On one point, all economists agree. Innovation is a fundamental, indeed necessary, element of economic growth. And note that we say “innovation†rather than “invention.†The latter is the creation of a new idea— but plenty of new ideas go nowhere. Innovation is the transformation of a new idea into successful commercial, scientific, or artistic application. Although innovation may incorporate invention, it need not do so.
A simple example may suffice. Many people credit Thomas Edison with the invention in 1880 of the incandescent light bulb. In fact, the first recognizable incandescent bulb was created in 1802 by Sir Humphry Davy and a bulb very much like Edison’s was patented in 1875 by two Canadians. Shortly after Edison independently patented an incandescent bulb, he bought the Canadians’ patent rights from them for $5,000 (over $1 million in today’s dollars)— and then proceeded to implement indoor electric lighting across America and around the world.
The invention was the incandescent light bulb. The innovation entailed the successful commercial application of that invention, an activity that included power generation and transmission, as well as the widespread commercial distribution of the bulbs themselves. Sitting in an English, Canadian, or New Jersey laboratory, the bulb was a bright idea. But once it lit up millions of homes and workplaces, it raised the world’s wealth and contributed to sustained economic growth that continues to enrich us today.
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