By Johannes Berchtold
In economically sluggish times, one wonders where the next wave of growth will come from - and what kind of growth it will be. It will most likely not come from traditional industries, as good management and automation might be trimming them down. Likewise, demographics and the anticipated rise of a middle class in developing economies do not seem to unlock much growth potential in the short term. Hence, we should not look for more of the same, but for what could be truly new.
That leaves technology to do the job. And this essentially means progress. Great waves of economic growth have always been driven by innovation, once inventions had been refined and reached the stage where they became transformative. If that happens, technology can become a prime force for boosting economic growth. But we are not there yet. Innovation is, in reverse, growth-driven. It is hard to think of a society that does not want to grow and still keeps on innovating.
Progress happens anytime and everywhere. It is a human ambition to take things to the next level. We should not stand in the way, as progress helps societies advance, do things better and correct the defects of past developments. Neither should we fall into the belief that progress can be steered towards a specific destination. The invention of the steam engine wasn't the revolution: It was the wider social and economic context, in combination with a refined technological innovation, which much later created the conditions to unleash the first Industrial Age. That is the case with digital technology, too.
We seem to be on the verge of something big, something we cannot quite grasp at the moment. We assume that it will be of a disruptive nature and that it will change the way we work, produce and live. Some call it the second Machine Age. It is increasingly recognized as the weak signals of future growth, growth that could even surpass the prosperity of the Industrial Age. But since innovation-led growth is essentially a black box, the best we can do now is look at the frameworks that best foster progress and prepare for the future as much as we can. This involves doing more basic research, investing in education and infrastructure, pushing for the free flow of capital and unfettered cross-border trade and allowing talented entrepreneurs to move freely around the globe. Such conditions are most likely to create a environment for progress to unfold and create growth.
This article refers to «Growth - the good, the bad, and the ugly» debated at the 46th St. Gallen Symposium (11-13 May 2016, Switzerland)