Beyond market failures: the market creating and shaping roles of state investment banks

Mariana Mazzucato and Caetano Penna

Journal of Economic Policy Reform, 2016, vol. 19, issue 4, 305-326

Abstract: The paper develops a typological framework of the roles of state investment banks (SIBs) in the economy. The typology identifies four different roles: countercyclical; developmental; venture capitalist; and challenge-led. The paper conceptually elaborates the typology by first providing a historical overview of SIBs, and then discussing how the mainstream “market failure theory” justifies them. It then advances a different conceptualization based on insights from heterodox economics, showing that all roles of SIBs are more about market creating/shaping rather than market-failure fixing. The paper concludes with a proposal of a new agenda for research on SIBs based on our typological framework.

Date: 2016
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Related works:
Working Paper: Beyond Market Failures: The Market Creating and Shaping Roles of State Investment Banks (2015)
Working Paper: Beyond market failures: The market creating and shaping roles of state investment banks (2014)
Working Paper: Beyond Market Failures: The Market Creating and Shaping Roles of State Investment Banks (2014)
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DOI: 10.1080/17487870.2016.1216416

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