Productivity and Innovation

Unleashing growth: The decline of innovation-blocking institutions

Klaus Desmet, Stephen L. Parente, 18 May 2013

Innovation is the beating heart of modern growth. This column argues that innovation-blocking institutions weaken when markets expand and competition intensifies. The rise and decline of medieval Italian crafts guilds offer valuable insights into this process. Policies that promote greater market integration and stronger competition are key steps in lowering the barriers to innovation.

Cuddly or not, the design of worker insurance is critically important

William Kerr, 17 May 2013

Do economies’ social policies affect their innovative outcomes? This column uses the case of venture capital investors to argue that it may. Countries that protect workers rather than jobs – and thus avoid employment-protection laws – developed stronger venture-capital markets over 1999-2008, especially in highly volatile sectors like computers or energy.

Do patent rights impede follow-on innovation?

Alberto Galasso, Mark Schankerman, 14 May 2013

Do patents encourage innovation? This column presents a new analysis, suggesting that patent rights block cumulative innovation only in very specific environments. To encourage innovation, remedial government policies should be targeted; a ‘broad based’ scaling back of patent rights is unlikely to be appropriate. Policies and institutions should facilitate more efficient licensing, promoting cumulative innovation without diluting the innovation incentives that patents provide.

Do entrepreneurs matter?

Sascha O Becker, Hans K. Hvide, 21 April 2013

Standard microeconomics ignores personalities, but business studies stress the importance of entrepreneurs. This column presents evidence that shows that personalities are important. Looking into the death of a firm’s founder during the first ten years of a company’s existence, the data suggest that entrepreneurs matter – they are the ‘glue’ that holds a business together.

Eurozone: Looking for growth

Laurence Boone, Céline Renucci, Ruben Segura-Cayuela, 25 March 2013

What happens after the crisis ends? This column estimates the long-term effects of the current cyclical downturn on Eurozone economies. In the absence of any real impetus for bold reform, estimates show that the damage will indeed be long lasting, permanently impairing growth for an ageing population that requires higher growth capacity more than ever before.