This section features media releases and announcements from the Programme on Innovation and Diffusion.
The Irish Times:
Global economy needs Marshall Plan for Covid, climate change – economist
14 September 2021
The global economy needs a new Marshall Plan to fight the fallout from Covid-19 and place green technology at the centre of energy, transport and food production systems, according to economist John Van Reenen.
The Edge Markets:
My Say: Economic growth and a societal merdeka of our spirit
9 September 2021
In a recent book, The Power of Creative Destruction, French economist Philippe Aghion and his two co-authors make the point that while it is common to see lower-income countries transitioning towards becoming middle-income countries, the next step in the transition is far too rare. An International Monetary Fund paper in 2019 makes the point that between 1960 and 2014, only 16 out of 182 economies globally reached high-income status. This is, as the term is commonly known, the so-called middle-income trap.
As the UK economy bounces back, do we sceptics need to say we got it wrong?
1 September 2021
Mandatory reading in this context is the UK's decisive decade report, the UK Economy 2030 project launched jointly by the LSE's Centre for Economic Performance and the Resolution Foundation. Britain has to invest hugely and cleverly this decade to level up and achieve net zero, it argues, but it has the ball and chain around its economy of Brexit and low productivity.
The Daily Telepgraph:
Don't bet British staff will replace migrants
31 August 2021
From the Migration Advisory Committee report in 2014, which found migration actually helped to boost job numbers in Britain, to the London School of Economics assessment published right before the Brexit referendum that found lower wages were more strongly linked to the financial crash than immigration, the argument that a migrant's job comes at the cost of a native workers' opportunity has proven a difficult one to stack up.
Japan Economic Foundation (Newspaper):
Digital Transformation and Innovation: the Impacts of Covid-19
31 August 2021
Moreover, a July 2020 survey for the United Kingdom suggests that many firms that adopted digital tools and processes during the pandemic expect to maintain these post-crisis ("The Business Response to COVID-19: the CEP-CBI survey on technology adoption" by Capucine Riom and Anna Valero, A CEP COVID-19 Analysis, Paper No. 9, Centre for Economic Performance, London, September 2020).
Rethinking capitalism: The power of creative destruction
31 August 2021
In The Power of Creative Destruction, economists Philippe Aghion, Céline Antonin and Simon Bunel argue that abolishing capitalism is not the solution. Historically, a market economy has proved to be a formidable engine of prosperity, enabling societies to develop in ways that were unimaginable even two centuries ago. However, market forces cannot be given free rein. The state and civil society both have a role to play in guiding the forces of disruptive innovation that underpin growth.
European Association for Research in Industrial Economics (EARIE) 2021
27-28 August 2021
POID Director John Van Reenen chaired and presented in a plenary panel discussion on “the Role of the State in the Post COVID Economy” at the 2021 Annual European Association of Research in Industrial Economics (EARIE) conference on August 28th in Bergen, Norway. Star speakers included Philippe Aghion (LSE and College de France), Wendy Carlin (UCL), Betsey Stevenson (Michigan) and Monika Schnitzer (Munich). The presentations covered thinking of a new framework for economic policy, industrial policy, the “knife edged” nature of economic policies actually enacted, how economists could be more influential, the risks of an over-extended industrial policy, the complementarity between policies towards growth and equality and the need for a new Marshall Plan to help the world recover from COVID.
- Wendy Carlin: The role of the state in the economy after Covid-19
- Philippe Aghion, Celine Antonin and Simon Bunel: Rethinking capitalism and the role of the state in Europe post-Covid
- John Van Reenen: The Covid recovery and beyond: going for growth
Furlough scheme draws to an end from next week - Rishi Sunak’s changes explained
26 August 2021
A survey undertaken by the London School of Economics (LSE) recently showed around one in every 16 businesses across the UK state they are at risk of closure over the next three months.
