Every year the awarding of Nobel prizes raises controversies about their legitimacy. This year has been no exception: the Peace Prize awarded to María Corina Machado, has divided the political world – beyond the motivations of democracy and gender – into two irreconcilable camps between the defenders (open or covert) of the dictator Nicolás Maduro and the admirers of a brave and charismatic woman.
A controversy of less media echo has arisen around the Nobel Prize in Economics, awarded to Joel Mokyr (50%), Philippe Aghion and Peter Howitt, for their contributions to the theory of “endogenous” growth through the so-called “creative destruction”. Like most of my readers, I am a layman in economic theories, which is why it is necessary to clarify the terms in quotation marks.
Endogenous growth refers to growth driven by domestic factors (human capital, technological innovation, knowledge, and productivity), in contrast to growth dependent on natural resources or foreign investment (exogenous growth). Japan exemplifies the endogenous model and Bolivia the exogenous one.
For its part, creative destruction is a concept coined in 1942 by the Austrian historian and economist Joseph Shumpeter, who, in addition to highlighting the role of culture and education in economic growth, observed that a technological innovation improves the quality of a product while making it obsolete, destroying the value of the previous one.
An illustrative case is the evolution of cell phones: each new model improves and replaces the previous one, vanishing all the economic and research effort invested in the old product. However, this is not always the case: an exception is the book whose innovations (the e-book) have not managed to completely displace the printed book.
The truth is that investment in R&D (Research and Development) is ephemeral and expensive, socially and economically, so the central question arises: who should lead R&D, the State or private companies? The liberal view advocates excluding the state or, as the laureates suggest, limiting it to “protecting” small newcomer from the power of the incumbent ones.
The reality, however, is more nuanced. On the one hand, China offers a successful counterexample: with integrated state planning, from research to industrialization to commercialization, it has achieved spectacular economic growth over four decades, lifting 800 million people out of poverty. Even in the US, apart from the myths of “garage” computer companies, R&D depends heavily on the military-industrial complex that funds basic research at universities with public funds, while application and production fall to the private sector.
Despite these cases, Ph. Aghion and P. Howitt tend to downplay the importance of public funding of R&D, apart from the fact that, in Latin America, R&D, when it exists and is not discouraged, as under Milei in Argentina, is usually disconnected from the productive apparatus.
Personally, I believe that, everywhere and especially in developing countries, the role of the State is essential to finance basic research, while the application of the results should correspond mainly to private, competitive and efficient companies.
In Bolivia, after the last two lost decades, it is expected that the new government will promote research, and avoid wasting resources on ventures that the private sector knows how to execute better. Incidentally, we will have a youth with a greater critical spirit.