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America’s Innovation Future

America’s Innovation Future. J. Bradford DeLong UC Berkeley and Kauffman Foundation May 2013. Outline. Big question: what are likely to be the most exciting and most fruitful focuses for industry studies over the next generation? Four eras of industrial development in the past

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America’s Innovation Future

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  1. America’s Innovation Future J. Bradford DeLong UC Berkeley and Kauffman Foundation May 2013

  2. Outline • Big question: what are likely to be the most exciting and most fruitful focuses for industry studies over the next generation? • Four eras of industrial development in the past • What comes in era number five? • Leading sectors: supply and demand perspectives • Predictions

  3. Four Eras of Industrial Development in the Past • Starting with the problem of getting water out of coal mines so you can fuel London… • Concentrated technological change in a few key leading sectors, 1730-1840 • The effects on the economy as a whole of the build-out of the key leading sectors of the Industrial Revolution, 1790-1890 • The broad-front coming of the age of economy-of-scale-driven mass production, 1860-1950 • The broad-front building-out of distribution and information, 1950-2010

  4. What Comes Next? • Era Number Five… • More of the same? • A reversion to one of the earlier three patterns? • Supply and demand perspectives

  5. The Supply Perspective • Ideas, energy, control • Ideas as to how to manipulate matter and energy • Extra energy to do the manipulation • Control of the process • Information technology as providing us with substitutes for the human eye-brain-hand loop as a control mechanism • Biotech as providing us with substitutes for the human eye-brain-hand loop as a control mechanism • Bad news for “unskilled” labor

  6. The Demand Perspective • Key questions for leading sectors • How elastic is demand? • In what directions does demand push innovation? • Infotech • Demand is not terribly elastic • Move and organize bits more cheaply • Health care • Demand is extraordinarily elastic indeed • Do more things rather than do things more cheaply

  7. Predictions • The supply and demand perspectives are pushing in the same direction • Information technology will drive to get the (still expensive) human eye-brain-hand out of the control loop • But that is not where the money is going to flow • Health care broadly construed will grab the lion’s share of spending increases • For that is where the money will go

  8. Implications • The economy is all about where the money is—what things are expensive and valuable • Interesting research questions concerning infotech and transformations of control in industries • But that isn’t where the money is going to be • And interesting research questions concerning the interface of industries with biotech/health care • And that is where the money is going to be • That is what people are going to care about

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