LSE British Politics and Policy Blog:
UK business confidence has increased – but the removal of furlough, possible new variants, and localised spikes in infections still pose risks
26 August 2021
The number of UK firms at risk of bankruptcy has more than halved in the last six months, while only 6% of all registered businesses say they are at risk – the lowest since September 2020. However, Peter Lambert, Apolline Marion, and John Van Reenen write that the removal of government support, possible new variants, and the ever-present risk of localised spikes in infections could make the rest of 2021 a quite volatile period.
As the economy bounces back, do we sceptics need to say we got it wrong?
22 August 2021
Byline: Will Hutton. Mandatory reading in this context is the UK's decisive decade report, the UK Economy 2030 project launched jointly by the LSE's Centre for Economic Performance and the Resolution Foundation. Britain has to invest hugely and cleverly this decade to level up and achieve net zero, it argues, but it has the ball and chain around its economy of Brexit and low productivity.
Labour market reallocation in the wake of Covid-19
13 August 2021
Lena Anayi, Jose Maria Barrero, Nicholas Bloom, Philip Bunn, Steven Davis, Julia Leather, Brent Meyer, Myrto Oikonomou, Emil Mihaylov, Paul Mizen, Gregory Thwaites. The Covid-19 pandemic hit some firms and sectors especially hard. As economies bounce back, a key question is whether the recovery will re-employ all of the workers shed during the downturn, and whether they will go back to similar jobs.
Imphal Free Press:
How social sciences can help fight COVID-19 and build back better
9 August 2021
A recent report by the Centre for Economic Performance and Grantham Research Institute on climate change and Environment emphasizes the importance of involving business and communities in developing a strategy for inclusive and sustainable recovery. A "better "post-recovery world will undoubtedly also benefit from the well-documented contributions that social sciences make in areas such as improving the resilience of our democracies and financial systems, exposing and addressing social and economic inequalities and promoting good mental health and more sustainable ways of living.
Why do some inventions take so long to arrive?
6 August 2021
Other obstacles are more subtle. Researchers at the Opportunity Insights project have analysed the phenomenon of “lost Einsteins”: young people (often girls or those from ethnic minorities or low-income families) who were discouraged because they never had an inventor as a role model.
Respond, Recover, Rejuvenate: How technology will drive SMB recovery
30 July 2021
These companies comprised 99.3 percent of all U.K. businesses, according to the National Federation of Self Employed & Small Businesses. Worryingly, however, by January 2021 more than one in seven U.K. businesses faced “imminent closure,” according to the Centre for Economic Performance (CEP) and the Alliance for Full Employment (AFFE).
Let me work from home, or I will find another job
27 July 2021
Jose Maria Barrero, Nicholas Bloom, Steven Davis. Employers in the US are grappling with whether and how to bring employees back to the office or other place of work. Using survey-based evidence, this column finds that four in ten Americans who currently work from home at least one day a week would seek another job if employers require a full return to business premises, and most workers would look favourably on a new job that offers the same pay with the option to work from home two or three days a week. High rates of quits and job openings in recent months appear to partly reflect a re-sorting of workers based on the scope for remote working.
The economy's long Covid
26 July 2021
Fortunately, though, we have some reasons for hope. One is that entrepreneurs tend to be over-optimistic which means new ones will start businesses even if older, debt-encumbered firms close. Stanford University's Nick Bloom and colleagues show that people working from home report that their productivity has risen slightly. MPC member Jonathan Haskel adds that working from home might increase potential output in another way - by enabling some of those outside the labour force because they are carers or disabled to take up work. And, he adds, investment in intellectual property has held up well during the pandemic. Given that it has big spillovers - one companies' knowledge benefits others - this too augurs well for future growth.
New York Times:
We Are Leaving ‘Lost Einsteins’ Behind
21 July 2021
In “Lost Einsteins: How exposure to innovation influences who becomes an inventor,” Alex Bell, Raj Chetty, Xavier Jaravel, Neviana Petkova and John Van Reenen, economists at U.C.L.A., Harvard, the London School of Economics, the U.S. Treasury and M.I.T., argue: ‘Children at the top of their 3rd grade mathematics class are much more likely to become inventors, but only if they come from high-income families.
