Can innovation solve the economic crisis?
There has been a wide international debate on the causes and possible solutions to the economiccrisis that emerged in 2007
2008 (Ranga and Etzkowitz 2012). The economic crisis sweeps acrossthe global financial system rapidly and furiously as markets are globally integrated (Gore 2010).Hence, the responses to the global economic crisis are not only
enclosed within a nation’s or acoalition government’s approach
. Rather, a global coordinated response is warranted as well.Economic stimulus packages addressing short-term and long-term problems have been adopted inmost countries as well as the European Commission (Ranga and Etzkowitz 2012). Internationally, theUnited States of America and European Union have recently been discussing on a free-tradeagreement to remove trading barriers between the two important economic powers and boost theeconomies (BBC News Business 2013). Globally, the G-20 group of major economies have consideredproposals on international financial regulation, anti-protectionism and economic support measuresat the November 2008 summit (Ranga and Etzkowitz 2012).Although important national and international resources have been pumped into the stimuluspackages, with some countries introducing fiscal packages of unprecedented size, evidence of itssuccess today is mixed (OECD 2009). Despite reported successes, the impacts of the economic crisisare still present in the world economy. In fact, the economy of some countries in the EuropeanUnion is worsening (Ranga and Etzkowitz 2012). This inevitably begs the question on whether themeasures taken place are effective to reverse or stop the decline. In order to tackle the currenteconomic crisis, many experts have gathered valuable lessons learnt from the Great Depression in1930s (Almunia et al. 2009).While the current economic crisis is comparable to the Great Depression in 1930s in the sense thatboth crises fall within the phase of Kondratieff winter (Gore 2010), the current economic crisis is nolonger specific only to the Industrial society. Rather, it is a downturn of both the Industrial andKnowledge society (Ranga and Etzkowitz 2012). The difference in the nature of the economic crisisfrom that of the Great Depression has significant policy implications. Besides increasingemployment, new forms of job must be created to overcome the crisis (Ranga and Etzkowitz 2012).In addition, what overcame the Great Depression then was the employment boom brought about bythe destructive World War II (Romer 1992). However,
the history of world’s development tells us
that wars generate more problems than they can solve (Hu 2009).