Moonshots and the New Industrial Policy

Front matter

—— International Studies in Entrepreneurship

Magnus Henrekson

Mikael Stenkula £ Editor:

Preface

Until recently, there was a broad consensus that free trade, domestic deregulation, and the removal of entry barriers and other policies that curtail competition were the keys to stimulating economic growth and societal welfare. In the business realm, the prevailing sentiment was that policy’s primary objective was to create a level playing field for companies—tregardless of their age, industry, size, or the personal characteristics and nationality of their owners. This perspective significantly influenced the establishment of an internal market within the European Union.

However, this consensus has shifted in recent years. Western governments are now launching expansive programs to not only rejuvenate their economies post-pandemic but also achieve ambitious goals such as sharply reducing and eventually eliminating CO, emissions. British-Italian economist Mariana Mazzucato was at the forefront of advocating this renewed policy direction, gaining widespread attention with her 2013 book, The Entrepreneurial State. In the United States, eminent scholars, including Harvard professor Dani Rodrik, have championed the resurgence of vertical industrial policies that address specific challenges and cater to select sectors.

Highlighting the purported immediacy of the problems they aim to address, these increasingly interventionist and specialized industrial policies are frequently termed “Missions” or “Moonshots.”

The reemergence of state-driven strategies stems from several powerful dynamics: China’s deployment of industrial policy fueling its remarkable growth, the West’s perceived stagnation juxtaposed with China’s swift technological advancements, the unforeseen disruption of the COVID-19 pandemic, climate change concerns, and growing geopolitical tensions. The ripple effect of imitation is evident: the European Union, observing the recent surge in subsidies and interventions in the United States, has reciprocated with measures of its own. Intriguingly, this trend intensifies even as the inherent limitations of vertical industrial policy seemingly hinder China’s economy.

Horizontal policies are universal, applying to companies regardless of their operations, geographic locations, or employed technologies. Such policies encompass measures such as R&D tax credits and accelerated depreciation allowances, vii viii Preface which mitigate capital investment costs. In contrast, vertical policies are tailored to benefit particular sectors or even specific companies. A notable recent instance is the renewable energy tax credits included in the US Inflation Reduction Act.

Mission-driven innovation policies are politically enticing, casting policymakers in the light of visionaries who bravely tackle contemporary grand challenges. Concurrently, major corporations reap the rewards of expansive support schemes and stimulus packages unfolding across Europe and the United States.

These vast interventions carry substantial costs and often introduce distortions, predominantly favoring influential and firmly established interest groups in society. Consequently, there is a pressing need for a rigorous scrutiny of these measures. Questioning the Entrepreneurial State (QES) aptly addressed this gap, evident from its impressive download count exceeding 200,000 in just 1.5 years. Nonetheless, with the publication of QES, the endorsement for large-scale missions has only broadened. This realization catalyzed our drive to produce a subsequent volume to QES, incorporating a more diverse authorship, offering deeper case-study insights, providing enriched theoretical viewpoints on the subject, and suggesting feasible alternative paths.

We wish to express profound gratitude to the chapter authors of this book. Their expertise has been invaluable, with each scholar not only contributing their own narratives but also offering feedback on drafts penned by their peers.

Magnus Henrekson gratefully acknowledges financial support from both the Jan Wallander and Tom Hedelius Foundation and the Kamprad Family Foundation for Entrepreneurship, Research & Charity. Christian Sandström is indebted to the Hamrin Foundation, the Knowledge Foundation, and the Ratio Institute, while Mikael Stenkula extends his gratitude to the Jan Wallander and Tom Hedelius Foundation. The Open Access fee has been generously co-funded by the Marianne and Marcus Wallenberg Foundation and the Knowledge Foundation. Special thanks are also due to Niklas Elert, Kathy Saranpa, Gustav Häggbom, and Mikael Arvidsson Martins for their insightful comments and suggestions on preliminary drafts of the chapters.

