This hack is a review on how we can learn from the past to make our future better " Innovation is the only way out". The recession of 2009 was the end of the global development cycle which began in 1950 according to the Russian scientist Kondratieff who identified it back in the middle of 1920. Kondratieff suggested that there was some connection between technological innovation, government system and the appearances of cycles of prosperity and recession.
If this is well know past what can be done to make unknown future better? I think smart taxation rules for New Zealand. The cycles of production and prices in the global development cycle generated by the cycle of investments and innovation during a technological revolution and relate to changes in supply and demand for natural resources, labour and capital.
It is fascinating to observe the enormous delay which occurs between an invention and the subsequent commercialisation as well as many inventions will lead to innovations which will rescue us from the current crisis as well as the invention from the past salvaged us before - were made between 20 and or even 100 years... before... but never taken up.
For instance refrigeration which has changed the lives of New Zealand farmers and hugely increased the level of their production output was invented in 1873 and innovated to commercial use in 1895. It took 56 years to bring Water turbine from invention to innovation and 79 years for a lead battery which was invented in 1780 and only commercially produced in 1859.
The Ministry of Research, Science ,and Development’s Innovation in New Zealand (Statistics New Zealand, 2003) survey focused on the achieved outcomes of innovation activity.
It found that 80 percent of businesses that implemented innovations have reported an increased range of goods and services as a result, 79 percent furthermore reported increased profitability, 75 percent improved efficiency, and 64 percent entered new markets in New Zealand as a result of innovation activity. On the other side, the survey found that innovation activity contributed little to opening up new overseas markets (30 percent), reduced environmental impact (21 percent), or reduced energy consumption (18 percent).
The answer in my view is simple the government can start with taxation benefits for some areas of businesses, for instance since New Zealand GDP mostly comes from farming industry the farms should be subsidised and additional streams of benefits for the business should be created through inventions and use of innovations. The other option is with intellectual businesses with international orientation to encourage investors to invest funds in the businesses which will produce greater good for the country and sell innovations or soft products. The last I want to suggest is seafood.
Many studies suggest that sharing of implicit knowledge is facilitated by geographical proximity. In Soviet Union for example entire cities were dedicated for academics only, good example of it would be Academgorodok which is not far from Novosibirsk. The town has 32 Universities and approximately only 170,000 residents.
Saxienian (1994) in his study of Silicon Valley found that firms in close proximity encouraged workers to use information they receive from each other not only from academic texts but also from day to day interaction.
Ingram and Roberts (2000) point out that social friendships facilitated by geographical nearness, play a significant role to compare with formal interactions.
If New Zealand goverment introduced tax benefits for the desired businesses it would increase the level of employed people and their income as the result level of commercial investments would go up (since investors always seeking options to increase their profits).
The experiments have been completed in the past Silicon Valley is a good example of a free economic zone.
I want to express my grattitude to my lecturer Dr Bernie Frey from Massey University MBA who managed to make the study so exiting and interesting.