Innovation pessimism_ Has the ideas machine broken down_ _ The Economist

Innovation pessimism_ Has the ideas machine broken down_ _ The Economist

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1/31/13 Innovation pessimism: Has the ideas machine broken down? | The Economist www.economist.com/news/briefing/21569381-idea-innovation-and-new-technology-have-stopped-driving-growth-getting-increasing 1/8 Digital & mobile Events Topics A­Z Newsletters Jobs Search Register Subscribe Log in World politics Business & finance Economics Science & technology Culture Blogs Debate The World in 2013 Multimedia Print edition Current issue Previous issues Special reports Politics this week Business this week Leaders KAL's cartoon Obituaries This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Review our cookies information for more details Related topics Europe Massachusetts Institute of Technology United Kingdom Paul Romer Jan 12th 2013 | From the print edition Innovation pessimism Has the ideas machine broken down? The idea that innovation and new technology have stopped driving growth is getting increasing attention. But it is not well founded BOOM times are back in Silicon Valley. Office parks along Highway 101 are once again adorned with the insignia of hopeful start­ups. Rents are soaring, as is the demand for fancy vacation homes in resort towns like Lake Tahoe, a sign of fortunes being amassed. The Bay Area was the birthplace of the semiconductor industry and the computer and internet companies that have grown up in its wake. Its wizards provided many of the marvels that make the world feel futuristic, from touch­screen phones to the instantaneous searching of great libraries to the power to pilot a drone thousands of miles away. The revival in its business activity since 2010 suggests progress is motoring on. So it may come as a surprise that some in Silicon Valley think the place is stagnant, and that the rate of innovation has been slackening for decades. Peter Thiel, a founder of PayPal, an internet payment company, and the first outside investor in Facebook, a social network, says that innovation in America is “somewhere between dire straits and dead”. Engineers in all sorts of areas share similar feelings of disappointment. And a small but growing group of economists reckon the economic impact of the innovations of today may pale in comparison with those of the past. Some suspect that the rich world’s economic doldrums may be rooted in a long­term technological stasis. In a 2011 e­book Tyler Cowen, an economist at George Mason University, argued that the financial crisis was masking a deeper and more disturbing “Great Stagnation”. It was this which explained why growth in rich­world real incomes and employment had long been slowing and, since 2000, had Like 3.3k Tweet Tweet 1,293 Latest blog posts - All times are GMT Immigration : The magic words "make them learn English" Johnson ­ 10 mins ago Growth and China : China approaching the turning point Free exchange ­ 33 mins ago Prophecy and 2013 : Cassandra's farewell Cassandra ­ 45 mins ago Remaking macro : Building a better model Free exchange ­ 1 hour 8 mins ago Jihad in North Africa : Badlands
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Innovation pessimism_ Has the ideas machine broken down_ _ The Economist

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