Stockholm, Sweden Magnus Henrekson Jönköping, Sweden Christian Sandström Stockholm, Sweden Mikael Stenkula

October 2023

Contents

PartI Introductory Chapter

Moonshots and the New Industrial Policy: Questioning thie Mission ECONhoMy 5 side ode ede JoG Ge RRR eee ee eRe SA

Magnus Henrekson, Christian Sandström, and Mikael Stenkula

Part II Theoretical Perspectives Diane Coyle

Randall G. Holcombe

A Behavioral Economics Perspective on the Entrepreneurial

Jan Schnellenbach

Olof Hallonsten

Part II Empirical Evidence

Rodney H. Yerger Jr A Case Study on DARPA: An Exemplar for Government Strategic

Rodney H. Yerger Jr

The State of the Entrepreneurial State: Empirical Evidence

Maral Batbaatar, Johan P. Larsson, Christian Sandström, and Karl Wennberg

When “What Works” Does Not Work: The United States’

David S. Lucas and Christopher J. Boudreaux

André Cherubini Alves You Can’t Develop What You Don’t Know: The Realities

Kathryn Waldron and Christopher J. Coyne

A Public Choice Perspective on Mission-Oriented Innovation

Rickard Bjérnemalm, Christian Sandström, and Nelly Åkesson

Learning from Overrated Mission-Oriented Innovation Policies:

Magnus Henrekson, Christian Sandström, and Mikael Stenkula

PartIV Alternative Paths

The Entrepreneurial State Cannot Deliver Without

Mark Sanders, Erik Stam, and Roy Thurik

David C. Rose

R&D Tax Incentives as an Alternative to Targeted R&D Subsidies. . . .

Roger Svensson

Magnus Henrekson and Mikael Stenkula

Contents

About the Editors

Magnus Henrekson is Professor of Economics and Senior Research Fellow at the Research Institute of Industrial Economics (IFN) in Stockholm, Sweden. He resigned as CEO of IFN in 2020 after 15 years of service. Until 2009, he held the Jacob Wallenberg Research Chair in the Department of Economics at the Stockholm School of Economics.

He received his PhD in 1990 from Gothenburg University with his dissertation An Economic Analysis of Swedish Government Expenditure. Throughout the 1990s, he conducted several projects that aimed to explain cross-country growth differences. Since the turn of the new millennium, his primary research focus has been entrepreneurship economics and the institutional determinants of the business climate. In this area, he has published extensively in scientific journals and contributed several research surveys to Handbooks in the field of entrepreneurship.

In addition to his academic qualifications, Henrekson has extensive experience as an advisor, board member, and lecturer in many different contexts, in both the business and public sectors.

Christian Sandström is Senior Associate Professor at Jönköping International Business School and the Ratio Institute in Sweden. His research concerns innovation policy and the interplay between technological and institutional change. Sandström is one of the editors behind Questioning the Entrepreneurial State (Springer). He has published more than 30 papers in peer-reviewed academic journals such as Technological Forecasting and Social Change, the Journal of Technology Transfer, and Industry and Innovation.

Sandström wrote his PhD thesis on the topic of disruptive innovation at Chalmers University of Technology (2010). He has been a visiting scholar at the University of Cambridge and ETH Zürich in Switzerland. Sandström has received several awards for his pedagogical skills and is a frequently hired public speaker on the topic of technological change and industrial transformation.

xi xii About the Editors

Mikael Stenkula is Associate Professor of Economics and holds a PhD from the School of Economics and Management at Lund University. He received this degree in 2004 with his dissertation Essays on Network Effects and Money. After having worked for a year as a lecturer at Lund University, where he taught microeconomics, he joined the Research Institute of Industrial Economics (IFN) in the fall of 2005. His main area of research is entrepreneurship economics.

Stenkula is part of IFN’s taxation history project, which has systematically and comprehensively described and analyzed the Swedish tax system from 1862 to the present day. This study is unique in scope—no equally comprehensive investigation of a national tax system has been conducted for any other country. In addition to the meticulous year-to-year documentation of all relevant details of the tax code, the project aims to examine how changes in the tax system affect the economy by guiding people’s choices, particularly how the tax system affects entrepreneurial activity and firm behavior.

Stenkula also teaches at the Stockholm School of Economics and serves as the executive secretary of the award committee for the Global Award for Entrepreneurship Research, the foremost global award for research on entrepreneurship.

