Mariana Mazzucato on the role of the EIB in spurring Investment-led Growth

Professor Mariana Mazzucato, of Sussex University, has produced pivotal research on the role that public financing plays in fostering not only investment but also competition. Here she is appearing on Bloomberg to explain the importance of the European Investment Bank as a potential driver of growth, innovation and competition in the European Union. She also supports the Modest Proposal’s proposal that 50% of investment projects ought to be funded by a net issue of ECB-bonds (with the remaining 50% to be financed normally via EIB-bonds). Note also her poignant point on how privatisation can diminish innovation; on the intense likelihood that Italy will be insolvent shortly, on the urgency with which Europe requires a gestalt shift. YOU CAN ALSO CLICK HERE FOR THE VIDEO


  • Specific and to the point that Professor Mariana Mazzucato, of Sussex University.

    It is nice to have people see the whole picture.

  • Having recently watched Mariana Mazzucato give a presentation in person, (rather than a video), I can attest she is a true live wire; vivacious and inspiring. But once again, her viewpoint is from the wrong end of the problem which is; new innovation comes from a fresh mind uninhibited by conventional thinking; not from major government inspired “projects”.

    This is a debate about funding creativity, when the solution proposed is as though being in control of the enormous outlet pipe overflows from a major river dam. You cannot contemplate the myriad ways the water will flow around the downstream seedlings, from contemplating the view of a massive flow from the dam; you have to “be there” to understand the problem from the other end of the flow where the funds are absorbed into the soil of the nation..

    That by far the majority of us innovators, have no access to any flow at all; that financial institutions have no spillway to permit the overflow of the annual input to the river of funding entering the financial dam; that we live in a financial desert downstream of the institutions, (the origins of why I called my own proposals, as far back as 1994, The Capital Spillway Trust). The normal flows from the likes of the EIB are always diverted into major government inspired proposals where, as was said, the implementation is appalling.

    Yes, we do need a common vision, a working mechanism; yes, she is correct to press her viewpoint; yes she is inspiring; but we need a solution that drives the money right down to the grass roots where there is none at the moment.

    • I don’t see how her viewpoint was only limited to the EIB. In fact, she was quite clear that the EIB could NOT invest in human capital, that only infrastructure and the like were its domain. She also mentioned investment in education and the like, research and development. Although I sympathize with your point of view on unconventional thinking and innovation, we surely can’t forget the huge government projects that have created new efficiencies in our daily lives. The internet, for instance, was a gov’t creation.

  • Thank you very much informing us every day for every step concerning greek, european and global financial and political crisis. My opinion is that the very technical economic language-discours, (economic imrerialism since the late 70’s-“everything has an economic solution”- which is only partially true), don’t help to create a large platform of common ideas and praxis. I enjoy your texts, books, articles, speeches and presentations because I find a kind of “scientific humour” that is lightening even a very difficult and technical item. I am convinced that only a very large and multilanguage “open space of discussing the crisis”, with some minimum principles, could help to progress this subject, surpassing various intentions and interests. For greek-speaking see

  • It may sound naive, stupid or irrelevant to the main concern … but i want more for Greece.
    I want a major change in Greece. And it can be done.
    The wind turbines and solar panels investments are giving back very little to the local communities. It’s not an investment that can trigger change in Greece. They are profitable only for the companies that make them and they may very well be non-greek.
    It’s irresponsible and stupid to destroy farms just to install solar panels. It’s simple risk management.
    Furthermore, what the next ruling party should be doing is to plan investments. Public investments. Find opportunities taking into account global economy. No, tourism and solar panels is not enough for this country. It’s ridiculous.
    All it takes is a plan for growth. Like the one, senior Aggelopoulos had conducted.
    Klaus is right on this. It’s not THE major issue right now. But it WILL be very soon.

    P.S. hundreds of politicians must go to prison!

    • I can not agree more.
      I would like to see Greece gain her agricultural power all over again.

      Greece is not about major high tech changes now. She is more natural.
      All the rest later.

      We have to start from the beginning.

    • Greece is going to be an energy superpower soon. Just because you can’t see it does not mean that it does not exist. (AOZ).

