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The Power of Market Creation

How Innovation Can Spur Development

Growth engine: testing at Embraer in Brazil, October 2014 Roosevelt Cassio / Courtesy Reuters

Most explanations of economic growth focus on conditions or incentives at the global or national level. They correlate prosperity with factors such as geography, demography, natural resources, political development, national culture, or official policy choices. Other explanations operate at the industry level, trying to explain why some sectors prosper more than others. At the end of the day, however, it is not societies, governments, or industries that create jobs but companies and their leaders. It is entrepreneurs and businesses that choose to spend or not, invest or not, hire or not.

In our research on growth, therefore, we have taken the opposite approach, working not from the top down but from the bottom up, adopting the perspective of the firm and the manager. From this vantage point, we have learned that different types of innovation have radically different effects on economic and employment growth. This insight gives entrepreneurs, policymakers, and

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