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Dialogue: 0,0:00:00.52,0:00:03.52,Default,,0000,0000,0000,,♪ [music] ♪
Dialogue: 0,0:00:14.00,0:00:15.00,Default,,0000,0000,0000,,- [Alex] In our previous videos,\Nwe've covered
Dialogue: 0,0:00:15.00,0:00:17.85,Default,,0000,0000,0000,,how capital accumulation\Ncan spur catch-up growth,
Dialogue: 0,0:00:17.85,0:00:22.39,Default,,0000,0000,0000,,but capital accumulation\Nbecomes less potent
Dialogue: 0,0:00:22.39,0:00:24.43,Default,,0000,0000,0000,,as countries grow wealthier.
Dialogue: 0,0:00:24.43,0:00:25.43,Default,,0000,0000,0000,,Countries on the cutting edge grow
Dialogue: 0,0:00:25.43,0:00:27.43,Default,,0000,0000,0000,,by developing more\Nand better ideas, but how?
Dialogue: 0,0:00:27.43,0:00:30.64,Default,,0000,0000,0000,,How do we get more\Nand better ideas?
Dialogue: 0,0:00:30.64,0:00:33.64,Default,,0000,0000,0000,,Individually, a good idea -\Nit might seem sort of random.
Dialogue: 0,0:00:33.64,0:00:38.12,Default,,0000,0000,0000,,Maybe it pops into your head\Nwhile you're in the shower
Dialogue: 0,0:00:38.12,0:00:40.96,Default,,0000,0000,0000,,or just before\Nyou go to sleep at night.
Dialogue: 0,0:00:40.96,0:00:43.96,Default,,0000,0000,0000,,But when we step back and look
Dialogue: 0,0:00:43.96,0:00:46.38,Default,,0000,0000,0000,,at the creation of new ideas\Nat a macro level,
Dialogue: 0,0:00:46.38,0:00:49.38,Default,,0000,0000,0000,,it's definitely not random.
Dialogue: 0,0:00:49.38,0:00:52.18,Default,,0000,0000,0000,,There are key ingredients\Nthat spur more ideas.
Dialogue: 0,0:00:52.18,0:00:55.18,Default,,0000,0000,0000,,Ideas don't fall from the sky\Nlike manna from heaven.
Dialogue: 0,0:00:55.18,0:01:02.07,Default,,0000,0000,0000,,They grow in the soil\Nof good institutions.
Dialogue: 0,0:01:02.07,0:01:03.25,Default,,0000,0000,0000,,Let me give you a story\Nto help illustrate this point.
Dialogue: 0,0:01:03.25,0:01:06.25,Default,,0000,0000,0000,,You might never have heard\Nof the flying shuttle,
Dialogue: 0,0:01:06.25,0:01:08.26,Default,,0000,0000,0000,,but it was one of\Nthe most important inventions
Dialogue: 0,0:01:08.26,0:01:11.26,Default,,0000,0000,0000,,in the industrial revolution.
Dialogue: 0,0:01:11.26,0:01:15.32,Default,,0000,0000,0000,,The flying shuttle improved looms,
Dialogue: 0,0:01:15.32,0:01:16.91,Default,,0000,0000,0000,,making it easier to make fabric\Nquickly and cheaply,
Dialogue: 0,0:01:16.91,0:01:19.91,Default,,0000,0000,0000,,and that made it possible
Dialogue: 0,0:01:19.91,0:01:23.31,Default,,0000,0000,0000,,for people around the world\Nto have new clean clothes.
Dialogue: 0,0:01:23.31,0:01:26.31,Default,,0000,0000,0000,,For the very first time,\Nfashion became something
Dialogue: 0,0:01:26.31,0:01:30.43,Default,,0000,0000,0000,,that wasn't just\Nfor the very, very rich.
Dialogue: 0,0:01:30.43,0:01:33.43,Default,,0000,0000,0000,,The flying shuttle\Nwas invented by John Kay.
Dialogue: 0,0:01:33.43,0:01:35.00,Default,,0000,0000,0000,,And what did Kay get\Nfor his efforts?
Dialogue: 0,0:01:35.00,0:01:36.00,Default,,0000,0000,0000,,Weavers who thought\Nthat Kay's invention
Dialogue: 0,0:01:36.00,0:01:38.00,Default,,0000,0000,0000,,would put them out of work,
Dialogue: 0,0:01:38.00,0:01:43.55,Default,,0000,0000,0000,,they smashed the new looms,
Dialogue: 0,0:01:43.55,0:01:46.18,Default,,0000,0000,0000,,and they burned\NKay's house to the ground.
Dialogue: 0,0:01:46.18,0:01:49.18,Default,,0000,0000,0000,,Despite creating one\Nof the most important inventions
Dialogue: 0,0:01:49.18,0:01:52.06,Default,,0000,0000,0000,,to launch the Industrial Revolution\Nand improve the world,
Dialogue: 0,0:01:52.06,0:01:55.06,Default,,0000,0000,0000,,Kay, in fear for his life,\Nfled to France,
Dialogue: 0,0:01:55.06,0:01:57.11,Default,,0000,0000,0000,,where he ultimately died\Na poor man.
Dialogue: 0,0:01:57.11,0:02:00.11,Default,,0000,0000,0000,,I don't know about you,
Dialogue: 0,0:02:00.11,0:02:02.57,Default,,0000,0000,0000,,but if I saw\Nwhat happened to John Kay,
Dialogue: 0,0:02:02.57,0:02:05.57,Default,,0000,0000,0000,,I might not be too eager\Nto pursue my invention.