      P.S. and none of the energy equipment and know how will be German. Greece’s future is in a compact alliance with the US, Israel and Cyprus. Bye bye morons of Europe. We have had enough with your nonsense.

    • @Demitri

      It’s not about agricultural versus tech innovation. It’s all about the return of each investment in our communities. Energy is definitely a field which Greece can have a major development. The key is who is going to benefit from it?

      Strategically we want to be sufficient in food as a country. Difficult times are ahead.

      I don’t agree that we must start from the beginning. There is no need to re-invent the wheel. What we need is strategically position our public investments in short term, mid term and long term.
      Educate and inform people towards a investment route.Build necessary structures to embrace the plan. Finally make sure that it’s done the way it is planned, the way it is promised. That’s the way you build confidence with your people. That’s the way you build an investor-friendly environment.

      My preference for development is local cuisine, local products, build a brand which have great local consumption at the start. Similar to what italians have accomplished. It’s a shame that in Crete, whiskey is preferred more than raki and wine. How are you going to expand this market abroad when tourists are consuming vodka and whiskey when on vacation?

      Secondly, archaeological oriented tourism. When it comes to cheap tourism, how can we compete to neighbouring countries? But taking advantage or something that other countries don’t have, we can increase our profit margin.

      Local authorities and individuals must be put into action. Central decision making is not functioning.

      Wind farms and solar panels but with great care. We don’t want to turn our living place into a mad house. This technology already exists in Greece. We must take advantage of local research and innovations which is quite competitive.

      Research in universities must embrace local communities and give solutions. In Greece there is a huge gap, universities are not part of communities. This must change.

      Unfortunately this is just talk. We must act as individuals. WE must take actions. Force the local authorities in this direction. Force our MPs in this direction. That’s a good reason for a protest. Build social groups and put pressure on politicians. That’s the way to go.

      Boycott foreign-made products and services. You will be surprised how many innovative greek products they are.

    • Yes Dean. i agree with you.
      Definitely AOZ is THE solution. Let’s see now if ND keeps its promises.

      But i am sure you will agree. Even if i knew that in 3 years from now, our “problems” will be solved, that doesn’t mean that we can stop trying make our lives better and fight for what we love.

      And bear in mind this. If our current political regime is not in a position to defend the fundamental human rights of its people, do you think it’s going to defend our sovereignty and national resources?

      It’s US (chic) that we must put pressure on them.

    • Ilias and Dean

      I LOVE it.

      Ilia ,when i say start from the beginning i do not mean reinvent the wheel.
      I mean exactly what you wrote ,developing an efficient plan and acting upon it.
      But make no mistake ,for this new plan will be a new beginning and must have nothing to do with management practices of the past.
      So ,yes ,we do start all over again ,fresh and with a clear mind.

      And i still do want to see the soul of Greece flourishing. Agriculture.
      No matter all the rest.

  • It´s about time we need a few more regional airports in Spain, that noone uses..

    • So you are saying that Eurozone has exactly the “things” it needs so it does not need anything else ie anything more will be useless…….OK !

    • He is right! Building useless infrastructure does not help anyone. Which is exactly what happens if the money comes from “someone else”.

    • n eu d

      No ,it is what happens when the money is used by German corrupt corporations and corrupt elite in general.
      Greeks do not need to prove their creativity to anyone.
      While you are just overefficient robots.

      And get used to the fact that this money that you say come from someone else ,are not your money but OUR money.

  • Hahahaha! The German Surpreme Court will stop the ratification of the ESM. They have asked the president NOT to sign it until the surpreme court has processed potential lawsuits!

    Looks like the EU dictatorship will be delayed. Heil Euro!

    • Why don’t you guys take your Supreme Court clowns and come to a sunny place for a change?

      It might help you to recharge your batteries and rid you of certain mental genetic defects.

      Who do you people think you are fooling with your contrived theater of legality?

    • Do not worry a lot of us will be doing just that pretty soon. I will go to Brazil, like every year. Best and especially not crowded beaches in the world!

  • RICHARD KOO: The Entire Crisis In Europe Started With A Big ECB Bailout Of Germany
    By Joe Weisenthal | Jun. 19, 2012, 1:29 PM

    Read more:

    Great note from Nomura’s Richard Koo, looking at the so-called “competitiveness problem” of the Southern European nations.

