The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World*

Abstract

Many observers have warned that the next stage of globalization—the offshoring of research and development to China and India—threatens the foundations of Western prosperity. But in this article, the author explains why the doomsayers are likely to be wrong.Using extensive field studies on venture capital‐backed businesses to examine how technology is really used to create value in modern economies, this article explains how and why scientific advances abroad generally contribute to prosperity at home, and why trying to maintain the U.S. lead by subsidizing more research or training more scientists is likely to do more harm than good.When breakthrough ideas have no borders, a nation's capacity to exploit cutting‐edge research regardless of where it originates is the key to its economic competitiveness. “Venturesome consumption”—that is, the willingness and ability of businesses and consumers to use products and technologies derived from scientific research in the most effective ways—is far more important than having a share of the research. And for this reason, well‐developed and “venturesome” economies like the U.S. benefit disproportionately from scientific innovations abroad. To cite just one example discussed at length in this article, the success of Apple's iPod owes much to technologies that were developed largely in Asia and Europe.The proven ability of the United States to remain at the forefront of the global “innovation game” reflects the contributions of many players—not just a few brilliant scientists and engineers, but literally millions of U.S. entrepreneurs, managers, financiers, salespersons, and, to a very large degree, U.S. consumers. As long as their venturesome spirit remains alive and well, advances abroad should not be feared but welcomed.