Innogen · News · December 14, 2008

Innogen Professor Mariana Mazzucato Awarded FP7 Research Grant on Finance, Innovation and Growth

The Open University

The three year, 1.5 million Euro project will be funded by the European Commission as part of the FP7 theme SSH-2007-1.2.3: The role of finance in growth, employment and competitiveness in Europe.


FINNOV is made up of 7 work packages, each led by one of the 7 participating universities in 4 European countries:

  • Open University (Coordinator: , Innogen Co-Investigator and Director of the OU’s inter-faculty centre on Innovation, Knowledge and Development),

  • University of Cambridge (UK),

  • University of Sussex (UK),

  • Sant’Anna School for Advanced Studies (Italy),

  • Universita’ delle Marche (Italy),

  • Bordeaux University (France),

  • Economics Institute (Czech Republic).

Key themes to be explored across the 7 work packages are:

  • Finance and the Economics of Risk and Uncertainty

  • The Interaction between Financial Institutions, Modes of Financing, and Modes of Innovation and Growth

  • Links between Economics of Innovation and Inequality

The Lisbon agenda states that Europe’s future prosperity is dependent on developing a knowledge-based economy driven by innovation. To stimulate the supply of innovation it calls for increased public and private investment in R&D to match the proportions of GDP being invested in R&D by Europe’s major competitors.

However the success of this strategy depends equally on the successful translation of innovation into economic growth. Business experimentation is central to these processes, and this ability is central to achieving the objectives of the Lisbon Agenda of 2000 and the new industrial policy in an enlarged European Union.

This project will examine key factors that impact on those processes, in particular the interactions between innovation and financial markets. It will lead to a deeper understanding of the complex relationships involved and will inform both policy and practice.

The current global financial crisis relates directly to the main research agendas of FINNOV in financial innovation, the role of the financial system within the economy, and the social distribution of risks and rewards.

The roots of the financial crisis go much deeper than changes in financial technology or banking regulation and reflect important shifts in the social distribution of risk within the US, and in the global economy.

The social institutions that socialised risks in the post-war period have been gradually replaced by institutional structures that individualised risks and remove the slack in the system that provides a buffer against large scale losses. 

 Institutional changes in the role of the innovative enterprise in the US economy and an increase in income inequality have removed institutional protection in a highly interdependent way that remains under-researched.  Prime tasks for FINNOV will be to determine how Europe can ensure that the financial system supports investment in innovation in ways that generate stable employment and equitable incomes.