Innovation & Economic Growth What promotes innovation?

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Presentation transcript:

Innovation & Economic Growth What promotes innovation?

GDP What creates Long Term Economic Growth? INCENTIVES MATTER!!!

Supply-Side Economics Orthodox macro theory consists of demand-oriented theories – they failed to explain stagflation (late 1970s) Supply-side economists believe the problems were high rates of taxation & heavy regulation: –This had reduced the incentive to work, save and invest. –What was needed was not a demand stimulus –Incentives are needed to stimulate supply. What is De-regulation?

Supply-Side Policy Basic Belief: Government Incentives Matter Goal: use incentives to shift the aggregate supply curve right –Note: When PPF shifts right => AS shifts right The supply-side toolbox consists of: –Tax cuts to stimulate work, saving, and investment –Deregulation to reduce production cost/stimulate investment. –Expenditures on education training/research expands capacity to produce

Innovation & GDP Growth

Innovation Bark People => please watch this video

Innovation: Creating Jobs? U.S. Economy

Innovation & USA Financial Capital is needed to start a new businesses –Without money => ideas can’t become reality –Venture Capital Firms lend money to startups Ideas for a new business easily raise money in USA –Google, Apple, Microsoft, Facebook, Bloomenergy etc…

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