Tuesday, February 15, 2011

Paul Romer: A Theory of History, with an Application

One of the best presentations I have observed in months! (and I do listen many, on double speed... :-)

Available as a video, a podcast mp3 and text transcript.

It's about value of Ideas!

Ideas have a special property that when replicated
they could in fact help original inventor.
Using good ideas increases global standard of living,
that is in turn increasing total innovation
that produces more value for all.

For this reason people tend to congregate to cities,
where is the highest concentration of ideas (more people = more ideas!)

Social rules are super-important!

Some rules encourage sharing (science),
some introduce protection (patents),
and both are needed in right measure
to enable innovation such as electric light.

Companies compete by improving internal rules,
as so do the countries...

Example: China was at one point world leader in innovation,
just to completely stop and stagnate for a long time,
while other nations moved ahead. Wrong rules!

And how did China managed to break this deadlock?
By imitating Hong Kong, that was an successful example of a different system on a small patch of Chinese rented land.
Little by little, China realized value of some different rules, and then created hundreds of cities similar to Hong Kong...