And mainstream Two Neo economists do not see government as all that effective and as a mechanism for a permanent growth machine. Government can’t deliver the goods, they felt. Warsh, for instance, acknowledged Solow’s observation that the chief limitation inherent in growth economics is that “we can’t routinely double R&D spending and expect to get results, any more than we can routinely slash taxes and expect revenue to increase”. (P. 401) Apparently, there exists no Laffer Curve for knowledge diffusion. As to Innovation itself? Just what do we mean by “Innovation”? Romer acknowledged that the innovative impact of knowledge and technology on economic growth is more or less confined to the “meta” ideas. Meta ideas support the production and transmission of other ideas.(Warsh, P. 401)  Innovation is confined to “Platform” ideas i.e. the Internet (thank you Al Gore)—but not an Internet router (sorry, Norman Abramson, Univ of Hawaii, 1970).  Run of the mill, derivative, copy cat “innovations” which are produced daily are not what the growth economists were talking about. They were talking about combustion engines, assembly lines, computers and chips, not about the thousands of micro variations, or the transfer of innovations from one sector to another sector. Today these micro innovations are regarded as the core product of “innovation” policy and programs–but they are not, at least accordingly to Growth Economics.

What’s the Theory Behind Innovation and the Knowledge-Based Economy | Journal of Applied Research in Economic Development Saturday, April 26, 2014 @ 1:40pm