Bridging the gap between innovation and economic growth

Kris Krug // Strategic News Service

Kris Krug // Strategic News Service

By Chance Murray

National GDP and national business models, are a derivative of the business models of individual companies within the economy. Bill Ribaudo, Managing Partner of Technology, Media and Telecommunications at Deloitte, Mark Anderson, CEO at Strategic News Service, and Evan Anderson, Director of Research at INVNT/IP; elaborated on how types of business models correlate with national economic growth throughout the world.

Over the past 40 years, the line between industries has blurred. For example, traditional combustion engines in vehicles have evolved into electronic motors, blurring the line between combustion and computers. Ribaudo suggested four primary divisions between industries in the 21st century:

  1. Asset builders
  2. Service providers
  3. Technology creators
  4. Network orchestrators

Each of these categories has the potential to sustain growth within national economies. However, the magnitude of growth for each category is unique. Technology creators and network orchestrators have growth potential between 4x and 8x, while asset builders and service providers have growth potential of only 1x to 2x.

Evan Anderson provided supporting research for Ribaudo’s claim. Anderson’s team compiled data that correlates innovation metrics with national GDP, yielding an index of countries positioned for high to low rates of growth. Among the highest ranking countries were Switzerland, the United States, and the Netherlands. Among the lowest were Mexico, Indonesia, and India.

“The data correlates well with Deloitte’s multiplier thesis,” said Anderson, “suggesting that economies focusing on multiplier industries — technology creation and network orchestration — have greater innovation per capita GDP.”

The implication for policymakers is that when faced with budget allocation decisions, one should consider the multiplier effect of the industries into which capital is flowing.

“We’re in an age of technology we’ve never been in before,” added Mark Anderson. “By acquiring intellectual property rather than developing it, companies and nations are losing the longer-term, exponential growth that is within reach.”

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