Coming up with the next big, game-changing idea has become increasingly difficult, with research out of the US revealing declining research productivity amid the rising cost and scale of innovation endeavours.
Research undertaken by economists at the Stanford Institute for Economic Policy Research (SIEPR) in 2017 shows that huge and ongoing increases in research and development will be required to sustain even the present low rate of economic growth, based on the concept that growth comes from ideas generation.
“The thought now of somebody inventing something as revolutionary as the locomotive on their own is inconceivable,” said Nicholas Bloom, SIEPR senior fellow and paper co-author.
Bloom and his co-authors, SIEPR senior fellow and Stanford professor Chad Jones, Stanford doctoral candidate Michael Webb and MIT professor John Van Reenen, examined research productivity at an aggregate national level in the US and across separate industries.
They found that while research efforts are rising substantially, ideas being generated per researcher are sharply declining. The number of Americans engaged in research and development has increased by more than twentyfold since 1930 but collective productivity has dropped by a factor of 41.
According to the paper, “productivity growth is slowing down because ideas are getting harder to find”.
While Moore’s Law, which observing that the number of transistors on an integrated circuit doubles around every two years, has held firm, the researchers found that since 1971 the effort behind chip innovations has risen by a factor of 78.
The researchers also identified a similar pattern of greater input with less output across other industries and publicly traded companies. The majority of those firms displayed continuous declines in productivity, despite allocating more funds to R&D.
“It’s getting harder and harder to make new ideas, and the economy is more or less compensating for that,” Bloom said.
“The only way we’ve been able to roughly maintain growth is to throw more and more scientists at it.”