Innovate or die –

Spence says it has not yet been fully recognised that the economic malaise is not just a cyclical downturn caused by excess debt, over-consumption, low interest rates and lax regulation, but part of a long-term structural change brought about by globalisation and technology, which are shifting the comparative advantage in a range of industries and services towards the developing world.

Europe, the US and other advanced economies must make long-term reforms to labour markets and boost productivity as well as encourage public and private sector investment in infrastructure, education, skills and training to remove growth constraints. Short-term fixes, such as Europe’s bailout packages and the US Federal Reserve’s promises of low interest rates for longer, can do little more than “kick the can down the road”, he says.

via Nobel laureate economist Michael Spence| as reported in Innovate or die –

2 Replies to “Innovate or die –”

  1. The world trading environment is far from perfect given distortions brought about by trade barriers, misaligned currencies, industry policies, tax patterns and so on but the fact is that companies best able to adapt to this environment will survive and thrive.

    Smaller players can adapt faster to take advantage of emerging opportunities and fold their tents and move on just as quickly. The Internet makes it possible for players across the globe to link up in ways never before possible.

    Adaptation is the name of the game and structural innovation in the way business occurs is key.


  2. There are parallels in history through the Napoleonic Wars and Britain being hell bent on drawing the German Navy into conflict in the North Sea from 1908. Globalisation and Technology are hard to group into the same breath.

    Globalisation tends to be some type of exploitation under the guise of free trade (often overlooking fair trade) and technology should read “of our time”. We see the fallacy of mercantilist theory, it can be proven to be false in economics, but it is inate.

    Through this cyclical type analysis we ultimately revert to national interest. That is where the Renmimbi being pegged is taking us. We have American multi nationals whose balance sheets are larger than many emerging nations GDP, yet their government can’t digest their debt levels.

    European Union is some type of colonialisation. France and Germany are bell bent on more centralised programmes while Greece and Spain start to say, it destroys our culture.

    It is all too frightening.

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