Trying too hard to "innovate" can actually backfire and make a country’s economy grow slower in the long run.
SSRN · March 13, 2026 · 6284998
Why it matters
We usually assume more innovation always equals more progress. This research shows that when incentives shift toward short-term productivity tweaks rather than fundamental breakthroughs, the 'innovation' we measure actually cannibalizes the work needed for long-term prosperity.
From the abstract
Standard growth models treat innovation as one-dimensional: higher innovation effort implies faster frontier expansion and stronger long-run growth. This paper shows that this inference fails when innovation is multidimensional. Innovation effort can be directed either toward expanding the technological frontier or toward improving productivity relative to an existing frontier, but only the former sustains long-run growth. Shifts in private incentives can reallocate innovation toward activities