The Role of Innovation in the Global Economy

Innovation and the Global Economy

In this course, Professor Neil Lee (London School of Economics) explores the geography of innovation and its role in the global economy. In the first module, we define innovation, and outline its importance as one of the main sources of national economic growth. The second module then examines the uneven global geography of innovation, focusing on the continued centrality of the US, China’s rise, and the relative decline of Europe. In the third module, we consider why Silicon Valley has become the world’s leading innovation hotspot, analysing its historical development through Alfred Marshall’s concept of “agglomeration economies”. The fourth module then looks at two increasingly important global centres of innovation, Shenzhen in China and Stockholm in Sweden. We conclude with a fifth module on the future of innovation and the possible impacts artificial intelligence will have on the global economy.

The Role of Innovation in the Global Economy

In this module, we think about what innovation is and its importance in the global economy. We focus on: (i) the basic concept of innovation, and its two main components - product innovation (production of new goods), and process innovation (improvement of production methods); (ii) the distinction between incremental and radical innovations; (iii) the wide-ranging spheres in which innovation takes place; (vi) the combinatorial nature of many innovations; (v) the important characteristic of innovations that they are not necessarily positive for humanity, looking at examples including military technology; (vi) why innovation is important - it is one of the key ways countries achieve economic growth and improve living standards.