The State's Core Job: Capabilities, Not Size
Economist Mariana Mazzucato argues the critical question for governments isn't size, but capabilities. In a recently shared paper, she asks if governments can effectively sense change, coordinate across agencies, and engage with stakeholders to solve complex problems.
Mazzucato's work builds on her 2013 book, "The Entrepreneurial State," which argues that the government has been a lead risk-taker in innovation. She points to technologies like the internet, GPS, and touch screens, all of which originated from state-funded research before being commercialized by the private sector. Her central thesis is that the state doesn't just fix market failures but actively shapes and creates markets. This concept of "mission-oriented innovation" guides her work at the UCL Institute for Innovation and Public Purpose (IIPP). The institute advises policymakers globally on using this approach to tackle large-scale challenges like climate change and public health. The goal is to steer economic growth in a desired direction by setting clear, ambitious goals that require cross-sectoral investment and innovation. In Europe, this focus on state capability is evident in GovTech initiatives designed to improve public services. Portugal, for instance, has risen to 3rd in the OECD's Digital Government Index, recognized for its user-driven services and shared digital infrastructure. The country's strategy focuses on simplifying processes before digitizing them, a core tenet of its Digital Transition Action Plan. A prime example of a European digital service built on state capability is Estonia's e-Residency program. Launched in 2014, it offers a government-issued digital identity that allows global entrepreneurs to establish and manage an EU-based company entirely online. The service is built on Estonia's existing digital infrastructure, including its secure e-ID system, demonstrating how foundational government platforms can enable new, user-centric services. The European Union also mandates a baseline of digital capability through its Web Accessibility Directive. This requires public sector websites and mobile apps to meet WCAG 2.1 Level AA standards, ensuring services are perceivable, operable, understandable, and robust for people with disabilities. This directive enforces a uniform standard, moving beyond voluntary guidelines to legally enforceable requirements for all member states. Looking ahead, the European Commission is actively promoting the adoption of AI in public services to augment the capacity of civil servants and deliver more proactive services. The focus is on developing "trustworthy AI" through human-centric design, transparent governance, and building in-house knowledge within public administrations to manage the technology responsibly. This includes investing in the data foundations and AI literacy of public sector employees before scaling solutions.
