America has maintained technological preeminence long enough for us to get complacent. However, as historian Donald Cardwell pointed out in the early 1970s after looking at a millenium of change, “No nation has been very creative for more than an historically short time.”
Mark Zachary Taylor, professor at the Georgia Institute of Technology, poses a simple question. “Why are some countries better than others at science and technology?” In his compelling yet accessible new book, he rejects consensus explanations and instead puts domestic and international politics front and center.
Most scholars and policymakers today put their faith in institutions to drive innovation. The “Five Pillars,” property rights, R&D subsidies, education, research universities, and trade policy many contend are sufficient to unclog market failures to get creative juices flowing. But Taylor demonstrates that these policies explain some but not all of national innovation rates (measured mostly through patent filings weighted by future citations). He also points out that of the top national performers, only the US, Canada, and Japan rank well on more than two of categories. While institutions may show how nations innovate, they don’t why they do.
Another school of thought points to to democratization and markets free of government interference as keys to national science and technology success. As Daren Acemoglu and James Robinson laid out in their recent bestseller ‘Why Nations Fail,’ countries need inclusive and competitive politics to ensure institutions don’t just preserve elite wealth at the expense of dynamism. In a convincing critique, he runs a regression showing how countries that have democratized the most over the past forty years haven’t had their innovation rates increase any more than those that haven’t.
He concludes that it’s “creative insecurity” and networks that nations need. Countries need to be threatened enough externally to be willing to take on monopolies and cut back on statism, but not too overwhelmed by their neighbors to be losing wars. Given his thesis, it seems like the threat of an alien invasion is all we need to really boost total factor productivity.