The Two Innovation Economies

HONG KONG – For 250 years, technological innovation has driven economic development. But the economics of innovation are very different for those at the frontier versus those who are followers striving to catch up.

At the frontier, the innovation economy begins with discovery and culminates in speculation. From scientific research to identification of commercial applications of new technologies, progress has been achieved through trial and error. The strategic technologies that have repeatedly transformed the market economy – from railroads to the Internet – required the construction of networks whose value in use could not be known when they were first deployed.