4. The success of these trading markets then encourages investments in
creating additional markets, and the financial system spirals towards
the theoretical limit of zero transaction costs and dynamically
complete markets."
Financial innovation is not adjuvant. Innovation is useless without
finance - whether in the form of equity or debt. Schumpeter himself
gave equal weight to new forms of "credit creation" which invariably
accompanied each technological "paradigm shift". In the absence of
stock options and venture capital - there would have been no Microsoft
or Intel.
It would seem that both management gurus and ivory tower academics
agree that innovation - technological and financial - is an inseparable
part of competition. Tom Peters put it succinctly in "The Circle of
Innovation" when he wrote: "Innovate or die." James Morse, a management
consultant, rendered, in the same tome, the same lesson more verbosely:
"The only sustainable competitive advantage comes from out-innovating
the competition."
The OECD has just published a study titled "Productivity and
Innovation". It summarizes the orthodoxy, first formulated by Nobel
prizewinner Robert Solow from MIT almost five decades ago:
"A substantial part of economic growth cannot be explained by increased
utilisation of capital and labour.
Pages:
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116