If I had asked the public what they wanted, they would have said a faster horse – Henry Ford
When the winds of change blow, some people build walls and others build windmills – Chinese proverb
At the level of countries, the response to crises tends to exhibit greater innovation in cases when the economic development model of a given country prioritises human capital development (including education and healthcare) as well as the creation of an investment and business climate that are conducive to the emergence of new start-ups, writes Valdai Club Programme Director Yaroslav Lissovolik.
Crises are an intrinsic part of the current economic system and while the question of attempting to avoid severe crises in the future will invariably feature in economic policy debates, the more realistic question on the agenda is whether it is possible to exploit the potential of crisis episodes to spur innovation. Indeed, the response of the business community to the unique conditions in the global economy elicited a significant capability to meet the challenge of the pandemic via adjusting to changes in demand. Airline companies switched from passenger flights to cargo transportation, restaurants and retail outlets expanded delivery options for customers (including via active development of online platforms), while companies in the services sector started to target “new demand” in areas such as telemedicine and education. The question is whether such innovation and adaptability will also be observed across countries and regions as well as at the level of global governance.
At the level of countries, the response to crises tends to exhibit greater innovation in cases when the economic development model of a given country prioritises human capital development (including education and healthcare) as well as the creation of an investment and business climate that are conducive to the emergence of new start-ups. The latter involves lower interventionism and administrative pressure on businesses, active promotion of private-public partnerships as well as the support extended to R&D activity. Legal climate considerations associated with the protection of intellectual property rights will be also important in securing sufficient incentives for companies to engage in innovations.