Part I Introductory Chapter

Moonshots and the New Industrial Policy: @ Questioning the Mission Economy ms

Magnus Henrekson, Christian Sandström, and Mikael Stenkula

Abstract The notion that society should be organized around large so-called missions has gained momentum in public debate, and the reemergence of active industrial policy across the world has been inspired by academic scholars promoting the idea of mission-oriented innovation policies (MOIPs). Besides this introductory chapter, this collective volume consists of 16 chapters distributed across 3 overarching themes: theoretical perspectives, empirical evidence, and alternative paths. The volume provides a comprehensive assessment and normative critique of the efficacy of such policies. In addition to summing up the main findings in the 16 chapters, this introduction provides some additional analysis, pins down the most important general conclusions, and suggests future research questions. Today’s economies are highly dependent on a well-functioning process of decentralized experimentation, selection, and screening. Instead of large-scale MOIPs, governments should strive to create an institutional framework that levels the playing field for potential entrepreneurs while encouraging productive entrepreneurship.

Keywords Entrepreneurship policy - Innovation policy - Institutions - Public choice

We are grateful for useful comments and suggestions from David Lucas and Kathy Saranpa. Financial support from the Jan Wallander and Tom Hedelius Foundation (P2018-0162 and 2023-0186), the Kamprad Family Foundation for Entrepreneurship, Research & Charity (P20220048), the Marianne and Marcus Wallenberg Foundation (2020.0049), and the Knowledge Foundation is gratefully acknowledged.

M. Henrekson - M. Stenkula (DX) Research Institute of Industrial Economics (IFN), Stockholm, Sweden e-mail: magnus.henrekson @ifn.se; mikael.stenkula @ifn.se

C. Sandström Jönköping International Business School, Jönköping, Sweden

The Ratio Institute, Stockholm, Sweden e-mail: christian.sandstrom @ratio.se

© The Author(s) 2024 3 M. Henrekson et al. (eds.), Moonshots and the New Industrial Policy, International Studies in Entrepreneurship 56, https://doi.org/10.1007/978-3-031-49196-2_1

4 M. Henrekson et al.

Introduction

We observe how governments in the West are introducing large-scale government programs in their efforts to both reboot their post-pandemic economies and to attain bold targets such as sharply reducing and eventually eliminating CO, emissions.

This broad trend toward increasingly interventionist industrial policies is often named missions, moonshots, or mission-oriented innovation policies (MOIPs). An archetypical example is the Cancer Moonshot, a large, government-directed effort to eliminate cancer, initiated by Barack Obama in 2016.' President Biden decided to reignite this MOIP in 2022. At the 60th anniversary of President John F. Kennedy’s historical speech in which Kennedy had announced the idea of putting a man on the moon “before this decade is out,” Biden announced:

I give you my word as a Biden: This Cancer Moonshot is one of the reasons why I ran for President. It’s part of my Unity Agenda that I laid out in my State of the Union Address to rally the American people to work together. Because we know this: Cancer does not discriminate red and blue; it doesn’t care if you’re a Republican or a Democrat.”

The renaissance of moonshot policies is interesting, especially bearing in mind that the first Cancer Moonshot was put in place over 50 years prior. In his 1971 State of the Union speech, President Richard Nixon declared:

The time has come in America when the same kind of concentrated effort that split the atom and took man to the moon should be turned toward conquering this dread disease. Let us make a total national commitment to achieve this goal.

Unfortunately, as is widely recognized, this first Cancer Moonshot, known as the War on Cancer, fell far short of its aspirations (e.g., Faguet 2005). Rostand (1990) summarizes the War on Cancer in the following way:

What is surprising, in this affair, is the numbers and qualifications of those gone astray. They were not half-wits, fools, or friends of the wondrous; No, they were true men of science, unbiased and honest men familiar with the scientific method: Men with cool and solid heads who, before and after their escapade, proved themselves worthy researchers.

