Stiglitz on innovation

It is quite rare that an economist understands innovation. Schumpeter was an exception, but it seems there is once again an economist who contributes to our understanding of innovation. Nobody less than Joseph E. Stiglitz wrote about the added value of innovation. It is to believed that innovation is a goal in it self, but why? What is the added value of innovation to our life, our income, to productivity? Stiglitz researches the added value of innovation to our life, well being and income:

 "NEW YORK – Around the world, there is enormous enthusiasm for the type of technological innovation symbolized by Silicon Valley. In this view, America’s ingenuity represents its true comparative advantage, which others strive to imitate. But there is a puzzle: it is difficult to detect the benefits of this innovation in GDP statistics.

What is happening today is analogous to developments a few decades ago, early in the era of personal computers. In 1987, economist Robert Solow – awarded the Nobel Prize for his pioneering work on growth – lamented that “You can see the computer age everywhere but in the productivity statistics.” There are several possible explanations for this.

Perhaps GDP does not really capture the improvements in living standards that computer-age innovation is engendering. Or perhaps this innovation is less significant than its enthusiasts believe. As it turns out, there is some truth in both perspectives."

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