Paul Romer: prediction

Transcript context

…So, general-purpose technologies, do you believe in them? This raises a deep philosophical concept, like do I believe in abstractions of any form. I think the general-purpose technology has been a useful way to distinguish a type of innovation that you could think of as being aligned along a continuum. There are some that have long paths of exploration that induce a lot of complementary innovation. At the other end of the spectrum you can think of things that might just be pure one-offs, even with the paper clip — we’re done with that. The abstraction takes a continuum or very high-dimensional set of possible innovations and then defines a category as a discrete entity and says these have a particular character; they’re worth studying. I think this has been a helpful abstraction for thinking about things like electrification. I imagine that it will be helpful as we contemplate things going forward, although the question there is, if it is a general-purpose technology, will we know it as it’s unfolding? Or will we only see that when we look back? Why do you think economic growth is so hard to forecast? If you go back to development economics, say in the 1960s, a lot of people thought, “Well, the Philippines, Ceylon, now Sri Lanka — they’ll be the big winners. They have some English language. They have nice ties with the Western world.” It didn’t work out that way. What is it that makes growth so hard to forecast?…

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