Innovation Is Essential For Economic Development

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There is no doubt that innovation is essential for economic development because it introduces novelty into the economic sphere for which the economy will not grow if the stream of novelty dry up (Kline & Rosenberg, 1986; Fagerberg, 2004). Moreover, it is important to industries and countries that want to maintain a competitive advantage (Goffin & Mitchell, 2005). Innovative countries have higher productivity and income than the less-innovative ones (Fagerberg, 2004). According to Hansen & Winther (2011), the United States’ higher Gross Domestic Product (GDP) growth and productivity during the 1990s was due to the large amount of Research and Development (R&D) investments compared the relatively low amount of R&D investments in Europe…show more content…
The spending on prescription drugs is on the rise. The United States spending on prescription drugs reached $329.2 billion in 2013, up 3.2 percent on a nominal basis and a rebound from the 1.0 percent decline in 2012 (Aitken et al, 2014). Furthermore, prescription drugs spending growth is anticipated to accelerate through 2019 due to increases in drug prices, as well as increases in the number of new drug approvals (Truffer et al, 2010). According to the recent report of EvaluatePharma’s World Preview: “For the first time in the pharmaceutical industry’s history, the consensus forecast of worldwide prescription drug sales is set to exceed one trillion dollars, reaching $1,017bn by 2020, equating to an average growth of 5.1% per year from 2013 to 2020.” Pharmaceutical R&D According to the Battelle Technology Partnership Practice: “the U.S. biopharmaceutical sector is one of the nation’s most dynamic innovation and business ecosystems. A large part of the modern biomedical economy is built upon a strong foundation of biopharmaceutical companies that perform and support advanced biomedical and technological R&D and act as the funnel and distribution engine for getting life‐saving and quality-of‐life improving therapeutics to the marketplace.” (PhRMA, 2013). However, the long-term success of the pharmaceutical industry depends heavily on a good quality R&D.
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