Dialogue: 0,0:02:05.57,0:02:08.05,Default,,0000,0000,0000,,Let's contrast Kay’s story\Nwith a great innovator
Dialogue: 0,0:02:08.05,0:02:11.05,Default,,0000,0000,0000,,from recent times, Steve Jobs.
Dialogue: 0,0:02:11.05,0:02:13.88,Default,,0000,0000,0000,,For his Innovations, not only\Ndid he earn lots of money,
Dialogue: 0,0:02:13.88,0:02:16.88,Default,,0000,0000,0000,,but also cultural awards.
Dialogue: 0,0:02:16.88,0:02:20.03,Default,,0000,0000,0000,,Jobs became an icon\Nthat people want to emulate.
Dialogue: 0,0:02:20.03,0:02:23.03,Default,,0000,0000,0000,,This goes back to institutions\Nand incentives.
Dialogue: 0,0:02:23.03,0:02:27.87,Default,,0000,0000,0000,,The institutions today\Nin the United States have enabled
Dialogue: 0,0:02:27.87,0:02:31.23,Default,,0000,0000,0000,,an amazing environment
Dialogue: 0,0:02:31.23,0:02:34.23,Default,,0000,0000,0000,,for entrepreneurs to thrive\Nand create new ideas.
Dialogue: 0,0:02:34.23,0:02:35.77,Default,,0000,0000,0000,,If you have a great idea\Nin the United States, in America,
Dialogue: 0,0:02:35.77,0:02:38.77,Default,,0000,0000,0000,,American institutions create good\Nincentives to pursue that idea.
Dialogue: 0,0:02:38.77,0:02:43.77,Default,,0000,0000,0000,,You'll find incubators\Nand venture capitalists
Dialogue: 0,0:02:43.77,0:02:45.91,Default,,0000,0000,0000,,who can help you\Nstart your business,
Dialogue: 0,0:02:45.91,0:02:48.91,Default,,0000,0000,0000,,laws to protect your idea,\Na culture that idolizes innovators,
Dialogue: 0,0:02:48.91,0:02:55.66,Default,,0000,0000,0000,,and markets who will\Nreward you handsomely
Dialogue: 0,0:02:55.66,0:02:58.24,Default,,0000,0000,0000,,should your idea be\Nattractive to consumers.
Dialogue: 0,0:02:58.24,0:03:01.24,Default,,0000,0000,0000,,John Kay could only dream\Nof the sort of world
Dialogue: 0,0:03:01.24,0:03:02.76,Default,,0000,0000,0000,,where he could profit\Nfrom his work.
Dialogue: 0,0:03:02.76,0:03:05.76,Default,,0000,0000,0000,,In the United States\Nand in most of the world today,
Dialogue: 0,0:03:05.76,0:03:08.16,Default,,0000,0000,0000,,ideas are produced for profit.
Dialogue: 0,0:03:08.16,0:03:11.16,Default,,0000,0000,0000,,Seventy percent of the research\Nand development expenditures
Dialogue: 0,0:03:11.16,0:03:15.94,Default,,0000,0000,0000,,in the United States are funded\Nby the private sector,
Dialogue: 0,0:03:15.94,0:03:17.93,Default,,0000,0000,0000,,and an even higher percentage\Nare funded privately
Dialogue: 0,0:03:17.93,0:03:20.93,Default,,0000,0000,0000,,in places like Japan.
Dialogue: 0,0:03:20.93,0:03:24.25,Default,,0000,0000,0000,,So while an individual idea\Nmight seem
Dialogue: 0,0:03:24.25,0:03:25.25,Default,,0000,0000,0000,,sort of just like good luck,
Dialogue: 0,0:03:25.25,0:03:27.25,Default,,0000,0000,0000,,we see that ideas\Nspring from places
Dialogue: 0,0:03:27.25,0:03:32.48,Default,,0000,0000,0000,,that have the right institutions\Nin place to create new ideas
Dialogue: 0,0:03:32.48,0:03:35.71,Default,,0000,0000,0000,,and pursue those ideas.
Dialogue: 0,0:03:35.71,0:03:38.71,Default,,0000,0000,0000,,In the next video, we're gonna look
Dialogue: 0,0:03:38.71,0:03:39.71,Default,,0000,0000,0000,,at one particular institution\Nwhich is important
Dialogue: 0,0:03:39.71,0:03:41.27,Default,,0000,0000,0000,,for the production of ideas, patents.
Dialogue: 0,0:03:41.27,0:03:44.27,Default,,0000,0000,0000,,We'll also discuss the trade-offs
Dialogue: 0,0:03:44.27,0:03:47.97,Default,,0000,0000,0000,,of protection\Nversus the sharing of ideas,
Dialogue: 0,0:03:47.97,0:03:50.97,Default,,0000,0000,0000,,and what role can governments play\Nin the production of new ideas?
Dialogue: 0,0:03:54.00,0:03:55.89,Default,,0000,0000,0000,,- [Narrator] If you want\Nto test yourself
Dialogue: 0,0:03:55.89,0:03:58.89,Default,,0000,0000,0000,,click "Practice Questions."
Dialogue: 0,0:03:58.89,0:04:03.02,Default,,0000,0000,0000,,Or, if you're ready to move on,
Dialogue: 0,0:04:03.02,0:04:06.02,Default,,0000,0000,0000,,you can click\N"Go to the Next Video."
Dialogue: 0,0:04:06.02,0:04:10.68,Default,,0000,0000,0000,,You can also visit MRUniversity.com
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to see our entire library\Nof videos and resources.