What specific forces and policies that prompt long‐term growth? Institutional factors yes!
Institutional factors include: government stability, the enforceability of contracts and property rights, tax and fiscal policies, trade policies, regulatory policies, labor costs, educational policies, research and development expenditures, infrastructure, demographics, and environmental factors.
Lesser known forces and policies that prompt long‐term growth…
Unfortunately, far less attention has been paid to the role that values—cultural attitudes, social norms, and political pronouncements — play in influencing opportunities for entrepreneurialism, innovation, and long-term growth.
Requirement of technological progress
As Mokyr notes, “technological progress requires above all tolerance toward the unfamiliar and the eccentric.” For innovation and growth to blossom, entrepreneurs need a clear green light from policymakers that signals a general acceptance of risk-taking — especially risk-taking that challenges existing business models and traditional ways of doing things.
Innovation allowed
Permissionless innovation is not an absolutist position that rejects any role for government. Rather, it is an aspirational goal that stresses the benefit of “innovation allowed” as the default position to begin policy debates. It switches the burden of proof to those who favor preemptive regulation and asks them to explain why ongoing trial-and-error experimentation with new technologies or business models should be disallowed.
Why did the digital economy improve?
This happened because the default position for the digital economy was permissionless innovation. No one had to ask anyone for the right to develop these new technologies and platforms. A series of decisions and statements in the mid-1990s paved the way, beginning with the Clinton administration’s decision to allow commercialization of what was previously just the domain of government agencies and university researchers. Shortly thereafter, Congress passed, and President Clinton signed, the Telecommunications Act of 1996, which notably avoided regulating the Internet like earlier communications and media technologies.
Internet was not regulated
Specifically, it stated that “the private sector should lead and the Internet should develop as a market driven arena not a regulated industry.”
Freedom to experiment
As Federal Trade Commission Commissioner Maureen K. Ohlhausen observes, “the success of the Internet has in large part been driven by the freedom to experiment with different business models, the best of which have survived and thrived, even in the face of initial unfamiliarity and unease about the impact on consumers and competitors.”
Something to think for the future trends of technologies as well
Getting the disposition right will be more important than ever with so many exciting—but potentially highly disruptive—technologies starting to emerge, including: the “sharing economy;” 3D printing; the “Internet of Things” and wearable technology; digital medicine; virtual reality and augmented reality technologies; commercial drone services; autonomous vehicles; and various robotic technologies.