Innovation, Entrepreneurship, and the Economy in the US, China, and India: Historical Perspectives and Future Trends

By Rajiv Shah, Zhijie Gao and Harini Mittal

What drives innovation and entrepreneurship in India, China, and the United States? Our data-rich and evidence-based exploration of relationships among innovation, entrepreneurship, and economic growth yields theoretical models of economic growth in the context of macroeconomic factors. Because we know far too little about the key characteristics of Chinese and Indian entrepreneurs and the ways they innovate, our balanced, systematic comparison of entrepreneurship and innovation results in a new approach to looking at economic growth that can be used to model empirical data from other countries. The importance of innovation and entrepreneurship to any economy has been recognized since the pioneering work of Joseph Schumpeter. Our analysis of the major factors that affect innovation and entrepreneurship in these three parts of the world – US, China and India –provides a comprehensive view of their effects and their likely futures.

• Looks at elements important for innovation and entrepreneurship and compares them against each other within the three countries
• Places theoretical modeling of economic growth in the context of the overall macroeconomic factors
• Explores questions about the relationships among innovation, entrepreneurship and economic growth in China, India and the US

• Language: English
• Publisher: Academic Press
• Release date: Oct 7, 2014
• ISBN: 9780128018651

Rajiv Shah

Dr. Rajiv J. Shah serves as president of the Rockefeller Foundation, a global institution with a mission to promote the well-being of humanity around the world. With a century-long track record of leveraging science, technology, and innovation, The Foundation is pioneering new ways to enable individuals, families, and communities to flourish. Dr. Shah is a graduate of the University of Michigan, the University of Pennsylvania School of Medicine, and the Wharton School. He has received several honorary degrees, the Secretary of State’s Distinguished Service Award, and the US Global Leadership Award. He is married to Shivam Mallick Shah, and they have three children.

Book preview

India.

Part I

Innovation

Chapter 1

Innovation

Abstract

We discuss what innovation is, since this is a term that has come to mean a lot of different things to a lot of different people. Since the entire first section of the book is devoted to innovation and the role of innovation, we define how we use the word innovation in our book. We also then discuss why innovation is important in any economy, and finally, we list the factors that we believe are important contributors for innovation to thrive. We further lay the groundwork for the first part of the book in this chapter by briefly comparing and contrasting general innovation trends in the United States, China, and India over the last few years using innovation indices and subindices of the United States, China, and India computed by INSEAD and WIPO.

Keywords

Clayton Christensen

Creative output

Economic growth

Global Innovation Index

Innovation

Joseph Schumpeter

Knowledge output

Peter Drucker

Technical progress

Value creation

Chapter Contents

What is Innovation?   3

Why is Innovation Important?   4

Factors Contributing to Innovation   5

References   7

What is Innovation?

A lot has been written on the subject of innovation. More than 250 books were published with the word innovation in their title in just the first 3 months of 2012, and the term appeared more than 33,000 times in 2011 alone, in the annual and quarterly reports filed with the US Securities and Exchange Commission (SEC), a 64% increase from 2006 (Kwoh, 2012).

The word innovation has come to mean a lot of different things to a lot of different people, and as is typically the case with words in vogue at different periods in time, this word has been used and abused to the point where the word may have begun to lose its meaning. While the word is derived from the Latin noun innovatus and appears in print as early as the fifteenth century, the more modern interpretation and expounding of it go back to the famous economist Joseph Schumpeter and his writings in the 1930s (Schumpeter, 1934).

In 1934, Schumpeter added a definition of innovation, or development, as new combinations of new or existing knowledge, resources, equipment, and other factors. He pointed out that innovation needs to be distinguished from invention. The reason why Schumpeter stressed this difference is that he saw innovation as a specific social activity, or function, carried out within the economic sphere and with a commercial purpose, while inventions in principle can be carried out everywhere and without any intent of commercialization. Thus, for Schumpeter, innovations are novel combinations of knowledge, resources, etc. subject to attempts at commercialization—it is essentially the process through which new ideas are generated and put into commercial practice. This combinatory activity he labeled the entrepreneurial function and the social agents fulfilling this function entrepreneurs. For Schumpeter, these are keys to innovation and long-run economic change (Fagerberg,