    Rather than some inherent problem found there, Koo says that what happened is that after the 2000 tech bubble collapsed (a bubble which Germany shared heavily in) the ECB used exceptionally loose monetary policy to stimulate the economy, so that Germany wouldn’t have to revive its economy via fiscal policy.

    This didn’t do much domestically in Germany (which was suffering from a balance sheet recession) but did really rev up the bubbles in the periphery, causing the boom in imports from Germany, thus putting the periphery in debt, and boosting Germany’s export sector, rescuing it from the post-tech-bubble funk.

    Says Koo:

    The countries of southern Europe, which had not participated in the IT bubble, enjoyed strong economies and robust private- sector demand for funds at the time. The ECB’s 2% policy rate therefore led to sharp growth in the money supply, which in turn fueled economic expansions and housing bubbles.

    Wages and prices increased… leaving those countries less competitive relative to Germany.
    In short, the ECB’s ultra-low policy rate had little impact in Germany, which was suffering from a balance sheet recession, but it was too low for other countries in the eurozone, resulting in widely divergent rates of inflation.

    As Germany became increasingly competitive relative to the strong economies of southern Europe, exports grew sharply and pulled the nation out of recession. Germany’s trade surplus quickly overtook those of Japan and China to become the world’s largest, with much of the growth fueled by exports to other European markets.

    ECB, not southern Europe, responsible for competitiveness gap

    In 2005, I told a senior ECB official that it was unfair to force other countries to rescue Germany by boosting their economies with loose monetary policy without requiring Germany to administer fiscal stimulus, when it was Germany that had become so deeply overextended in the bubble. The official responded that that is what a unified currency means: because Germany could not be granted an exception on fiscal stimulus, the only option was to lift the entire region with monetary policy.

    In other words, there would have been no need for such dramatic easing by the ECB—and hence no reason for the competitiveness gap with the rest of the eurozone to widen to current levels—if Germany had used fiscal stimulus to address its balance sheet recession.

    The creators of the Maastricht Treaty made no provision for balance sheet recessions when drawing up the document, and today’s “competitiveness problem” is solely attributable to the Treaty’s 3% cap on fiscal deficits, which placed unreasonable demands on ECB monetary policy during this type of recessions. The countries of southern Europe are not to blame.

    Nailed it.

    Read more:

  • This belief that Germany had a effective energy policey is seriously dumb – its solar thingies are a joke , it cannot counter coal depletion.
    Simply look at the TPES figues since 1990.
    Solar does not work to create growth (a rise in net BTUs) in Morrocco , it will not work in Greece.

    • As long as we still have first generation solar with efficiencies of 10-15%, we are going nowhere.

      The future of solar technology is all in US labs where the next generation of photovoltaics will produce efficiencies of 60%+.

      Until then the German solar proposition is nothing more than a contrived public subsidy which actually detracts and subtracts from efficient energy goals.

      Plus the Chinese have already cleaned up the German solar clock. So, no need to go there.

  • Because Germany borrows on our collective european account it extracts resourses from all of Europe to further centralise its mercantile heart – which orbits the Rotterdam / Holland / Rhine / Rhur hub.

    When it decides to continue to make cars rather then split atoms it drives up the cost of Nat gas for the lot of us.
    It does not matter if its a super effiecent method of production it is making goods we don’t need – its a net extractive method of Industrial production.

    • True.

      Germany = a mercantile and consumption model that no one needs or should want.

      The whole idea of Germany is a giant anachronism which hardly fits in the new knowledge based economy.

      Germany is already dead but doesn’t even know it. But it soon will. Mark my words on it.

    • Hey Dork, please list a few of ressources you mentioned that come from Greece, please.

    • EXACTLY.

      And now we have to pay for all the crap because she wants to advance her efficiency even more than the already unnessesary rhythm of production. Beyond and above the natural rhythm.

      And she uses the bad debt of her own banks to frame us.

    • n eu d

      Just a few?


      and many many more

      and in the very near future

      Natural Gas

      Thank you very much.