80% of managers in the UK have little to no training - Debunk the leadership myth and eliminate the ‘Accidental Manager’
19 July 2021
2017 research from the Centre for Economic Performance at the London School of Economics found that four out of five of employees who are promoted to managerial roles are not suitably equipped to cope with leading a team, and this problem was particularly prevalent in Great Britain, with the country scoring just 3.03 out of five for management best practice, behind the US (3.31), Japan (3.23), Germany (3.21) and Canada (3.14).
Treasury Committee - Jobs, Growth, and Productivity after Coronavirus
12 July 2021
On Monday afternoon, Dr Anna Valero, Senior Policy Fellow, at the Centre for Economic Performance (CEP), and Deputy Director of the Programme on Innovation and Diffusion (POID) gave evidence to the Treasury Committee for their inquiry on 'Jobs, Growth, and Productivity after Coronavirus'. They discussed the outlook for economic growth post-pandemic, the causes of the UK’s lower level of productivity compared to other advanced economies, the causes of the ‘productivity puzzle’ in advanced economies and the specific challenges faced by the UK, and how Government policy can boost growth.
Nigeria: Shaping the Covid-19 Response - The Role of Social Science
08 July 2021
A recent article by the LSE Centre for Economic Performance and the Grantham Research Institute on Climate Change and the Environment suggests that the involvement of businesses and communities in the post-pandemic world will allow communities re-open in a manner that is beneficial for communities that have been ravaged by the virus.
Covid-19 has persuaded Americans to leave city centres
07 July 2021
Nicholas Bloom of Stanford University and Arjun Ramani, a student at that university who will take up an internship at The Economist this summer, have now supplied some answers. They find the pandemic has persuaded Americans to move out of city centres. But they have not gone all that far.
Capitalism after Covid: Conversations with 21 Economists
16 June 2021
As with Bretton Woods and with the Beveridge Report during WWII, the crisis generated by the Covid pandemic creates an opportunity to rethink our economic system. This new book offers the thoughts of 21 top economists representing most of the different fields of economics on the key challenges the world faces after the Covid pandemic.
- Raffaella Sadun: Management for the recovery: Promoting innovation and curbing the power of digital giants
- Philippe Aghion: Is ‘cutthroat’ capitalism more innovative?
- John Van Reenen: The Lost Einsteins
Pandemic investment could lift output
02 June 2021
Another report by the London School of Economics found that companies have been innovating at a much faster pace than they would have done otherwise. In a survey of several hundred companies, it found that more than 60 per cent of businesses invested in digital technologies and new management practices between March and July last year. A total of 45 per cent said that they had introduced new products or services during the period and about 38 per cent had adopted new digital capabilities. Crucially, 90 per cent of companies that have innovated during the coronavirus outbreak said that the changes would persist into the future and about three quarters said that their innovations had boosted profitability.
Capucine Riom and Anna Valero, the report's authors, said: "The unique nature of the crisis has forced many firms to make rapid changes to their ways of working and to adopt new digital technologies or management practices considered to be productivity-enhancing in normal times. If such innovation persists, it could induce lasting impacts on business performance and productivity".
Almost three-quarters of a million businesses ‘at risk of failure over next three months', economists warn
04 May 2021
Warnings of widespread business failure comes in an analysis by the John Van Reenen and Peter Lambert, using the latest Business Insights and Impact survey.
Going for growth
08 February 2021
On the 8th of February 2021, POID, along with the Centre for Economic Performance, held an online public event on how the UK and the wider world can return to sustainable growth following the COVID-19 pandemic.
Pulling together the lessons of 30 years of work on technology, management and productivity, John Van Reenen argued that innovation is the key to rekindling our economies.
