Has the ideas machine broken down?
The Economist has an interesting report on the perception by some that the rate of (technology) innovation is slowing down. This goes against the cliché that technology driven change is accelerating, however with people like Peter Thiel, a founder of PayPal, and the first outside investor in Facebook, says that innovation in America is “somewhere between dire straits and dead” – you should sit up and listen.
Our view is that while micro economic measures of productivity growth have indeed flattened or trended down in many advanced economies, it is more to do with the organisational appetite and skills for taking on board innovation as opposed to the availability of it.
The closing quote from the article summarises our thoughts accurately:
…productivity advances should generate enormous welfare gains. Yet the adjustment period could be difficult. In the end, the main risk to advanced economies may not be that the pace of innovation is too slow, but that institutions have become too rigid to accommodate truly revolutionary changes…
Have a read of the article – see what you think.[clear] You can find the complete article at The Economist here