|| Marina Abed Tatiana Voinova Valérie Chardonnens Stefanie Derzsi Economist: The growth machine.
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Transcript of || Marina Abed Tatiana Voinova Valérie Chardonnens Stefanie Derzsi Economist: The growth machine.
||
Marina Abed
Tatiana Voinova
Valérie Chardonnens
Stefanie Derzsi
Economist: The growth machine
||The growth machine 2
Economists vs. Managements view on Innovation Creative Destruction The Free-Market Innovation Machine
Capitalism vs other economic systems Large firms and Oligopolies Protection of Innovation and Who Benefits
Innovation in Socialist and Capitalist systems
04.03.2015
Executive Summary
||The growth machine 304.03.2015
Economists vs. Managements view on Innovation
Management obsession with innovation is not shared by economist
Innovation is acknowledged as being a driver of economic growth
How and why innovation happens remains ignored
||The growth machine 404.03.2015
Creative Destruction
Technological innovation comes from the entrepreneurs Established companies drive innovation using its capital Innovation creates new monopolies with abnormal profits to
be succeeded by rivals(http://en.wikipedia.org/wiki/Joseph_Schumpeter)
“Creative destruction” as a process of creating new and destroying old as innovative firms drive established companies of the market
Joseph Schumpeter
(1883-1950)
||The growth machine 504.03.2015
The Free Market Innovation MachineCapitalism vs Other Economic Systems
Reasons Innovative activity becomes mandatory
way of survival for firms Technology spreads much faster due to
incentives to share the knowledge that contribute to growth, not state patronage
Prof. Wiliam Baumol, an American economist
Capitalism as a “machine whose primary product is economic growth”” provides :
continuous stream of successful innovations best economic system to generate growth
||The growth machine 604.03.2015
The Free Market Innovation MachineLarge Firms and Oligopolies
Large firms are unique features of capitalist economies• Resources to invest in “routinized” innovation• Incentives
Oligopoly best foresters productive innovation • No single price as in monopoly• No price wars as between many companies• Few big firms compete using innovation to differentiate
||The growth machine 704.03.2015
The Free Market Innovation MachineProtection of Innovation and Who Benefits
Protection of innovation• Misleading belief: innovators protect intellectual
property rights to maximize profits they can earn• Real situation: innovators license new technology to
share as others can be more efficient at exploiting it, so it makes economic sense to license
Who benefits from innovation • Less than 20% of benefits to innovators and investors• The rest spills over to society at large• Stronger intellectually property rights would encourage
innovation and therefore increase benefit to society
||The growth machine 804.03.2015
Innovation in Socialist and Capitalist systems
http://images.businessweek.com/bloomberg/pdfs/most_innovative_countries_2014_011714.pdf
||The growth machine 904.03.2015
Innovation in Russia vs. USA
http://bizshifts-trends.com/2011/03/10/the-innovation-gap-u-s-vs-europe-japan-china-india-russia/
R&D outputs
• Russia has a highly educated workforce with large # of skilled researchers yet lags behind in productivity.
• America is the world leader in technological achievement and innovation yet not producing the type of workers needed in a knowledge-based economy.
||The growth machine 1004.03.2015
Innovation in Russia vs. USA
http://bizshifts-trends.com/2011/03/10/the-innovation-gap-u-s-vs-europe-japan-china-india-russia/
Who holds IP rights?
• Russia: it is unclear whether the inventor, the inventors employer or the state who financed the R&D owns IP. Also, registered IP is weakly protected.
• USA has clear set of patents and licensing which is protected.