Innovation is a process of resource allocation. First, developmental, in that it commits resources to irreversible investments with uncertain returns. Second, organisational, in that it generates returns through the integration of human and physical resources. Third, strategic, in that it allocates resources to overcome market and technological conditions that other firms take as given.
Why is innovation important to growth?
Stagnant growth, little to no growth, is as a result of a) lack of consumption, and b) lack of innovation. While lack of consumption may be tackled through Keynesian demand-side economics – boosting the aggregate demand in an economy. This is artificial and cannot be sustained without innovation. For the reasons mentioned above, innovation is a greater driver of growth than demand-side economics.
What has innovation and growth got to do with today?
Well, if you hadn’t noticed it is a worry that Britain’s growth could stagnate. The coalition government…
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