial strategy to boost the UK economy in the wake of Covid-19.
Mariana Mazzucato is director of the UCL Institute for Innovation and Public Purpose, and was instrumental in the introduction of mission-oriented thinking in the strategy. She was speaking at a Business, Energy and Industrial Strategy Committee session on post-pandemic economic growth on 25 June.
Asked about the success of the strategy, which was introduced under Theresa May’s government in 2017, Mazzucato said it was too early to tell, with much attention having shifted towards Brexit over the past few years.
“I haven’t seen yet the current administration putting as much attention into that challenge-oriented 2017 industrial strategy. I really hope now is the moment to do that, both because the attention now can hopefully move away from the obsession around Brexit, but also the Covid crisis itself is throwing to us many challenges related to health but also the digital divide.”
Commenting on the state of the UK economy before the pandemic, Diane Coyle, a professor of public policy at the University of Cambridge, said there had been a “consistently low level of investment” in the UK economy.
“We’ve lagged the OECD average and we’ve been at the bottom of the league table for many years now,” she told MPs. “And it’s across the board: it’s been private business investment, it’s been investment in R&D, in infrastructure, investment in certain kinds of skills—both public and private.
“Investment is key because it not only indicates confidence in the future it actually determines the sustainable rate of growth over long periods of time. If we don’t address that we are going to be “baking in” relative decline to the British economy for years and decades to come.”
Mazzucato added that a short-termist corporate governance structure had led to lower rates of investments in areas that produce long-term growth such as R&D.
“If these long-run investments are not made, due to an overly-financialised short-termist corporate culture, then of course productivity will suffer,” she said.
In particular, Mazzucato added, “science industry linkages are extremely important to the economy’s productive capacity”.
She criticised the UK government’s “under-investment” in the network of Catapult Centres, which promote R&D through business-led collaboration between scientists and engineers, pointing out that the UK invests only about a tenth of what Germany invests in its Fraunhofer Institutes.
“We haven’t necessarily been making those kinds of investments over the last 20 or 30 years so we are catching up in terms of creating a really dynamic innovation system.
“The science base is quite strong but those science industry links have been weaker than some of our northern neighbours.”