With the acceleration of technological change moving at an astounding pace , we are inclined to think of our age as the most innovative era ever. We have smartphones and supercomputers, nanotechnologies and big data, gene therapy, stem-cell transplants and many more technological breakthroughs. Governments, universities and firms together spend around $1.4 trillion a year on research and development, more than ever before. Innovation is essential to an advancing society. Every couple years or so, somebody needs to invent some sort of technological advancement that helps people get their needs met easier. But has innovation stagnated over the years? Yes, but this is not because of a lack of innovative people but it is because of a lack of a need to have products that are pervasively innovative.
Innovation is the process of translating an idea or invention into a good or service that creates value or for which customers will pay. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. Innovation involves deliberate application of information, imagination and initiative in deriving greater or different values from resources, and includes all processes by which new ideas are generated and converted into useful products. In 1886, Karl Benz created the first automobile. This was an immense technological breakthrough because of the fact that before his invention, people got around by walking or by horsepower. Even though this was a great step into what the future holds for our society, this momentous achievement was dwarfed in comparison to the invention of the Boeing 707 almost 70 short years ahead. The first car only moved at 1% the speed of sound while the Boeing travels at 80% the speed of sound. (cite) To put this in perspective, in almost 70 short years, man has been able to move at almost the time it takes for a sound to reach somebody's ear.
Robert Gordon said in a lecture that he gave at TED Talks Convention that innovation is slowing down. More specifically he said this: "So I started wondering and pondering, could it be that the best years of American economic growth are behind us? And that leads to the suggestion, maybe economic growth is almost over. Some of the reasons for this are not really very controversial. There are four headwinds that are just hitting the American economy in the face. They're demographics, education, debt and inequality. They're powerful enough to cut growth in half. So we need a lot of innovation to offset this decline. And here's my theme: Because of the headwinds, if innovation continues to be as powerful as it has been in the last 150 years, growth is cut in half. If innovation is less powerful, invents less great, wonderful things, then growth is going to be even lower than half of history."
In the simplest form, technological progress arises as a incremental process that improves the efficiency of resource deployment. It may not be uniform across sectors or time, but the aggregate effects are relatively smooth. In contrast are major inventions that had far-reaching and prolonged implications, such as the steam engine, electricity, or the computer. The distinction between drastic and incremental innovation is useful since frequently incremental innovations, although taking place in the regular course of business follow drastic innovations. A drastic innovation, however, introduces a discontinuity in the organization of the economy in the sense that the innovation replaces an old technology that played a significant role in an industry with new methods of production. Or it replaces an old material that performed certain functions with a new one.
Note that a discontinuity in this sense does not automatically imply a necessary discontinuity in the observed pattern of resource allocation or the evolution of output. The introduction of a superior technology can be gradual, starting with a…