In the long run, as the Nobel laureate Paul Krugman has written, productivity is almost everything. But what drives productivity? The answer is know-how. It is because humanity has discovered, developed, deployed, and disseminated useful knowledge that an ever-rising proportion of the world’s population is at last escaping the “poor, nasty, brutish and short” lives of our ancestors, pithily described by the philosopher Thomas Hobbes in the 17th century.
Knowledge is also somewhat paradoxical. It is most productive when freely available. But the incentive to create it depends on the ability to restrict its use. The former consideration justifies dissemination. The latter justifies control. How, then, is this balance working?
The latest World Economic Outlook offers an illuminating chapter on how globalisation has been helping to spread useful knowledge. This analysis sheds light on the contemporary landscape of innovation, on the current diffusion of knowledge, on what is happening to productivity, on the role of global value chains and on the impact of competition on creation and use of knowledge.