Do ideas or institutions fundamentally drive long-term economic growth?
In this paper, we propose that the most historically accurate and practically useful answer to this question is, in fact, neither. In the place of these two conjectured fundamental drivers of long-term economic growth we propose a third: market-creating innovation.
We begin by offering a definition and two examples of market-creating innovation that provide a foundation for the historically informed theory that follows. With this definition and the examples in mind, we next assess the two dominant theories of development— essentially, the currently dominant answers to the centuries-old question of why some countries prosper while others do not.
Building on this, we assess how new influences such as Blockchain technology and emerging business models relate to market-creating innovation, institutional evolution, and, ultimately, economic development. We offer specific examples of how Blockchain technology is being deployed to support market-creating innovation.
We conclude by considering how a better understanding of the drivers of development prompts us to reconsider the definition of development itself.
About the Authors:
Clayton Christensen
Clayton Christensen is the Kim B. Clark Professor of Business Administration at the Harvard Business School and is the architect of Disruptive Innovation. Clay was named the World’s Most Influential Business Management Thinker in 2011 and 2013.
Efosa Ojomo
Efosa Ojomo is a research fellow at the Clayton Christensen Institute for Disruptive Innovation. Efosa’s work focuses on using Disruptive Innovation theory to fundamentally change the discourse in the global development community, thus enabling nations to engender their own path to long-term growth and prosperity. This March, Efosa will also be a keynote speaker at IIL's 2019 Leadership and Innovation Online Conference.