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The Future of National Development Banks$
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Stephany Griffith-Jones and José Antonio Ocampo

Print publication date: 2018

Print ISBN-13: 9780198827948

Published to Oxford Scholarship Online: November 2018

DOI: 10.1093/oso/9780198827948.001.0001

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National Development Banks and Mission-Oriented Finance for Innovation

National Development Banks and Mission-Oriented Finance for Innovation

Chapter:
(p.255) 10 National Development Banks and Mission-Oriented Finance for Innovation
Source:
The Future of National Development Banks
Author(s):

Mariana Mazzucato

Caetano C. R. Penna

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198827948.003.0010

How can one conceptualize the new ‘mission-oriented’ role assumed by national development banks (NDBs)? The standard ‘market failure’ perspective provides only a partial and limited justification for what NDBs do and does not explain historical and contemporary developments. This chapter combines insights from Keynes, Minsky, Schumpeter, and Polanyi (and works in their tradition) to review the old and new roles of NDBs. It discusses these roles taking into account two important dimensions: (i) the relationship between risks and rewards, and (ii) the criticisms that NDBs crowd out private investments. It shows that the roles typically performed by NDBs go beyond that of the state as ‘market fixer’ to assume that of market shaper and creator.

Keywords:   development bank, mission-oriented policy, innovation policy, market failure, crowding out

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