    • Good, than these make very good collateral for the bailout loans! In addition to the gold of the central bank of Greece which has already been pledged as such.

    • n eu d

      The bailouts are unreasonable and can not be paid.

      What have we been saying for so long?
      That is why we say that the plan is legal asset stealing and most of the reforms are just an excuse to cover the banksters.

      Does “Germany” want all the gold?
      She already took some as well as underwater wealth.
      The banksters use her power to get Greece.

      Do you like it n eu d?
      An economic war? A war without weapons? People dying from a distance?

      They will not get everything. We haven’t endured so many years because we give up.

  • Angela Merkel’s mania for austerity is destroying Europe – The German Chancellor is terminating growth and pushing us towards a new Depression.

    Which world leader poses the biggest threat to global order and prosperity?

    The Iranian president, Mahmoud Ahmadinejad? Wrong.

    Israel’s prime minister, Binyamin Netanyahu? Nope.

    North Korea’s Kim Jong-un? Wrong again.

    The answer is a mild-mannered opera fan and former chemist who has been in office for seven years.

    Yes, step forward, Chancellor Angela Merkel of Germany, whose solution to Europe’s financial crisis – or lack thereof – has brought the continent, and perhaps the world, to the edge of a second Great Depression. “World Bank warns that euro collapse could spark global crisis”, read the headline on the front of the Observer on 17 June.

    With apologies to Mike Godwin and his eponymous law, Merkel is the most dangerous German leader since Hitler. Her eight predecessors – from Konrad Adenauer to Gerhard Schröder – presided over a manufacturing miracle at home and the rehabilitation of Germany’s reputation abroad. Under Merkel, however, the country finds itself isolated once again, loathed and feared in equal measure.

    Cartoons in the newspapers of Germany’s neighbours have depicted the chancellor with a Hitler moustache or wearing a spiked, Bismarck-era military helmet. Commenting on the phenomenon, the columnist Jakob Augstein observed: “Her abrasive pro-austerity policies threaten everything that previous German governments had accomplished since World War II.” Merkel, Augstein rightly noted, is “a radical politician, not a conservative one”.

    Neighbourhood bully

    Merkel did not cause the financial crisis; that (dis)honour still belongs to the world’s “top” bankers. But her deficit fetishism and obsession with spending cuts are exacerbating the continent-wide debt-and-growth crises that threaten to upset more than six decades of pan-European unity and stability.

    Then there is her bullying tendency. The majority of Greeks voted on 17 June either to delay or to cancel the EU-imposed austerity plan; up popped Merkel the next day to warn: “No departures can be made from the reform measures . . . We have to count on Greece sticking to its commitments” – and to slap down her foreign minister, who had suggested that the EU might give Greece more time to do cuts.

    Merkel prefers to fiddle as Athens burns – and Madrid and Rome, too.

    Youth unemployment in Spain and Greece is hovering around 50 per cent; in Italy, a third of 15-to-24-year-olds are out of work. Riots beckon as Europe’s far right attracts new supporters. It is ironic that the leader of a nation paranoid about and offended by any mention of its Nazi period seems so relaxed about the rise of anti-austerity, neo-Nazi parties across the EU, from Marine Le Pen’s National Front in France to Greece’s black-shirted Golden Dawn to the fascists of Jobbik, now the third-largest party in Hungary’s parliament.

    Merkel’s supporters argue that this is unfair. She is, they say, standing up for hard-working Germans who are weary of bailing out their feckless southern European neighbours.

    This is nonsense. First, figures released by the OECD show that the “lazy” Greek worker labours for 2,017 hours per year, which is more than the average in any other EU nation – and more than 40 per cent longer than the average German works. So a little less Schadenfreude, please.

    Second, it isn’t just southern Europeans who are revolting against fiscal sadism.

    In May, Mer­kel’s Christian Democrats suffered a humiliating defeat in an election in Germany’s most populous state, North Rhine-Westphalia. It was the party’s worst result in the state since the Second World War. Ordinary Germans are starting to acknowledge that austerity isn’t working.

