Innovation

Innovation is a key element in improving productivity, which in turn is a big driver of economic growth. In the modern era, innovation tends to be associated with new gadgets and disruptive technology (see this Explainer) but it can be a new way of organising work, such as Henry Ford’s mass production line or the shift in agriculture from a two-field to a three-field rotation system, which increased yields substantially. Innovation can arise from the insight of entrepreneurs or from investment in research and development, which can be done by the government; the internet and the global positioning system were first developed by nation states.