This document discusses economic development and innovation. It covers Paul Romer's endogenous growth model where ideas and innovations can experience increasing returns. It discusses how government can encourage innovation through policies that protect intellectual property like patents. It also discusses the importance of institutions in creating markets and the rules that support property rights, enforce contracts, and minimize corruption to promote innovation.

2. Lecture 10
Economic Development

3. One page summary of the 17 Goals
. 77). HarperBusiness. Kindle Edition.

4. Romer
Growth Model
Ideas
Paul Romer

5. Economics of Ideas
Ideas
Inventions
Innovations
Increasing Returns

6. Rates of Return
Increasing
Romer
Decreasing
Solow

7. Economics of Ideas
Profits motivate
Share without losing value
Benefit but not pay
Government encourage
Larger market, more
incentive

8. Make me an
iPhone.
Sorry, I have the
atoms but not the
knowledge.
We need
innovation

9. Why are apps
so cheap?
Large fixed cost
Zero marginal cost
Huge market

10. 1.2 billion
$1 million
$1
sell 2 million
$2 million
Profit
$1 million

11. Research and
Development
$13 billion a year

13. Economics of Ideas
Imitators drive
innovators out of the
market
Patents
20 year monopoly

14. Economics of Ideas
People
Incentives
Creativity

15. Incentives
dignity
property rights
honest government
political stability
rule of law

16. Increase the number
of ideas per hour?
ideas for making it
easier to create
more ideas

17. Douglass
North
Nobel
Prize
1993
Institutions
Culture

18. Rules of the Game
Formal Rules
Informal Constraints
Institutions
Organizations
The Players

19. Institutions
Market-Creating
Market-Regulating
Market-Stabilizing
Market-Legitimizing
Political Institutions

21. Market-Creating
Protect property rights
Enforce contracts
Minimize corruption
Rule of Law
Trustworthy Police and Judges

22. Market-Regulating
Market failures
Monopolies
Public goods

23. Market-Stabilizing
Low inflation
Low volatility
Low unemployment

24. Market-Legitimizing
Social Protection
Insurance
Protect against shocks

25. Political Institutions
Free Press
Elections
Competitive parties
Participation

27. 2. Not All Innovations are Created Equal
3. In the Struggle Lies Opportunity
4. PullVersus Push
5. America’s Innovation Story
6. How the East Met the West
7. Mexico’s Efficiency Problem
8. Good Laws Are Not Enough
9. Corruption is Not the Problem; It’s a Solution
10. IfYou Build It,They May Not Come
11. From Prosperity Paradox to Prosperity Process

28. Alleviating poverty is not the
same as creating prosperity.

29. Innovation
a change in the processes by which
an organization transforms labor,
capital, materials, and information into
products and services of greater
value.

30. Innovation
A valuable invention

31. Innovations
Sustaining
Efficiency
Market-creating

32. Innovations
Sustaining
Efficiency
Market-creating

33. Growth Problem
Innovation Problem