    But Merkel won’t budge. She is a purveyor of the conventional wisdom which says that the economy is like a household that can’t borrow or spend more than it earns. But economies are not households – or credit cards! – and common sense tells us that the solution to a downturn caused by a prolonged drought in demand is not to reduce demand further (by slashing spending). History teaches us that the Great Depression wasn’t helped by Herbert Hoover’s cuts in the US and, in pre-war Germany, it was mass unemployment, not hyperinflation, that propelled Hitler to power in 1933.

    Fiscal self-flagellation

    In a study published in 2010, analysts at the International Monetary Fund found just two cases, out of 170 examples across 15 advanced economies between 1980 and 2009, in which cuts in government spending turned out to be expansionary for the economy overall. They concluded: “Fiscal consolidation typically has a contractionary effect on output.”

    Merkel’s insistence on fiscal self-flagellation, her unwillingness to countenance any fiscal stimulus by Germany or an easy-money policy by the European Central Bank, have pushed depressed countries such as Greece further into depression. The recent announcement at the G20 summit in Mexico that Merkel may now be willing to allow eurozone institutions to buy up the debt of crisis-hit member countries is too little, too late.

    This isn’t just about geopolitics or macro­economics.

    Europe’s austerians have blood on their hands. Suicide rates are up by 40 per cent in Greece; the birthplace of western democracy is being remorselessly reduced to the status of a developing country. Meanwhile, Merkel, as the US economist Robert Kuttner wrote earlier this month, “continues to pursue Germany’s narrow self-interest . . . [because] Germany benefits from the rest of Europe’s suf­fering in two ways – expanded exports and dirt-cheap money”.

    In denial and bent on austerity über alles, Merkel is destroying the European project, pauperising Germany’s neighbours and risking a new global depression.

    She must be stopped.

    • The only possible solution is through reasoned debate; we must keep our thoughts and arguments centred upon reason and peaceful solutions. Once we lose sight of reason, we can kiss goodbye to another decade through war.

    • I totally sympathise; the tragedy is that we here in the UK are in as much trouble, financially as Greece; perhaps even more so and the only reason we are getting away with it is the spotlight is thrown on Greece rather than the UK.

  • I believe the gestalt shift is not between austerity (to painfully pay debts) and growth (in order to pay debts less painfully or even painlessly). It is between growth and no growth.

    First, a new definition of growth is needed so I will not include returning to one’s national GDP level before the crisis struck (let us call that a dead-cat bounce). Furthermore, growth must discount the effect of inflation. Again, let us redefine inflation to include bubbles of all kinds – in real estate, stocks, commodities, etc. What is left we will call growth.

    This desperation for investing in something, anything, (green sounds nice and what with dependency on oil-producing countries, peak oil and all that) is another financial gimmick to get fresh capital into the economy in the belief that capital produces growth. It does not. The availability of capital is just one of the conditions for growth and if the others are not present, increased liquidity will just form another bubble, in this case, a green bubble.

    Prof. Mazzucato mentions that investment produces growth in China and Brazil. Of course it does. These countries, and many others, have other conditions to sustain growth, namely, millions of poor people in dire need of housing, drinking water, and schools. Fulfilling new real needs is growth.

    What do developed countries need other that to pay debt? Do you really need to double your output every decade or so to meet new needs? If not, then your growth schemes are just disrupting the efforts of countries trying to alleviate poverty, school their populations, and build basic infrastructure. As it is, many countries hold vast reserves just to fend off speculative attacks from core countries trying to maximize capital returns instead of developing their countries.

  • I’ve been reading and thinking about things on this great blog for months. Including reading YV’s Modern Political Economics (twice – more needed), and watching the fascinating sessions at U Texas a few months ago (YV, Bibow, Raffer etc). That is a fraction of the interest the YV’s writings have inspired in me to go and read up on political economy – inspired by the utter idiotic hell that is being visited on European economies. Including my own (personal and national), apart from the Greek one.

    So I do recognise that this is an economics blog; not a music blog or words/poetry blog.

    But I would like to ask a favour. Will someone – and of course I know that there are many Greeks here – PLEASE translate Nikolas Asimos’s Sto Falimento Tou Kosmou (Στο Φαλημέντο του Κόσμου) into English for me? Or even transcribe the Greek lyrics for me to figure out? I took it to my heart as an anthem to talk sense to me in 2009, when I couldn’t find any work, and all my power seemed to be gone. Can’t find English translation (or even Greek lyrics, which I could work with slowly given my rubbish knowledge of Greek) anywhere.

