Thursday, November 27, 2014

Violence and Innovation

ABU DHABI – In the 1949 British film The Third Man, the character Harry Lime observes that, during the Borgia family’s rule in Renaissance Italy, the country “had warfare, terror, murder, and bloodshed. But [it] produced Michelangelo, Leonardo da Vinci, and the Renaissance.” By contrast, he contends, Switzerland’s 500 years of democracy and peace produced little more than the cuckoo clock.

While the implication that innovation and creativity are born only of conflict is extreme – in fact, Switzerland is a world leader in innovation – Lime makes a crucial point. Although peace, order, and political stability are widely perceived as essential prerequisites for invention, entrepreneurship, and economic development, there have been many exceptions to this rule – especially when it comes to creativity and innovation.

The United States is consistently ranked among the world’s top ten countries for innovation, including by INSEAD’s Global Innovation Index. But, on the Global Peace Index, it is ranked 88th of 153 countries. Likewise, the United Kingdom and the Netherlands rank, respectively, fifth and sixth on the Innovation Index, but only 28th and 29th on the Peace Index. Conversely, Bhutan is among the top 20 most peaceful nations, but does not even make it onto innovation indices.

Of course, crime, terrorism, conflict, and political instability severe enough to cause a total breakdown of law and order significantly impede creativity and innovation. But some countries show strong resilience in the face of pervasive violence and volatility.

For example, despite widespread violent crime, Mexico and South Africa have high levels of innovation (measured by patent filing and trademark registration). When terrorism indicators are taken into account, Lebanon, Turkey, Jordan, and Israel emerge as resilient innovators. Just as peace and stability do not always lead to creativity and innovation, fighting and uncertainty do not necessarily deter it.

Although peace, political stability, and civil order are important factors to consider when selecting a location for a large-scale foreign production or service operation, they are far less important when it comes to sourcing creativity and making the related investments. In particular, creative industries, such as animation, arts, design, and software – which are mostly based on individual skills and talent – tend to be more resilient to conflict than others.

Given this, officials, investors, and business leaders in search of revolutionary ideas, cutting-edge solutions, and untapped talent should not allow turbulence in some societies, or tranquility in others, to influence their decisions excessively. In fact, stepping out of one’s comfort zone may offer significant benefits.

Some evidence suggests that the prevalence of uncertainty may boost competition, thereby sparking innovation. Furthermore, social environments that are characterized by lower levels of consensus and higher levels of violence may be more likely than their more harmonious counterparts to catalyze radical innovation.

Lebanon’s experience supports this assessment. Despite its long history of political violence, its creative industries are expanding. According to a 2007 study of Lebanon’s copyright-based industries, conducted by the World Intellectual Property Organization, the main challenges facing the country’s software sector – an important part of its economy – include restricted markets, intense competition, a brain drain (loss of human capital), inadequate technology policy, a lack of government incentives, and rampant piracy. Violence is conspicuously absent from the list.

To be sure, violence is always a problem. But countries like Lebanon have become resistant to its effects – for example, by developing creative industries – diminishing its negative impact on economic, social, and intellectual development. In 2005, 10% of all new businesses in Lebanon were in the creative sector, and the copyright-based industries contributed 4.75% of GDP.

Similarly, despite high levels of political violence, Nigeria produces more than 1,000 films annually. Indeed, Nigeria’s film industry is the world’s third largest, after the US and India, and is second only to oil production in terms of its economic significance to the country.

According to a 2010 United Nations report on the creative economy, global trade in creative goods grew at an annual rate of 14% from 2002 to 2008. Meanwhile, exports of such goods from developing countries, which tend to experience more violence, grew at a rate of 13.5%, reaching $176 billion (43% of total world trade in creative industries) in 2008. Although overall global trade declined by 12% that year, trade in creative goods and services continued to expand. This has significant implications for political and business leaders – especially in turbulent regions like the Middle East.

In order to bolster economic growth and innovation amid conflict and volatility, policymakers and investors should focus on building the creative industries. The resilience and adaptability that they provide are crucial to supporting long-term economic growth and job creation – no matter what the future brings.

Read more from our "The Innovation Revolution" Focal Point.

