Innovation in the economy leads to the creation of better goods and services that improve lives, and drives progress and economic growth
Illustration: Chaitanya Dinesh Surpur
Innovation and its impact on development have been topics of discussion for some time. A 2021 report by UNCTAD showed that while there was little difference in GDP per capita across the world in the 1700s, the industrial revolution and subsequent waves of innovation led to the West’s dominance.Every wave of progress increased the inequality between countries with unequal access to basic necessities such as infrastructure, education, health, electrification and telecommunications. Some countries managed to catch up by adopting new technologies, but many remained behind.
While I am not equipped to separate the effects of colonialism, wars and other events, it is clear to me that innovation creates a positive impact on a country’s ability to grow. Innovation in the economy leads to the creation of better goods and services that improve lives, and drives progress and economic growth. It helps businesses stay competitive, meet changing consumer needs, and generate new jobs. Furthermore, innovations in fields such as health care and technology can address important global challenges, such as disease and environmental sustainability. And companies and countries that innovate are more efficient and better equipped to adapt to changes in the market.
Startups, being at the forefront of innovation, play a crucial role in the economy. The impact of innovation on the economy is evident when we look at some of the most innovative companies of the last 30 years, such as Apple, Microsoft, Google (Alphabet), Amazon, Tesla or Facebook (Meta). These companies started small and have built great value for themselves and the economy around them. Through a process of disciplined experimentation, startups are able to take calibrated risks, test their products, get feedback and iterate. As a result, they innovate faster than established businesses, overtake competition and gain a foothold in the market.
(This story appears in the 24 February, 2023 issue of Forbes India. To visit our Archives, click here.)