    I felt from the music that this song had a lot to say that was relevant to me – and to what is happening in Greece now! – but that is just a musician listening. I don’t know the words, and would love to. Got stuck for a start on what seems to be a problem that “falimento” is not strictly a Greek word! (much black humour could come from that….!)

    Here is the inevitable Youtube:

    Many thanks, and all the best


    • Sto Falimento tou Kosmou- In the World’s Bust
      Here you go( the translation is mine so you must forgive me if it is poetically speaking subpar-I’ve never translated poetry before but because i love Asimo I considered it my duty to reply):
      I remember looking at you on the edge of the cliff
      by balancing you upset the mistakes of the times
      your whole being pulsated in the light
      in your pure essence the people took fright.

      In this world’s bust
      I am the ridder of the sky
      with people you seek connection
      but this thread too has been severed.

      The years that have gone by have left you with scars
      you used to carry your “now” in other times
      you became one like nothing with the ocean
      and met the infinite to your other self

      In this world’s bust
      I am the ridder of the sky
      you hold Ariadnes’ thread
      and from their sickness, once more, you have fled.

    • I remember I watched you at the edge of the cliff
      balancing you were upsetting the mistake of time
      vibrating your entire being in the light
      your pure substance terrified by people.

      In this world of falimento
      I ,the rider of the sky
      you ask people’s contact
      but this thread has also broken.

      The years that have passed left you wounds
      you were carrying your now to other eras
      you joined as a nothing with the ocean
      and met the infinite to your other self.

      In this world of falimento
      I ,the rider of the sky
      Ariadne’s thread you hold
      and from their illness you escape once more.

      (falimento = bankruptcy ,fiasco ,debt)

    • Europe is a continent. Difficult to destroy. The only thng that will be destroyed is this worthless “currency” called the Euro.

  • @No EU dictatorship
    What will happen to the German Diesel ration when it has to compete with other sovergin countries in Europe for this limited resourse ? – it will dive , making its Industry a non Industry.
    Germany is not a Industrial powerhouse as the US was pre war – the US was both China
    and Saudi Arabia in one package.
    Not only does it have no oil but its coal reserves are declining ,Polish coal reserves are


    • >>>What will happen to the German Diesel ration when it has to
      >>>compete with other sovergin countries in Europe for this limited
      >>>resourse ?

      I assume the outcome will be that many Greeks will use the donkey as a means of transportation as they cannot pay the imported oil and have not much than feta cheese to trade for.

    • @No EU
      No – Germany pays for its imports via petro senstive exports …if the rest of Europe cannot buy its goods – it is cooked.
      It has a very different economy from France for example who despite 30 years of neo liberlism has a memeory of the past.
      That excess oil that Germany normally burns will move elsewhere although most likely it will be burned by the US.
      We live in a era of zero sum economics.

    • >>>if the rest of Europe cannot buy its goods – it is cooked

      Don´t worry the Chinese, Americans & Brazilians will buy our stuff while the rest of Europe is going down the drain.

    • n eu d

      Obviously you haven’t noticed that we are in a global recession.
      Let me remind you that Germany’s exports are 70 to 75% inside the EU.

      You have it coming.

      Guest (xenos)

      She reminded it me a bouncing meetball at Gdansk.
      Thank God our own Greek bouncing meetballs weren’t there.

      My TV would have been in orbit now.

  • Look the EIB should have continued to invest in Nuclear back in the day as this freed up nat gas for direct combustion elsewhere.
    However its probally too late for that now – it should direct almost all of its energy towards light rail and Trams in countries with many 1000s of Kms of ancient trackbeds and cheaper electricity such as in
    France…this will also free up oil to be burned elsewhere in Europe.

    The Nantes – chateaubrient tram train is probally a good example of this

  • Greece’s future is in a compact alliance with the US, Israel and Cyprus.

    The above rubbish can only come from the mouth of a [self-declared] fervent Greek Zionist, aka Dean Plassaras.