Monday, December 17, 2007

Global Paradigm Shift Through Global Innovation

In attempting to be more precise in assigning relevant meaning to tags I have been using, I have used the tag innovation as applied to those creative changes that have had some economic impact, whether we classify them as high or low or business or social entrepreneurship, as opposed to pure creativity as in art.

The Entrepreneurial Mind back on 12/10/07 gave us Innovation Around the Globe which cites the National Dialogue on Entrepreneurship's reports on two new studies highlighting innovation in Asia and Europe.

"A new World Bank study examines the state of innovation in East Asia with a focus on three primary sources of knowledge flow into the region: international trade, acquisition of disembodied knowledge, and foreign direct investment. East Asian economies still rely heavily on knowledge flows from Japan and the US, but the region's economies are beginning to build their own home-based knowledge industries as well."

All three primary sources of knowledge are of interest but what is especially in disembodied knowledge. The second study is a new Information Technology and Innovation Policy Foundation report:

"[F]uture European prosperity depends upon Europe's ability to more effectively deploy information and communications technologies (ICT). The study notes that European productivity growth rates have lagged in recent years, and it identifies lagging use of ICT (especially in service sectors) as one culprit in the process. Like the US, Europe needs to boost productivity rates. But the pressures in Europe are even stronger, due to a more rapidly aging population. How can Europe reverse these trends? The report's author, Rob Atkinson, recommends greater overall private investment in ICT, the creation of public incentives to support such investment, and expanded efforts to promote digital literacy and adoption among the general population of European countries."

Professor Cornwall makes it clear where he falls on the economic philosophical continuum.

"Let us hope that by the phrase "more effective government supports" the authorsare referring to what has proven to be
the most effective government support for entrepreneurship -- bureaucrats and politicians getting out of the way of entrepreneurs and letting free markets work. Central planning efforts where government agencies try to pick winners and losers have never proven to be a wise long-term strategy. "

"The most effective means of encouraging private investment is making favorable policy decision for an entrepreneurial economy. Lower taxes, less regulation, and stronger property rights are all key elements. I am afraid that most of Europe has a very long way to go on all three of these critical issues of public policy."

I have to confess to some doubts to this position when I consider the amount of support that Asian countries, especially Japan, have given their businesses. I also have to wonder about the technological bump Asia got from the IT infrastructure investment that was made and how we keep on falling farther and farther behind. I am definitely not in favor of centralized planning but I am also still not willing to fully depend upon the unfettered free market. Perhaps after a few more economic courses I will change my mind.

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