Paul Romer: evaluation

Transcript context

…Do you think the distinction between economic growth at the frontier and catch-up growth is always so well defined? If you think of China — they seem to have innovations — how quickly they can build things, that they have an autocratic government, but they’ve managed to keep a reasonable amount of stability and keep the public on board. Isn’t that a kind of innovation, like a technological innovation? And their growth, in a way, is at some other frontier rather than just being catch-up? Well, going back to the work I was part of in the ’90s, where we were looking at cross-country growth regressions, I think we weren’t careful enough to distinguish some kind of extremes of, say, growth frontier and growth catching up. In the case of China, it would make sense to recognize that China is, in some sense, different economies, like the economy of Shanghai is very different than the economy of rural China. There may also be, in addition to this catch-up versus the leading-edge distinction, which is based on essentially the level of technology in a country, there’d also be a separate dimension, which is something like the institutional evolution of the economy. So you could have a very institutionally well-developed economy that’s still very low in terms of its technological success. That would be unexpected. You could also have some significant technological success but still very, very weak institutions. We’ll need more than one dimension to really characterize different economies. But all of that said, I found, at least when I started to think about problems — which is really the best test of a theory — that I needed a different theoretical apparatus to think about, say, the challenge in Tanzania than the challenge in Germany. If you’re called into a White House and asked to give advice — how could the United States promote innovation? — what might you say? I know it’s a big long list, but where would you start?…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.