Dani Rodrik

Opinion | From AI to medical research, why innovation must not be left to innovators alone

The innovation agenda has been captured by narrow groups of investors and firms whose values and interests don’t necessarily reflect society’s needs

The public sector provides the essential social, legal and educational infrastructure that sustains private R&D and can thus help ensure innovation mirrors social priorities

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The factory of a Chinese carmaker in the southern city of Zhaoqing touts 100 per cent automation for the installation of car bodies at its welding workshops, with over 200 robotic arms. Firms tend to overinvest in automation to increase the return to capital and managers, at the expense of employees. Photo: SCMP Pictures

Dani Rodrik

Published: 9:45pm, 12 Aug 2020Updated: 9:45pm, 12 Aug 2020

Innovation is the engine that drives contemporary economies. Living standards are determined by productivity growth, which in turn depends on the introduction and dissemination of new technologies that allow an ever-wider variety of goods and services to be produced with fewer of our planet’s resources.

Policymakers and the public at large understand the importance of innovation. What is less well appreciated is the degree to which the innovation agenda has been captured by narrow groups of investors and firms whose values and interests don’t necessarily reflect society’s needs.

In today’s advanced economies, private firms undertake the bulk of research and development. The business sector’s share of total R&D spending ranges from 60 per cent in Singapore to 78 per cent in South Korea, with the United States closer to the higher end, at 72 per cent. But it is the public sector that provides the essential social, legal and educational infrastructure that sustains private R&D.

Innovation in the private sector depends crucially on government funding of basic science and research labs. It relies on scientific talent trained in universities supported by public funds. The state provides innovators with monopoly rights through the patent system, and ensures the private appropriation of returns on R&D through labour and contract law. Not least, private R&D is heavily subsidised by the state through tax credits and other policies.

As a society, we should care not just about how much innovation takes place, but also about the types of new technologies that are developed. We ought to ensure we are investing in technologies that are safe, environmentally sound, that empower rather than simply replace human labour, and that are consistent with democratic values and human rights.

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The direction of technological change is not fixed or determined from outside the social and economic system. Instead, it is shaped by incentives, values and the distribution of power.