The Demographics of Innovation

Conclusion

In this book, I have argued that the innovation capacity of a country is fundamentally determined by demographic factors, including the size, geographic concentration, and age structure of the population. The effect of demographics on innovation has been at work throughout history. I have surmised that the alternative rise of Western and Eastern civilizations throughout history can be partly attributed to demographic factors moderated by geopolitics and transportation technologies.

However, until recently, the effect of demographics on innovation has been underappreciated, partly because of the seemingly negative effect of a large, concentrated population on resources and the environment. Malthus was one of the most famous economists and demographers ever, and his theory was the theoretical foundation for the anti-fertility movement in many developing countries in the 1970s and 1980s. The effect of aging was underappreciated also because aging is a very recent phenomenon in just a few developed countries, such as Japan.

Going forward, I believe that the effect of demographics on innovation will be increasingly prominent for the following reasons.

1. As technology progress in the energy sector outpaces population growth, the resource/environment bottleneck is diminishing. The Malthusian worry of a large population is fading, and economists will focus increasingly on the positive side of a large population, especially its effect on innovation.
2. The emergence of service ...