Special Address: 'What the Collective Brain teaches us about Economic Policy'

Inclusivity is a key determinant for the proliferation of innovation in a society.

Innovation stems from increased knowledge growth in society.

Knowledge growth in a society is a function of population size, inclusivity and cohesiveness. The larger the population, the more innovative they are.

Inclusivity, or equitable access to the Collective Brain, matters for diffusion of knowledge and innovation.

Innovative societies tend to have higher access to role models which is crucial for encouraging innovation. Exclusion of certain parts of the population from the Collective Brain has real longterm costs to a country.

Inclusion can be imperfect.

Inclusion is imperfect along many dimensions due to socioeconomic class, gender, ethnicity and immigration status or country of birth. Deeply engrained stereotypes along gender or racial lines can also become a deterrent of innovation.

Trust and greater cohesion within society are essential for innovation and economic growth

Trust is important as all economic interactions require some form of trust.

There is a strong positive relationship between trust and national income level. Countries with a higher level of trust tend to have higher income per capita.

If trust is important, why don’t all countries trust more?

This could be attributed to adverse historical shocks, a distrust trap (self-perpetuating distrust between groups), or a discrepancy between the optimal level of trust at a society-level versus the individual-level.

Well-designed policies can help close the trust gap in a country.

Trust and cohesion can be increased with policies that encourage integration and shared experiences of different groups of society. Trust can also be built among Firms via policies that facilitate an open and competitive environment.

The mobility of population via migration is beneficial for all involved.

Migration increases the rate of innovation and productivity of the population.

We often focus on the short-term cost of a growing immigrant population while ignoring the benefits that tend to be reaped further down in the future.

‘Brain Drain’ should not be negatively perceived.

Countries with higher immigrant population have historically been more innovative and hence, wealthier. Immigrants tend to spur innovation in their country of residence, while benefiting their home countries by building networks and maintaining relationships.