The EU Green Deal is an example of a new MOIP, amounting to EUR 1000 billion over a 10-year period. Several of the main reports that lay the foundations for the EU Green Deal were written by a comparatively small group of scholars who have popularized the idea of MOIPs. In the United States, the Biden presidency has put in place the Inflation Reduction Act (IRA), which is a combination of debt repayment (USD 306 billion) and funds specifically targeting cleantech. The design and implementation of these policies is influenced by the advice of scholars such as Mariana Mazzucato and colleagues. Economists such as Dani Rodrik at Harvard

'White House (2022a). ? White House (2022b).

Moonshots and the New Industrial Policy: Questioning the Mission Economy 5

University have also been instrumental in advocating the renaissance of industrial policies (Juhasz et al. 2023; Tagliapietra and Veugelers 2023; Rodrik 2022).?

Despite many historical examples of failed moonshot policies, policymakers and scholars who engage in these large-scale programs which aim to accomplish industrial and environmental renewal are rarely questioned. Often, it appears that these policies are put in place with little scrutiny and prior analysis. This trend is in many ways a manifestation of renewed belief in the efficacy of government interventions, formulated by Mazzucato (2022, p. 93) as follows:

Governments are the only actors capable of underwriting the scale of investments required; of coordinating multiple actors around the common goal of decarbonization; and of ensuring the costs and benefits of a green transition are distributed equitably across society so that social injustices are tackled alongside environmental crises.

We have witnessed a growing number of scholars questioning the entrepreneurial state and the idea of a mission economy (Wennberg and Sandström 2022; Muldoon and Yonai 2023; Kantor and Whalley 2023; Kirchherr et al. 2023), but this trend toward critical examination of such policies is still in its infancy. In the collective volume Questioning the Entrepreneurial State (Wennberg and Sandström 2022), 32 scholars offered a combination of theoretical and empirical contributions on the topic of industrial policy. Critical praise of the volume has emphasized the importance of both more grounded theoretical perspectives and further empirical studies of MOIPs (Muldoon and Yonai 2023). Moreover, the accelerating trend toward more proactive industrial policies, under labels such as Inflation Reduction or Green Deals, has spawned a need for continued inquiry into the workings of industrial policy in general and MOIPs in particular.

We begin this introductory chapter with an overview of the ongoing debate concerning the role of the entrepreneurial state and industrial policy. Then, we review and summarize the different contributions to this volume. It consists of three parts: (i) theoretical perspectives on MOIPs; (ii) empirical examinations of MOIPs, including in-depth case studies and reviews of previous studies; and (iii) contributions pointing to alternative ways to accomplish economic and social development.

Throughout this volume, we rely on the OECD’s (2021, p. 15) definition of a MOIP as

a co-ordinated package of policy and regulatory measures tailored specifically to mobilise science, technology and innovation in order to address well-defined objectives related to a societal challenge, in a defined timeframe.

>Tagliapietra and Veugelers (2023) is an ambitious volume published by Bruegel. It consists of 12 chapters by a total of 18 authors including world-leading scholars Philippe Aghion, Dani Rodrik, and Laura Tyson. The volume asks whether industrial policies can be designed “that strengthen green growth and economic security without hurting competition, economic openness and cohesion in the EU” and whether it is “possible to do so without stronger EU-level governance, backed by financial resources” (p. 12). In his Foreword, Bruegel Director Jeromin Zettelmeyer asserts that the answer to the first question is Yes and that this cannot be achieved unless the EU assumes a stronger governance and financing role.

Relatedly, the OECD specifies a set of criteria for a MOIP, adding that these policies ideally also (i) involve different actors from different fields and sectors; (11) address a grand challenge or wicked problem; (iii) have a defined deadline that is medium- or long-term with (iv) clear, measurable milestones along the way; and (v) involves an element of risk.

Questioning the Entrepreneurial State

In some respects, this volume is a sequel to Questioning the Entrepreneurial State: Status-quo, Pitfalls, and the Need for Credible Innovation Policy (Wennberg and Sandström 2022), which was published in 2022 as an open access book available for free download. In its first year, the book was downloaded more than 180,000 times, and in September 2023, the number of downloads surpassed 200,000. The book has been presented at numerous academic seminars and conferences as well as to policymakers across the globe.

