The great innovation debate | economist.com


The Economist

Growth

Fears that innovation is slowing are exaggerated, but governments need to help it along

WITH the pace of technological change making heads spin, we tend to think of our age as the most innovative ever. We have smartphones and supercomputers, big data and nanotechnologies, gene therapy and stem-cell transplants. Governments, universities and firms together spend around $1.4 trillion a year on R&D, more than ever before.

Yet nobody recently has come up with an invention half as useful as that depicted on our cover. With its clean lines and intuitive user interface, the humble loo transformed the lives of billions of people. And it wasn’t just modern sanitation that sprang from late-19th and early-20th-century brains: they produced cars, planes, the telephone, radio and antibiotics.

Modern science has failed to make anything like the same impact, and this is why a growing band of thinkers claim that the pace of innovation has slowed (see article). Interestingly, the gloomsters include not just academics such as Robert Gordon, the American economist who offered the toilet test of uninventiveness, but also entrepreneurs such as Peter Thiel, a venture capitalist behind Facebook.

If the pessimists are right, the implications are huge. Economies can generate growth by adding more stuff: more workers, investment and education. But sustained increases in output per person, which are necessary to raise incomes and welfare, entail using the stuff we already have in better ways—innovating, in other words. If the rate at which we innovate, and spread that innovation, slows down, so too, other things being equal, will our growth rate.

Doom, gloom and productivity figures  >>>     Leer más “The great innovation debate | economist.com”

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Asking the experts | economist.com


The economy

Our admittedly unscientific poll offers cheer to both candidates

BARACK OBAMA and Mitt Romney have spent many months and hundreds of millions of dollars trying to convince the public that electing the other man would lead to economic catastrophe. They have fought to a draw: voters today are almost evenly split over which man would do a better job on the economy.

But whom would the experts pick? To find out, The Economist polled hundreds of professional academic and business economists. Our main finding should hearten Mr Obama. By a large margin they rate his overall economic plan more highly than Mr Romney’s, credit him with a better grasp of economics, and think him more likely to appoint a good economic team (see chart). They do not hold the perpetually disappointing recovery against him; half of respondents graded his record as good or very good, compared with just 5% who said that about George Bush in our poll four years ago. “It all depends on the counterfactual,” said Justin Wolfers, an economist at the University of Pennsylvania’s Wharton School, referring to how bad things might have been without the president’s emergency measures.

But Mr Romney can take heart from a deeper dive into the numbers. The Economistpolled two groups: research associates of the National Bureau of Economic Research, the country’s leading organisation of academic economists; and the outlook panel of the National Association for Business Economics. The academics gave Mr Obama much higher marks than Mr Romney, which may in part reflect partisan preference: fully 45% of them identified themselves as Democrats, and just 7% as Republicans.

By contrast, the forecasters, a much less partisan crowd, consistently assigned Mr Romney higher scores. Democrats and Republicans were equally represented in this group, at 22% each. Roughly half of both groups were either independent or declined to state an affiliation. Among these independents, and these are probably the most compelling numbers, Mr Obama’s platform still got a higher grade than Mr Romney’s, but by a much smaller margin than in the group as a whole. The independents, by a slim margin, thought Mr Obama would name a better economic team, but also believed that Mr Romney has the better grasp of economics.

While we cannot claim that this is a scientific sampling of economists’ opinions, our sample is reasonably large: 312 of the 902 NBER research associates responded, as did 51, around half, of the NABE forecast panel’s members. Leer más “Asking the experts | economist.com”

Good vibrations – economist.com


Shattering news | economist.com

How to restore people’s voices

INJURY, disease or sheer old age mean that as many as 7% of Americans (and, presumably, a similar proportion of the population of other countries) have some kind of voice disorder caused by scarring of their vocal cords. Such scarring makes the cords stiff, and stops them producing sound in the normal way. But that could be overcome if a method were found to restore the cords’ flexibility.

Robert Langer, a pioneering biomedical engineer at the Massachusetts Institute of Technology, and his colleagues think they have one. They have developed a material that mimics the characteristics of natural vocal cords and could thus help restore distorted voices.

To make their new material, Dr Langer and his team took polyethylene glycol, a substance widely used in the cosmetics industry and thus known to be safe, and altered the chemical linkages between its molecules.

This allowed them to control the polymer’s viscosity and elasticity. After some trial and error, as they described on August 20th to a meeting of the American Chemical Society held in Philadelphia, they hit on a mixture which matches the traits of human vocal cords.