Technology and the labour market
16 December 2020
On 16 December 2020, the Centre for Economic Performance held a panel event to mark the 10th anniversary of Sir Chris Pissarides Nobel Prize for Economics. In 2010, Chris was awarded the prize for Economics for his work with Peter A. Diamond and Dale Mortensen for their analysis of markets with theory of search frictions.
This December event, Technology and the labour market, focused on how advances in artificial intelligence, robotics, biotechnology and other areas are bound to have ever greater impacts on jobs and the labour market and asked, How will the employment prospects and wages of different types of workers be impacted by these developments? Are jobs going to disappear?
LSE press release
New LSE innovation research programme to help boost UK productivity
21 August 2020
A new Programme on Innovation and Diffusion (POID) based at LSE and led by world-leading economist Professor John Van Reenen will be funded by £4m from the Economic and Social Research Council (ESRC), part of UK Research and Innovation (UKRI).
It is part of a £30m package of measures by the ESRC - its largest ever single investment - to help solve the UK's stagnating productivity, as well as boost wage growth and drive up living standards. This research, which will inform significant decisions by governments and business leaders, has become more pressing given the need to support economic recovery in the context of the COVID-19 pandemic.
POID is rooted in the argument that productivity growth rests ultimately upon two elements: innovation - ideas that are new to the world - and the diffusion of these ideas across the economy. ESRC is contributing £4m, while LSE is providing £1m. The programme will be led by Professor Van Reenen, OBE, who is Ronald Coase Chair in Economics at LSE, and an associate and former director of the Centre for Economic Performance.
He is renowned for his research on productivity, which looks into the causes and consequences of innovation for economic life, both in terms of 'soft' innovation such as changes in management practices and 'hard' technologies such as Information Technology and Artificial Intelligence.
His work shows how important innovation is for economic growth, what can be done to increase management quality and productivity, and how and why governments should support research and development.
Professor Van Reenen said: "For over a decade, Britain's economy has suffered from stagnating productivity and wages. We need to reignite innovation and diffusion to recover from this pandemic and the other headwinds beyond."
Professor Simon Hix, Pro-Director for Research at LSE, said: "We very much welcome the opportunity the ESRC has given LSE to apply cutting-edge research in the social sciences to help solve what is perhaps the UK's most difficult economic policy challenge of our times."
Separately from LSE's work, the ESRC investment also includes a new Productivity Institute based at the University of Manchester.
Science Minister Amanda Solloway said: "Improving productivity is central to driving forward our long-term economic recovery and ensuring that we level up wages and living standards across every part of the UK.
"The new Productivity Institute and LSE's innovative research will bring together the very best of our researchers, boosting our understanding of the different drivers of productivity and helping people and businesses earn more in every area of our economy."
ESRC's Executive Chair, Professor Jennifer Rubin, said: "The Institute at Manchester and the LSE research programme address what is arguably the UK's biggest economic challenge. This funding represents the largest economic and social research investment ever in the UK, befitting its enormous potential to improve lives for millions of people.
"The Institute and programme will address low productivity by traditional measures, but also go beyond these measures to explore wider issues, including variation across places and what can be done to improve productivity for the UK as a whole; the importance of delivering a low carbon economy; relationships between well-being, productivity and skills; and the need for new ways of measuring productivity in a changing economic, technological and environmental context.
"The aim is to ensure that advances in knowledge inform the significant decisions and interventions that policy makers, businesses and individuals must make to improve productivity, and to achieve the attendant improvements in wages and living conditions that doing so can drive."
These new investments align with ESRC's Delivery Plan, which names 'Transforming Productivity' within the Productivity, Prosperity and Growth priority area.
They also complement ESRC's existing investments in the Productivity Insights Network (PIN), the Enterprise Research Centre, the What Works Centre for Local Economic Growth, and the Productivity Outcomes of Workplace Practice, Engagement and Learning (PrOPEL) Hub, a multi-disciplinary hub at Strathclyde Business School.