Politicians and pundits often talk about the importance of economic growth. While bigger isn’t always better, the premise behind the focus on growth is that it will improve the collective quality of our lives. More opportunities for all of us to contribute to society and make a better living for ourselves, our families, and our neighbors is an admirable goal. Economic progress over the centuries has undeniably led to longer, healthier and happier lives for many people.
But where does economic growth – which economists define as an increase in overall production per capita – actually come from? The classic industry that economists use to illustrate the multiple factors involved in growth is agriculture. While few of us work on a farm anymore, all of us have a general sense of the dynamics involved.
More output could come from increases in labor – for example, hiring more people on the farm should increase output, up to a point. Gains can also be made by investing in capital – perhaps a new tractor that increases efficiency. But innovation is also a major factor. Think of the gains in agricultural output through the usage of new or improved fertilizers, crop rotation methods, pest management, and irrigation technology, the so-called Green Revolution, that has helped dramatically reduce the incidence of famine throughout the world over the past half a century.
Economists estimate that roughly half of the growth in our economy comes from innovation, as opposed to increases in labor supply or capital spending. Which raises the next question: where does innovation come from? Most people think of innovation as occurring in far-away places, such as Silicon Valley, government labs or big multinational corporations, led by elite scientists, professors or technologists. But the reality is that innovation can and does happen anywhere.
Here in Maine, it might surprise some people that innovation is a major driver of our local economy. We have companies and organizations in the greater Biddeford & Saco region that are leveraging novel techniques and processes to grow their businesses. In some cases, the innovations represent new inventions that are patentable. But in other cases, the innovations are new or improved ways of doing things, or innovative marketing techniques to reach new customers or markets. The proverbial good old-fashioned Yankee ingenuity – coupled with classic Maine personality attributes that emphasize hard work, perseverance, and a can-do attitude, are making a huge difference in our local economic landscape.
In April, the Chamber of Commerce will be hosting an event at City Theater in Biddeford to highlight some of the innovative activity occurring every day in our area. Local business leaders will give short TED-like talks on how innovation is driving their business success. We’ll be sharing more details soon. It’s an exciting time in the Biddeford & Saco region, with innovative entrepreneurs in our community helping to lead the way.
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