Laboratory tests have shown that when air is blown through a model of the vocal cords made from this material, the model responds in the way that real cords do. Leer más “Good vibrations – economist.com”

Is the sun the answer to India’s energy problems?

hat should mean a building boom. Sunil Gupta of Standard Chartered, a bank, reckons India’s share of new global solar installations will rise from 1% this year to 5% by 2015. India’s central government has set a target for 20,000MW of installed solar generation by 2022, from under 1,000MW today. That would still represent a miserly 5% or less of total power-generation capacity in India, and cost perhaps $30 billion-40 billion to build—a fraction of the investment in new coal-fired plants. So plenty of folk think the official target will be smashed. D.J. Pandian, a civil servant in charge of energy policy in Gujarat, believes his state alone will easily reach 10,000MW of capacity in a decade.

But not everyone agrees. “Half of these plants won’t be here in ten years,” says a German boss at the new solar park—bad news, since the contracts are for 25 years. Too many firms have cut corners, he reckons. A Chinese executive raises his eyebrows at India’s plans to force solar firms to buy some equipment locally. “The supply chain and economies of scale are not there,” he says. An American manager scoffs: “We’ve all been coming to India for years and they’ll never get there…They don’t have the infrastructure.” The difficulty of getting plugged into the grid and a shortage of water to clean panels are common worries.


ON A salt plain near the border with Pakistan lies half a billion dollars’ worth of solar-energy kit paid for by firms from all over the world. A million

Català: Planta de concentració fotovoltaica a ...

panels stretch as far as the eye can see. Past a dishevelled brass band is a tent crammed with 5,000 people who cheer when Narendra Modi, the chief minister of Gujarat, declares the solar park open: “I pray, sun god, that today Gujarat will show the way to the rest of the world for solar energy.”

Despite the uncomfortable cult of personality around Mr Modi, Gujarat is an easy place to do business. And solar power would appear to be an obvious winner for India. The country has plenty of sun and flat, idle land. India is energy-hungry, but electricity supply is sporadic. Costly diesel generators are popular. Solar power could replace them. And solar parks, which look like giant Lego kits, are easier to build than conventional power plants. The new park, in a place called Charanka, has just over 200 megawatts (MW) of capacity running, making it the biggest site in India. It took 16 months to build. No one builds nuclear power stations nearly that fast.

Two other factors make an Indian solar boom seem possible. Conventional energy generation, which in India means burning cheap but dirty local coal, is a mess. Power stations charge local electricity boards 3-4 rupees ($0.06-0.08) per kilowatt hour. The state coal monopoly is unable to dig up enough of the black stuff, forcing power firms to buy pricier imported coal. Hopes that India might find abundant natural gas off its coast have been dashed. Many observers think the price of conventional power will have to rise to 5-6 rupees.

Meanwhile, the cost of solar equipment has fallen by a third since 2010, reckons Alan Rosling of Kiran Energy, a solar firm backed by American private equity. Cheaper solar and pricier conventional power have persuaded many that solar will soon be competitive without subsidies. V. Saibaba, the boss of Lanco Solar, a firm that makes and operates solar parks, says that by 2016 Indian solar will match the price of conventional electricity. Leer más “Is the sun the answer to India’s energy problems?”

The business of gaming

The console-makers are well aware of this. Nintendo helped to pioneer the idea that games could appeal to a much wider audience. Its Wii console has sold 89m units over the half-decade since its launch, outdoing both Sony’s PlayStation 3 (56m) and Microsoft’s Xbox 360 (58m), largely thanks to a games catalogue aimed at casual fans. It features titles like “Wii Fit” (a fitness game) and “Wii Sports”, a version of sports like golf, tennis and ten-pin bowling. The Xbox, PlayStation3 and Wii all have their own online shops that allow consumers to download games directly to their consoles, and all three are encouraging developers to make casual games for them. Mr Merel thinks the console business will remain a smaller though mostly profitable niche within a games industry that will range over a wide variety of platforms and attract a much more mainstream audience.

Categories such as “casual” or “online” games are not always neat and tidy. Not all online games are aimed at casual users. “Minecraft”, developed by Mojang, a tiny Swedish firm, is an online adventure game that mixes the building qualities of Lego with the social appeal of “World of Warcraft”. Despite its basic graphics and intricate gameplay it has sold over 4m copies. Conversely, some recent smartphone games have almost console-quality graphics and involving storylines. Development costs are already ticking up. The only safe bet about the future is that it will be more fragmented and more diverse than the past.


Thinking out of the box

Consoles are no longer the only game in town

THE IDEA BEHIND video games used to be simple. Nintendo, Microsoft, Sony, Sega and others sold consoles at a loss and made their money from the boxed games they produced for them. The punters, mostly young technophile men, bought the games from a shop, played them for a few weeks and then put them away.

