TLDR: The long tail of innovation
by Harvard Business Review (these highlights provided for you by Annotote)
“ The competitiveness of the U.S. economy depends on technological progress, but recent data suggests that innovation is getting harder and the pace of growth is slowing down.
“ In our research we focused on the golden age of invention: the late 19th and early 20th centuries, when America became the world’s preeminent industrial nation.
“ We built a systematic data set that contains millions of patented inventions and millions of individuals in Federal Censuses from 1880 to 1940 … to shed light on why the U.S. was so innovative.
“ [A regression analysis] illustrates a strong relationship between patenting activity and GDP per capita at the state level. [For example] Massachusetts, which from 1900 to 2000 had four times as many patents as a less innovative state, like Wyoming, would become 30% richer … by 2000.
^N.B. Correlation is not causation!
“ innovation flourished in densely populated areas where people could interact with one another, where capital markets to finance innovation were strong, and where inventors had access to well-connected markets. States with a legacy of slavery were considerably less innovative, and religion had a negative effect, too, though to a lesser degree.
“ If innovation is associated with financial rewards from patents and the associated monopoly rights, then we should see a positive association between innovation and inequality. But if innovation permits new entrants or small business owners to catch up with incumbent leaders, then innovation should lead to lower income inequality.
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