Growth, Innovation and Intangible Investment.

Growth, Innovation and Intangible Investment.  
My evidence to the LSE Growth Commission, June 2012.

Inequality, health and the Spirit Level

I am at Sussex university discussing a paper by Richard Wilkinson, author of the Spirit Level.  His main point is that many outcomes, notably health are not correlated with GDP per head, but with inequality.  So for example,

 

is the relation between life expectancy and GDP per head i.e. declining.  But

is the relation between inequality and life expectancy. 

So Paul Stoneman asks a nice point.  He can see that making a poor person richer might riase their life expectancy.   But the logic that inequality matters says this:  making a rich person poorer, raises the life expectancy of the poor person.  This seems to me a substantial objection to the theory that inequality determines life expectancy and health. 

Patents and innovation

This seems like a very interesting paper:

DP9458 Patents and Cumulative Innovation: Causal Evidence from the Courts

Author(s): Alberto Galasso, Mark Schankerman

Abstract: Cumulative innovation is central to economic growth. Do patent rights facilitate or impede such follow-on innovation? This paper studies the effect of removing patent protection through court invalidation on the subsequent research related to the focal patent, as measured by later citations. We exploit random allocation of judges at the U.S. Court of Appeal for the Federal Circuit to control for the endogeneity of patent invalidation. We find that patent invalidation leads to a 50 percent increase in subsequent citations to the focal patent, on average, but the impact is highly heterogeneous. Patent rights appear to block follow-on innovation only in the technology fields of computers, electronics and medical instruments. Moreover, the effect is entirely driven by invalidation of patents owned by large patentees that triggers entry of small innovators, suggesting that patents may impede the ‘democratization’ of innovation.

UK Productivity

Update.  The new data were encouraging, +0.3%.  I discussed them in advance on Radio 4 Today,  from 23 mins in: http://www.bbc.co.uk/programmes/b01s0qmg …

The UK awaits the 2013Q1 GDP numbers release on Thursday. Meanwhile more parts of the productivity puzzle feature.

1.  Public Service Productivity Estimates: Total Public Services, 2010 is released today.  Key points.

a. Total public service productivity has remained broadly constant between 1997 and 2010, with an
annual average growth rate of 0.0% i.e. outputs matched inputs.
b. The two most recent years, 2009 and 2010, showed modest productivity growth rates of 0.3%.

Here's the picture
 



And the per year data are




So the current economy looks like the public sector over the last 13 years.

2. The IFS Green Budget had a great chapter on productivity.
An interesting graph is






which shows that
1. the aggregate fall in labour productivity is the result of falls within sectors, with some sectors experiencing larger falls than others.

2. The figure shows that the fall of productivity within the finance industry alone would have reduced the aggregate productivity by 1.2% (i.e. a quarter of the total 5.0% fall caused by within-industry effects). The mining and quarrying industry also saw a large fall in productivity, which accounts for about a third of the absolute fall.