Economics of New Ideas and Innovations

Paper Summary:

This research paper discusses the economics of a new idea. It explains that, without new ideas and inventions, the economy might very well become stagnant or decline, as predicted by many early economists, who did not understand that impact that ideas and innovative technology had on global markets. It discusses how technology is endogenous in the new growth theory, which holds that technology is a function of the capital and labor used to develop technology, the technology used in that process, and the economic environment. For the purpose of this paper, technology refers to the methods and tools that are used to generate new ideas and more efficient ways of producing goods and services. It also explains how ideas and technical innovations are crucial to the economy. If a country wants to grow, it must create an environment that encourages entrepreneurs and innovators to generate new ideas. This paper discusses these topics in an effort to determine how new ideas stimulate the economy and how poorer countries can use ideas and technical innovations to converge.

From the Paper:

"In recent years, researchers have shifted their focus to one of most important questions in economics: why are some nations richer than others (The Economist, 1996)? Poverty is seen as a global concern and the surest remedy for poverty is economic growth. While growth has created problems of its own (including pollution), these problems pale in comparison with the harm caused by the economic stagnancy of poor nations, which leads to wasted lives and suffering."

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