The entrepreneurial state : debunking public vs. private sector myths

This book debunks the myth of the state as a large bureaucratic organization that can at best facilitate the creative innovation which happens in the dynamic private sector. Analyzing various case studies of innovation-led growth, it describes the opposite situation, whereby the private sector only becomes bold enough to invest after the courageous state has made the high-risk investments.

The volume argues that in the history of modern capitalism, the state has generated economic activity that would not otherwise have happened, and has actively opened up new technologies and markets that private investors can later move into. It examines case studies ranging from post-WWII American mass-production systems to nanotechnology and the internet, while a special chapter on Apple looks at how modern products like the iPad are based on government-developed technologies. Thus while entrepreneurial individuals are needed, their impact is mainly based on public investments. Spurring innovation in this way requires more than simply “fixing markets,” it involves creating “mission-oriented” ones in key industries.

In particular, the book debunks the myth that Silicon Valley was created by entrepreneurial venture capital, and draws lessons from this for the future of green technology. The book also raises a fundamental question: if the state is so important to investments in high-risk innovation, why does it capture so little return?