The volume received positive reviews in, e.g., the Journal of Evolutionary Economics (Boudreaux 2022), the Journal of Economic Literature (2022),* International Small Business Journal (Stam and Vogelaar 2023), and the Review of Austrian Economics (Holcombe 2022), and was endorsed by scholars and policymakers. Josh Lerner of Harvard Business School, David Audretsch of Indiana University (the most cited scholar in entrepreneurship economics), and former Swedish Minister of Finance, Anders Borg, have all endorsed the book (see endorsements in Wennberg and Sandström 2022).

Despite having engaged so many well-reputed authors and receiving widespread attention and praise from both scholars and policymakers, the response from Mariana Mazzucato and her colleagues was meager. On April 27, 2022, Mazzucato posted this response on X (then Twitter):

Critical thinking on innovation policy is key but using a book to attack a strawman of an idea is just another distortion. Response to be followed by longer article.

When asked 4 months later about this longer response, no answer came from Mazzucato. However, the following comment was made on the third of September 2022 on X (then Twitter) by Rainer Kattel, professor and deputy director of the Institute for Innovation and Public Purpose at University College London (UCL): The collection is intellectually embarrassing, arguments in most articles have no legs to stand on. And I am not sure most authors even realize they are serving the agenda of Catowannabes.

“Unsigned review in Vol. 60, No. 4, p. 1545.

On the initiative of Mariana Mazzucato, the Institute for Innovation and Public Purpose was founded in 2017 with herself as its director. It is fair to say that the institute was founded with the express purpose of providing a platform for Mazzucato and her ideas.

Moonshots and the New Industrial Policy: Questioning the Mission Economy 7

When professors with elevated positions at prestigious universities such as UCL respond in this way to fellow scholars seeking to engage in a discussion, it is a signal that the topic warrants further examination.

There are several other examples of policymakers and scholars who have tried to initiate an open discussion about MOIPs and the renaissance of industrial policy. For more information, see Olof Hallonsten’s chapter in this volume about innovationism and the new public intellectuals. Such attempts have usually received little attention and been ignored by proponents of MOIPs (Hallonsten 2024).

The Critique

Questioning the Entrepreneurial State gathered a group of scholars who brought forward different theoretical angles to the limitations and challenges related to MOIPs and the notion of an entrepreneurial state. Several insights emerged from this combined effort. Governments cannot act as entrepreneurs because they face no real market or risk and can therefore not be evaluated (Larsson 2022). For similar reasons, they are less able to act entrepreneurially (Sarasvathy 2022). Relatedly, they are likely to lack ownership competence (Murtinu et al. 2022). Other critical work has been of a more empirical nature, pointing to the lack of information and knowledge among policymakers who are in the position of enacting these initiatives (e.g., Sandström and Alm 2022) and that missions tend to favor vested interests rather than new entrants or institutional entrepreneurs (Bergkvist et al. 2022).

Beyond Wennberg and Sandström (2022), we see increasing scholarly interest in the actual workings of MOIPs. Some of this critique has been of a more theoretical nature such as Lucas et al. (2018). Richard Nelson and co-authors argued that MOIPs “are not the right models for new programs aimed at the challenges we now face” (Foray et al. 2012, p. 1697). Grand societal challenges cannot be solved using a mission-oriented approach because such challenges

are all very different than the challenges faced and met by Manhattan and Apollo. These programs were aimed to develop a particular technological capability, and the achievement of their technological objective signaled the end of the program. (p. 1698)

Other scholars have applied public choice perspectives on policymaking, suggesting that incentives may diverge among policymakers, government officials, and interest groups in society. This renders the possibility of a societally beneficial outcome less likely (Muldoon and Yonai 2023).

