This paper makes the case for a central bank mandate that includes the mobilization of finance for growth in small open economies. I draw on the literature analyzing the performance of the “Asian Tigers” and the more recent literature on the entrepreneurial state to show that innovation costs are a barrier to investment and growth in export-led economies. The state plays an essential role in subsidizing the return on innovation to increase it to an internationally competitive rate. It falls naturally to the central bank to mobilize the finance for this state subsidy. However, the funds raised by the bank should be intermediated to investors through development banks, equity and venture capital institutions, and similar entities.
