Innovation And Entrepreneurship For Economic Growth

INNOVATION AND ENTREPRENEURSHIP FOR THE ECONOMIC GROWTH.

1176 words.

Nowadays economic growth is topic everybody worries about, in the developed countries it is important not only to maintain the leadership and the heavy productive and financial infrastructure (Banks, factories, stock exchanges), but also to be able to have the resources required for paying debts.

In less developed countries it is also an important topic, because many of these countries have high rates of young population who require jobs and opportunities, if this youth cannot integrate to the economic dynamics social problems even worse than just the public manifestations that we saw during 2011 will arise.

Countries are approaching different strategies to increase their economic growth rate, we can see in the United States and other countries historically low interest rates, with this monetary policy they are trying to activate the development of new productive projects however last year´s economic growth rate in the U.S. was just 1.6% (coming from a 3.1% growth in 2010) and many analysts consider than in 2012 the GDP growth rate is going to be lower due to a decrease in government spending because of the adjustments needed to face the debt, I´m focusing in the U.S. economic growth rate because of its importance to many other national economies that depend on the growth of the world´s largest economy.

Many manufacturing companies are leaving developed countries like the US seeking for more competitive countries based on low wages, we can see the same phenomena in other developed countries.

If low interest rates are not enough to encourage economic growth and in many countries the government expense is not possible anymore because of high debt rates, then what can this countries do to keep growing and ensure that the standard of living of the citizens will not fall dramatically in the next years.

There are many initiatives that developed countries can undertake to address this situation, but most of them require that the people that currently hold power (politicians, company directors, universities board members, etc). recognize the necessity for a thinking breakthrough, we have to stop thinking that what has worked in the past is going to work in the future and by this I’m talking about: use of fossil energy, current corporative structure, incremental improvements of existing technology.

This looks more complicated than just adjusting the interest rate by means of open market operations, or to lower tax rates, but I strongly think that taking actions towards a cultural transformation is the path needed to avoid economic stagnation and social problems that would come with It.

There are two important components required to foster this transformation, these are innovation and collective entrepreneurship.

Innovation is needed to create new products, new companies, new solutions to old problems, governments can foster the development of new companies providing the adequate incentives and making policies that encourage making business with new technologies or products that protect the environment and public health.

Imagine the amount of new companies that could be created if governments were effectively committed with the environment protection, a whole bunch of new companies would be founded to produce clean energy, other many high tech companies would be created to design and manufacture the equipment’s required to produce that clean energy, green appliances companies would be born, etc. all these new companies would hire well prepared people and would pay taxes (required for more government expense, which translates in more jobs and economic growth).

A country can promote the creation of complete new industries, we have clear examples like Denmark with the wind power industry, with its vision of being 100% independent of fossil fuels this country has established itself as the leader in the manufacturing of windmills, R&D centers, and wind energy production.

A second example is Brazil with the ethanol industry where it is the leading ethanol exporter in the world and more than a half of all the cars and motor vehicles in Brazil are powered by this fuel that uses sugar cane as its feedstock.

Also currently there are attempts in the UK to set this country as the leader in the marine energy industry.

These are examples of how whole new industry and its related supply chain can be generated by encouraging innovation

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