The Rationale Behind This Volume

The rationale behind this volume is threefold. First and arguably most important, larger and more ambitious government programs continue to be initiated across the

European Union and in the United States. For example, the EU program Horizon Europe is structured to address five mission areas regarded as “grand social challenges.”® Running from 2021 to 2027, the program has a total budget of EUR 95.5 billion. The EU’s Green Deal is committed to spending EUR 1000 billion over 10 years in order to attain climate neutrality by 2050.’ More than 40 percent of these resources (EUR 430 billion) are earmarked for hydrogen-based technologies.* The US equivalent is the Inflation Reduction Act of 2022, which will “provide more than USD 369 billion for climate solutions and environmental justice and put the United States on a path to cut carbon emission by an estimated 40% by 2030.”” These new programs—initiated on both sides of the Atlantic Ocean—are inspired by Mazzucato’s books and by the broader literature on innovation systems. Mazzucato (2021) describes how congresswoman Alexandria Ocasio-Cortez and senator Ed Markey in the United States as well as the president of the European Commission, Ursula von der Leyen, were inspired by her work. Mazzucato recalls in her book that she advised the European Commission regarding the design and implementation of the Green Deal, which covers various subsidies and guaranteed loans related to a range of missions including the reduction of CO, emissions.

Second, many programs are put in place without significant prior analysis of the risks and problems related to large-scale government missions. Past examples of underperformance or outright failure are often disregarded. Research on innovation policy more generally pays little attention to failure, and there are few studies aiming to explain how and why innovation policies fail (Karna et al. 2022). As noted by Josh Lerner in Boulevard of Broken Dreams (2009, p. 5), “for each effective government intervention, there have been dozens, even hundreds, of failures, where substantial public expenditures bore no fruit.” Kärnä et al. (2022) document that these dozens, or hundreds, of failures are largely absent in the literature on innovation policy. In order to develop sound policies, it is important to look at both successes and failures; we therefore see a need for more explicit attention focused on how and why MOIPs may fail. Relatedly, we see a need for additional theories that

®https://research-and-innovation.ec.europa.eu/system/files/2022-06/ec_rtd_he-investing-to-shapeour-future_0O.pdf.

The proposed financing of the EU Green Deal is set out in the EU Green Deal Investment Plan (European Commission 2020). It comprises two principal financing streams totaling EUR | trillion. Over half of the budget, EUR 528 billion, will come directly from the EU budget and the EU Emissions Trading System. The remainder will be sourced through the InvestEU program, which combines EUR 279 billion from the public and private sectors to 2030 and EUR 114 billion from national co-financing. It will provide an EU budget guarantee to allow the EIB Group and others to invest in higher-risk projects, enabling private investment. The European Innovation Council has also set aside a EUR 300 million budget to invest in market-creating innovations that contribute to the goals of the EU Green Deal.

The president of the European Commission, Ursula von der Leyen, stated that the European Green

Deal would be Europe’s “man on the moon moment” (https://www.euractiv.com/section/energyenvironment/news/eu-commission-unveils-european-green-deal-the-key-points/).

* https://www.c40knowledgehub.org/s/article/Climate-action-and-the-Inflation-Reduction-Act-Aguide-for-local-government-leaders?language=en_US.

Moonshots and the New Industrial Policy: Questioning the Mission Economy 9 highlight both the costs and the benefits of various innovation policies. We note that several scholars have emphasized the importance of articulating political economy perspectives on MOIPs more clearly and challenge these ideas on both theoretical and empirical grounds (Muldoon and Yonai 2023; Holcombe 2022). Several contributions in this volume try to do so explicitly (e.g., Holcombe 2024; Waldron and Coyne 2024; Henrekson and Stenkula 2024; Schnellenbach 2024).

Third, the lack of substantive reactions so far from Mazzucato and colleagues— paired with the fact that other scholars and policymakers have experienced a reluctance to engage in critical debate—indicates that this subject is in great need of further inquiry. If new policies and government programs are established based on information provided by scholars soliciting policymakers to promote their own agendas, it is essential for economic and social progress that such academics engage with and respond to the work of their critics. We continue this introduction with a brief historical and conceptual background to MOIPs.

