Innovation and Growth

… a core concept in Macroeconomic Policy

Concept description

The rule of 70 says the doubling time is 70/growth rate and is a useful rule of thumb for quickly calculating the doubling time for something (e.g. population, GDP, internet nodes) that is growing at a constant rate.

Don Boudreaux (reference below and link on right) introduces his MRU video as follows.

“In this video, which is also featured in Marginal Revolution University’s Everyday Economics course, we discuss the key factors behind the rise in innovation and entrepreneurship over the past couple of centuries. The economic historian Deirdre McCloskey coined the term “innovationism.” While there have always been inventors and innovators, that number exploded after the eighteenth century, contributing to what has been described as the “Hockey Stick of Human Prosperity.”

“Why has innovation grown so rapidly? Economist Douglass North argued it had to do with institutions such as property rights, non-corrupt courts, and rule of law, which lay the foundation for innovation to take place. Others attribute the rise to factors such as education or access to reliable energy. McCloskey argues that what really kicked innovation into high gear is a change in attitude – ordinary people who once celebrated conquerors and kings began to celebrate merchants and inventors. In the end, a better understanding of what drives innovation could help poor countries that still live on the handle of the “Hockey Stick” reach a much greater level of prosperity.”

MRU practice questions

See http://www.mruniversity.com/node/306611, accessed 22 April 2016.

1. To what rapid increase is the tale of “the hockey stick of human prosperity” referring?
   1. Rapid increase in global population
   2. Rapid increase in gross domestic product (GDP) per capita
   3. Rapid increase in the standard of living
   4. B & C only
   5. A, B, & C
2. When did the world begin to shift from the handle to the blade section of the hockey stick (of human prosperity)?
   1. 0 A.D. 
   2. 13th century 
   3. 18th century
   4. 20th century
3. True or false: All countries shifted from the handle to the blade portion of the hockey stick (of human prosperity) at about the same time.
   1. True
   2. False
4. In addition to improved access to education and reliable energy sources, what other changes do scholars cite as a reason(s) why we experienced the recent, rapid increase in human prosperity?
   1. Improvements in institutions
   2. Increase in religiosity
   3. Change in attitude
   4. A & C only
   5. A, B, & C

Source

Don Boudreaux, An Orgy of Innovation, Marginal Revolution University, at http://www.mruniversity.com/courses/everyday-economics/hockey-stick-human-prosperity-innovation-invention-entrepreneur, accessed 22 April 2016.

Atlas topic and subject

Wealth of Nations and Economic Growth (core topic) in Macroeconomic Policy.

Page created by: Ian Clark, last modified on 22 April 2016.

Image: Don Boudreaux, An Orgy of Innovation, Marginal Revolution University, at http://www.mruniversity.com/courses/everyday-economics/hockey-stick-human-prosperity-innovation-invention-entrepreneur, accessed 22 April 2016.