Those customers are still around, but they have been joined by a plethora of others. New, more casual sorts of games are being picked up by a mass audience that would previously not have played at all. “In the past few years two things have changed,” says Mr Moore of Electronic Arts. “The first is the proliferation of platforms [on which to play games], and the second is that it’s become so much easier to call yourself a gamer.”

So the industry has branched out into a bewildering variety of sub-sectors and niches. At one extreme, companies in the traditional sector are still charging $50 or $60 for high-end console games with ultra-realistic graphics and cinematic game play. At the other, a shoal of smaller firms is developing simpler, more casual games aimed at a much larger and more diverse group of customers. In between, a mix of established firms and start-ups are testing new ways to develop games and new business models for selling them.

One of the biggest changes has been the rise of the mobile phone as a gaming device. Games specifically designed to be played on mobile phones already account for $8 billion of the $56 billion global games market, even though they typically sell at less than a tenth the price of a traditional console game. Such mobile games are simpler to play and require less time and dedication than the console titles. Their relatively low development costs and the fact that they can be downloaded over mobile networks bring them into impulse-buy territory, says Mr Harding-Rolls at Screen Digest.

Playing on the move

The potential market is huge. The number of mobile-phone subscriptions worldwide is over 5 billion. Last year 1.6 billion handsets were sold, a 31% rise on 2009. That is attracting attention from big, established firms such as THQ, an American publisher and developer of video games, and Square Enix, a Japanese publisher and developer that has a dedicated mobile division.

But many games for mobile phones are made by small start-ups, attracted by low entry costs. The best-known example is “Angry Birds”, released in 2009 by Rovio Mobile, a Finnish firm with just 55 employees. It is a light-hearted affair in which vengeful player-controlled birds hurl themselves at fortifications built by a group of egg-snatching green pigs. In terms of sales, it is among the most popular games ever made, with total downloads of more than 500m (the game is available in a free but limited edition as well as in a standard, paid-for version). By contrast, a console game is reckoned to have done well if it sells a couple of million copies.

Games are proving a popular application for mobile phones, and especially for the latest generation of smartphones such as Apple’s iPhone. PwC expects the market for such apps to grow from around $7 billion last year to $35 billion in 2015, and much of that growth is likely to be driven by games. They accounted for more than half of the 100 most popular apps for the iPhone in 2010 and make up a large chunk of the software market for other brands of smartphone too (see chart 1).

Online orcs

Thanks to the spread of high-speed internet connections, the web has emerged as a games platform in its own right. Blizzard Entertainment’s “World of Warcraft”, an intricate online fantasy world filled with orcs and dragons, attracts around 9m regular users, each of whom pays a monthly subscription fee of around $10 to play.

As with mobile games, much of the interest in online gaming revolves around attracting a new, more casual kind of player. Again, the potential market is vast. Companies such as PopCap, a Seattle-based games studio, specialise in easy-going games that run in ordinary web browsers. PopCap’s most successful game to date is “Bejeweled”, an abstract puzzle game in which users have to create patterns in a grid of coloured gems. It is easy to pick up but difficult to master, and can be played for a few minutes at a time. In 2010 sales of the full version, which sells for about $20, passed 50m. Leer más “The business of gaming”

All the world’s a game

Over the past two decades the video-games business has gone from a cottage industry selling to a few niche customers to a fully grown branch of the entertainment industry. According to PricewaterhouseCoopers (PwC), a consulting firm, the global video-game market was worth around $56 billion last year. That is more than twice the size of the recorded-music industry, nearly a quarter more than the magazine business and about three-fifths the size of the film industry, counting DVD sales as well as box-office receipts (see chart below). PwC predicts that video games will be the fastest-growing form of media over the next few years, with sales rising to $82 billion by 2015.


Video games will be the fastest-growing and most exciting form of mass media over the coming decade, says Tim Cross

IN NOVEMBER 2010 “Call of Duty: Black Ops” was released. Fans in many countries queued round the block to get their hands on a coveted early copy. A lucky few had won tickets to invitation-only release parties which were broadcast live to viewers across the internet. The event had been advertised on billboards, buses and television for weeks. Chrysler even produced a commemorative version of its Jeep. In the event the reviews were mixed, but no matter: the publishers, Activision, notched up worldwide sales of $650m in the first five days. That made it the most successful launch of an entertainment product ever, and people kept buying. A month later the total stood at over $1 billion.

“Black Ops” is not a film or a book: it is a video game. For comparison, “Harry Potter and the Deathly Hallows Part 2”, the current record-holder for the fastest-selling film at the box office, clocked up just $169m of ticket sales on its first weekend. “Black Ops” stole the crown from its predecessor in 2009, “Call of Duty: Modern Warfare 2”. The latest instalment, “Modern Warfare 3”, released on November 8th, set a record of its own with $750m in its first five days. Leer más “All the world’s a game”