During this timeframe, both countries experienced extremely high levels of GDP growth by linking the science sector with the business sector, importing technology, and creating incentives for innovation.Īdditionally, the Council of Foreign Relations asserted that the U.S.’ s large share of the global market in the 1970s was likely a result of its aggressive investment in new technologies. Between 19, India and China, developed a National Innovation System designed to invest heavily in R&D with a particular focus on patents and high-tech and service exports. Correlations Between Technology, Innovation, and GrowthĮmpirical evidence generates a positive correlation between technological innovation and economic performance. Collaboration on a global scale as a result of technological progress has allowed for exponential levels of innovation. This spread of ideas can be built upon quickly and universally, creating the ability for innovation to be further expanded upon by different parties across the globe. The close proximity of various resources and collaborators in each hub stimulates a higher degree of innovative capacity.Ĭommunication and cumulative knowledge in these technology hubs allows for these innovations to spread via technology to be implemented across the globe with relative immediacy. Places like California’s Silicon Valleya and Baden-Wurttenberg, Germany are strong examples of the value of technological hubs. The proliferation of innovation pertains to two important factors of technology driving innovation: the creation of geographic hubs for technology and empowerment of knowledge exchange through communication and transportation. Note the overlapping trajectories of technologies: one product may dominate the market and grow at a high rate the next (“emerging”) product may start low while the other product is dominant but in turn grow to dominate the market even more thoroughly than the first, as technology and production are refined and improved. Technological Innovation Chart: This chart demonstrates the pattern of innovation over time. Product life cycles shows how economic returns go through a steep exponential growth phase and an eventual evening out, which motivates businesses to leverage technology to produce new innovations. Technology is innately scalable, demonstrating a consistent trend toward new innovations as a result of improving upon current ones.
Technology in particular is a powerful driving force in innovative capacity, particularly as it pertains to both the evolution of innovations and the way they proliferate.
This theory of innovation economics notes that the neoclassical approach (monetary accumulation driving growth) overlooks the critical aspect of the appropriate knowledge and technological capabilities. One particular perspective on economics isolates innovation as a core driving force, alongside knowledge, technology, and entrepreneurship. Innovation is a primary source of competitive advantage for companies in essentially all industries and environments, and drives forward efficiency, higher productivity, and differentiation to fill a wide variety of needs. Scalable: Able to change in size or to scale up.
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