Lecture 8 - Innovation dynamics in the World Economy

The document discusses innovation dynamics in the world economy. It notes that the world economy has long provided incentives for innovation through markets, specialization of production, and opportunities for catching up. However, the current era features new dynamics like the globalization and decentralization of research. While this brings opportunities through access to knowledge and markets, it also poses challenges for countries in maintaining competitiveness and for developing countries in building capabilities to absorb knowledge. The policy debate often focuses on R&D investment but developing countries face more fundamental questions about which types of innovation best suit their level of development and needs.