Historical and Conceptual Background to Mission-Oriented Innovation Policy

The idea of mission-oriented innovation has its roots in the literature on evolutionary economics (Nelson and Winter 1982; Freeman 1987) and innovation systems (Lundvall 1992; Geels 2004; Borras and Edler 2014; Schot and Steinmueller 2016). It is clearly steeped in the tradition of what could be called third-generation innovation policy, which posits that governments should not only provide basic research and contribute to the commercialization of it but also to guide innovation efforts in specific directions. According to this approach, it is no longer enough for the government to increase positive knowledge externalities by supporting R&D activities, nor is it enough to provide targeted support or platforms strengthening the links between diverse actors such as universities, start-ups, and incumbent firms. The purposeful direction of these activities and proactive intervention in the marketplace is deemed necessary. A critical element distinguishing the mission-oriented approach is therefore directionality. This concept is used to underscore the importance of establishing a specific direction for innovation policies:

The key insight of this report is that missions are both a means of setting economic growth in the direction of where we want to be as a society and a vehicle we can use to get there. (Mazzucato 2018, p. 28)

Missions are a way to implement directionality inside an economy. (Mazzucato 2021, p. 124)

While several scholars have proposed more directed innovation policies, no one has been more successful in diffusing such ideas and popularizing them to policymakers than Mariana Mazzucato. Using the Apollo and Manhattan Projects as illustrative examples, she argues that the state should initiate bold efforts into novel, unchartered territory, thereby guiding and driving change to achieve social and economic progress. The fact that Mazzucato (2018), the study from which the above quote comes, is an official document of the European Commission highlights how popular mission-oriented policies have become among policymakers.

From this perspective, policymakers are given a pronounced role as the primary agents behind desirable changes:

Moving to a greener low carbon economy means redirecting all sectors and all actors — public, private and civil society — towards economic growth in a sustainable and inclusive direction. (Kattel et al. 2021, p. 18)

MOIPs are initiated in order to apply a “moonshot” logic to grand societal challenges. In this sense, MOIPs can be regarded as an attempt to extend Richard Nelson’s work in the 1977 book The Moon and the Ghetto, where he discussed why humanity could put a man on the moon but failed to eradicate poverty. The purpose of MOIPs is to mobilize actors from various parts of society to address important challenges. Its proponents claim that missions can be launched in order to transition to green energy, address homelessness, clean up oceans, or increase equality, to name a few examples. Ideally, these missions provide an overarching umbrella where actors can be mobilized and collaborate.

How to Read this Volume

This collective volume contains three distinct parts in addition to the introduction. Part II presents a collection of theoretical perspectives on MOIPs (Coyle 2024; Holcombe 2024; Schnellenbach 2024; Hallonsten 2024). Part II examines the empirical evidence related to MOIPs. It consists of explorations of the empirical evidence used to justify missions (Yerger 2024a, 2024b), three case studies of failed MOIPs (Lucas and Boudreaux 2024; Alves 2024; Waldron and Coyne 2024), an assessment of previously published analyses of MOIPs (Batbaatar et al. 2024), an exploration of government agencies implementing MOIPs (Bjérnemalm et al. 2024), and a chapter in which the main takeaways from the previous chapters are identified (Henrekson et al. 2024). Part IV presents alternative strategies for policymakers to accomplish innovation and renewal (Sanders et al. 2024; Rose 2024; Svensson 2024; Henrekson and Stenkula 2024). Here we summarize each chapter and seek to integrate them into a more holistic discussion.

Part II: Theoretical Perspectives

In the chapter “State and markets: Not whether but how,” Diane Coyle (2024) situates several of the contributions of this volume. Coyle asserts that MOIPs may help private and public sector actors to coordinate their efforts toward a common objective but underscores that this interaction is much more nuanced than current

Moonshots and the New Industrial Policy: Questioning the Mission Economy 11 accounts of the Apollo or the Manhattan projects, for example. There is a need among policymakers to offer simple solutions and hence to find ways to gain short-term popularity—a need that certain scholars have met by offering oversimplified narratives.

Coyle describes Mazzucato’s overarching argument, summarizing it as “the attribution of intentionality, and the conclusion that if it worked for inventing the Internet, it can work for other societal aims.” She further notes that it is widely acknowledged among economists that governments have a critical role in funding basic research and technology development and that there is by now a large and growing body of literature discussing various forms of public-private interactions and the optimal role of a government in innovation (e.g., Rothwell and Zegveld 1984; Aghion and Tirole 1994; Acemoglu 2002). Covering some of this literature, Coyle suggests that coordination problems between different actors seem to provide the strongest rationale for MOIPs but emphasizes that each mission needs to be specific concerning the problem to be addressed and that not every policy should be “shoehorned into a mission.”