2018 Leontief Prize Winners Mariana Mazzucato and Branko Milanovic
"Globalization, Innovation, and Inequality"
On April 17, the Global Development And Environment Institute (GDAE) awarded the 2018 Leontief Prize to Dr. Mariana Mazzucato and Dr. Branko Milanovic. This year’s award recognized Dr. Mazzucato for her path-breaking research on the positive role of governments in fostering innovation and Dr. Milanovic for his vital contributions to measuring and responding to global income inequality. The ceremony and lectures were held in Ballou Hall on Tufts University’s Medford Campus.
Anthony Monaco, president of Tufts University, opened the event, affirming the Leontief Prize’s “distinguished history”, and that this year’s recipients “represent the best of the tradition that GDAE champions and embodies.” Read the full text of President Monaco’s remarks.
GDAE Co-Director Neva Goodwin introduced the prizewinners, acknowledging them for their outstanding contributions to economic theory. She praised Dr. Mazzucato for asking the questions that we haven’t even thought of yet, and Dr. Milanovic for epitomizing how an economist can truly make the world a better place. (Watch Dr. Goodwin’s introductions of Dr.MazzucatoandDr.Milanovic)
From Market Fixing to Market Shaping: Reframing Growth Policy
Dr. Mariana Mazzucato, Chair in the Economics of Innovation and Public Value and Director of the Institute for Innovation and Public Purpose at University College London (UCL), emphasized the need to change the discourse around how public value is created, nurtured, and evaluated. She presented a new perspective on the entrepreneurial role of the state in creating transformational growth in markets.
Dr. Mazzucato addressed the perception that the public sector should focus primarily on setting the “rules of the game” and fixing market failures. She argued that this traditional economic framework is problematic, characterizing the public sector as being passive by only responding to market problems and fixing negative externalities.
As an alternative, Dr. Mazzucato proposed a radically different lens, viewing the public sector not as market-fixing but as market co-shaping and market co-creating. This is expressed in her ROAR framework based on four guiding questions:
Routes and Directions: How to use policy to set new direction of change and enable bottom up experimentation?
Organizations: How to build explorative public sector organizations that learn-by-doing, and welcome trial and error?
Assessment: How to evaluate public sector market creating investments?
Risks and Rewards: How to form new deals between public and private sectors, socializing both risks and rewards?
Dr. Mazzucato concluded, “it’s not enough just to talk about the entrepreneurial state” and emphasized the need for “new practice-based ideas that policymakers can bring to the table” as well as, “new ideas, stories, narratives, and vocabularies about wealth creation.”
Changes in the Global Income Distribution and their Political Consequences
Dr. Branko Milanovic, Visiting Presidential Professor at Graduate Center City University of New York and Senior Scholar at the Stone Center for Socio-economic Inequality, discussed his work measuring global income inequality. He outlined the major changes in economic geography and inequality that occurred during the Industrial Revolution. During this time, the West became rich, leading to greater inequality between nations and individuals. Now, countries left out during the Industrial Revolution, such as such as China, are developing rapidly, and in the process driving new changes in global inequality. In the case of China, many households are moving toward the global median income, posing political considerations for the role of the West and the future of democracy.
Dr. Milanovic presented his renowned “elephant graph” to illustrate the positive and negative income effects of globalization on different groups. According to Milanovic, there were large increases in income for many Asian countries and the global top 1%, while the world’s poorest as well as the lower and middle classes in Western countries have seen limited income growth.
Dr. Milanovic concluded his lecture by addressing various political implications of global income inequality, including income distribution policy options, the power of the emerging global middle class, and the political fallout from the stagnation of middle income classes in Western nations.
The awardees closed the event by engaging the audience in a question and answer session that dealt with issues of private and public sector efficiency, shrinking wage growth, nationalizing sectors, and going green as part of the next industrial revolution. The reception after the event was co-sponsored by the Tufts Institute for the Environment and the Tufts’ Office of Alumni Relations.
Watch interviews with the 2018 Leontief Prize Winners
Interview with Dr. Mariana Mazzucato
Dr. Mariana Mazzucato spoke with Dr. Neva Goodwin, co-director of Tufts' Global Development And Environment Institute, about her book, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, and the need for an entrepreneurial state to address current global challenges. They also addressed how to direct growth in sustainable ways, and the importance of reframing policy making as market-shaping and market-creating approaches to value creation.
Interview with Dr. Branko Milanovic
Dr. Branko Milanovic spoke with Dr. Brian Roach, researcher with Tufts' Global Development And Environment Institute, about the factors contributing to the current reduction in global inequality, the future of economic inequality, increasing income inequality levels within countries, and Milanovic's infamous elephant graph showing the groups positively and negatively affected by globalization. They also covered policy options to address national level inequality, such as closing tax loopholes and stronger inheritance taxes.
About the Leontief Prize
GDAE inaugurated its economics award in 2000 in memory of Nobel Prize-winning economist and GDAE advisory board member Wassily Leontief. The Leontief Prize for Advancing the Frontiers of Economic Thought recognizes economists whose work, like that of the institute and Leontief himself, combines theoretical and empirical research to promote a more comprehensive understanding of social and environmental processes. The inaugural prizes were awarded in 2000 to John Kenneth Galbraith and Nobel Prize winner Amartya Sen.
GDAE was founded in 1993 with the goal of promoting a better understanding of how societies can pursue their economic and community goals in an environmentally and socially sustainable manner. The Institute develops textbooks and course materials, published on paper and on its web site, that incorporate a broad understanding of social, financial and environmental sustainability. The Institute also carries out policy-relevant research on climate change, the role of the market in environmental policy, and globalization and sustainable development.
In addition to Amartya Sen and John Kenneth Galbraith, GDAE has awarded the Leontief Prize to Paul Streeten, Herman Daly, Alice Amsden, Dani Rodrik, Nancy Folbre, Robert Frank, Richard Nelson, Ha-Joon Chang, Samuel Bowles, Juliet Schor, Jomo Kwame Sundaram, Stephen DeCanio, José Antonio Ocampo, Robert Wade, Bina Agarwal, Daniel Kahneman, Martin Weitzman, Nicholas Stern, Michael Lipton, C. Peter Timmer, Albert O. Hirschman (posthumous), Frances Stewart, Angus Deaton, Duncan Foley, Lance Taylor, James K. Galbraith, Amit Bhaduri, and Diane Elson.
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