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    1. CommentedWangolo David Ivan

      While violent territories might be show innovativeness, the cause is not the violence. The violence might however be responsible for the resilience of those population to survive and hence innovate! Sustainable innovation can only be tested in predictable environments.

    2. CommentedNathan Coppedge

      Maybe it is just GDP and quality of life, which are also reflected in the power of the military.

      I suspect it has more to do with population and level of treatment within the population, including strategic uses of stress, such as caffeine consumption.

      Interestingly, caffeine consumption may also explain post-modernism.

    3. CommentedFrank O'Callaghan

      Innovation depends on education, diversity and the security to take a risk. Violence, if anything, prevents this.

    4. CommentedTonu Pavel

      When considering amount of inventions and technical advancement made in the 2nd WW than it can be concluded that instability is a driving force for innovation.

    5. CommentedJorge Simao

      Incentive creates innovation -- the insurance that the rewards of the innovation return back to the innovator. This is marginally related to violence, but more to the socio-political and economical model.
      It's an interesting point of the author, specially for being non-intuitive. (And yes well written). However, to be credible it would have to be backed by more detailed statistics, rather than just anecdotal cases studies. The example of Switzerland (and possible others), self-contradicts the whole article, to the point that it losses credibility. Any way, good work in laying out your innovative, and yet non violent, perspective.

    6. CommentedDr. Hanan Taleb

      Thanks for the nice well-written article.

      Zsolt – I think that you have completely misunderstood the article. It calls for more support to creativity and innovation and not violence!! This is a nice and thought-provoking article which argues that whilst violence can indeed have a negative impact on innovation, some countries have succeeded in showing strong resilience against violence and instability. Lebanon represents an interesting case to study for economists and policy makers. This is for sure.

      Thanks again Dr. Sami for this interesting point you raised, you are a remarkable innovation expert.

    7. CommentedZsolt Hermann

      I am not sure what the conclusion or recommendation of the article is, I cannot really accept that for example the constant strife in Lebanon, the constant uncertainty the majority of the public faces can be justified just because some inspired individuals file more patents, and innovations than people in other countries.
      I am quite certain if asked most of the Lebanese would rather live in a country like Bhutan, so they can plan, prepare for a predictable future than to face the day to day uncertainty, mortal dangers, their current country "offers".
      The type of ingenuity, innovation the article describes is an instinctive one, when the pressure of negative events, sufferings force people to think outside of the box, and produce breakthroughs, new type of thinking, new products.
      But why should not we try to harness this potential, and create such a system where people can continue to be innovative, fresh, ingenious without the need of constant negative pressure, without the threat of a violent environment?
      The only question is motivation. How can we create an environment were positive motivation overcomes negative motivation?
      Where people can have a safe, tranquil life but they are not seduced, numbed down to stop developing, innovating?
      Our new global, integral reality offers us such a chance.
      Although almost everybody accepts, admits that the whole of humanity has evolved into such an interconnected and interdependent system, we still use these connections in a self centered, subjective way, causing constant harm with destructive competition.
      Thus although on one hand there is drive for innovation, on the other hand it comes with terrible waste of resources, unequal distribution with huge surpluses on one side and huge deficit on other sides. And since self reception is limited, we cannot receive infinitely as proven by growing emptiness, depression especially among those who receive, earn the most.
      As a result the whole system is edging towards system failure, effecting developed and developing equally.
      If it remains uncorrected even the most genius innovations cannot stop the present human system from a total collapse.
      On the other hand if we started to use the existing and permanent interconnections in a mutually complementing, positive way, we could create an infinite flow of information, innovation, development in between the elements of the system.
      If everybody only holds on to the amount of resources necessary for comfortable, optimal function (which can vary according to nationality, culture, personal character, talents, inclinations) and passes on the rest to the whole, like in a healthy human body, or any well functioning natural system, everything becomes freed up, free flowing without boundaries.
      In such a human system the positive motivation would drive innovation, since my benefit and prosperity agrees with the benefit and prosperity with the whole, the more I give the more I receive, the system constantly grows, but not necessarily in a quantitative but in a qualitative manner.
      Which is crucial in a closed finite, integral system.