Bottom-up Policies Trump Top-down Missions

Magnus Henrekson () and Mikael Stenkula

No 16487, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Mission-oriented innovation policies are becoming increasingly popular among policymakers and scholars. We maintain that these policies are based on an overly mechanistic view of innovation and economic growth, suggesting that a more bottom-up approach is called for. By invoking an entrepreneurial ecosystem perspective, we point out that innovative entrepreneurship requires many other actors—besides the entrepreneur—whose skills and abilities are necessary to realize an entrepreneurial project. When mission-oriented policies play a large role in the economy, connections between actors in the ecosystem risk becoming distorted. A functioning and well-balanced entrepreneurial ecosystem requires instead an institutional framework that levels the playing field for potential entrepreneurs and encourages productive entrepreneurship. To promote this kind of system, we discuss in more detail eight key areas where appropriate horizontal or bottom-up policy measures can foster innovation and, in the end, the welfare-enhancing productive entrepreneurship policymakers and scholars strive for.

Keywords: institutions; entrepreneurship policy; entrepreneurial ecosystem; collaborative innovation bloc; public choice (search for similar items in EconPapers)
JEL-codes: H50 L26 O31 P16 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2023-09
New Economics Papers: this item is included in nep-ent, nep-hme, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
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Published - published in: Magnus Henrekson, Christian Sandström, and Mikael Stenkula (eds.), Moonshots and the New Industrial Policy, Cham: Springer, 2024, 309–331

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Related works:
Chapter: Bottom-Up Policies Trump Top-Down Missions (2024)
Working Paper: Bottom-Up Policies Trump Top-Down Missions (2023)
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