What, or rather who, contributed to China’s economic miracle? Spending in research and development (R&D) – and its ability to produce technological change – is often considered as a factor in economic growth. Yet China has shown exceptional growth with scant spending on R&D, even as Japan’s economy has stalled in comparison even with significant expenditures in that area.
New research by Maria Minniti, Bobby B. Lyle Chair in Entrepreneurship in SMU’s Cox School of Business, and co-author Moren Lévesque shatters some myths about entrepreneurs, innovation and the growth of an economy.
The authors distinguish entrepreneurs as research-based (spending on R&D) or imitators (without R&D spending). The difference is between “those that commercialize invention and new markets, and those that commercialize products or services that already exist,” Minniti says. “In the past, we have mainly focused on the research-based entrepreneurs. My claim is that the imitators are important, too.” When returns on R&D spending are low, as in many emerging economies, a high number of imitative entrepreneurs who increase competition and product supply will still generate economic growth, she adds.
The authors write that entrepreneurs are the “lubricant at the core of the growth process.” Their innovative contributions also vary by country. In countries like Somalia, for example, “growth is not necessarily going to come from technological innovation,” Minniti says. Instead, it may rise from agricultural innovations that increase crops and provide clean water, she adds.