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Dialogue: 0,0:00:00.23,0:00:03.85,Default,,0000,0000,0000,,♪ [music] ♪
Dialogue: 0,0:00:13.73,0:00:15.60,Default,,0000,0000,0000,,- [Alex] In our previous videos,\Nwe've covered
Dialogue: 0,0:00:15.60,0:00:19.10,Default,,0000,0000,0000,,how capital accumulation\Ncan spur catch-up growth,
Dialogue: 0,0:00:19.10,0:00:21.56,Default,,0000,0000,0000,,but capital accumulation\Nbecomes less potent
Dialogue: 0,0:00:21.56,0:00:23.33,Default,,0000,0000,0000,,as countries grow wealthier.
Dialogue: 0,0:00:23.33,0:00:25.28,Default,,0000,0000,0000,,Countries on the cutting edge grow
Dialogue: 0,0:00:25.28,0:00:29.10,Default,,0000,0000,0000,,by developing more\Nand better ideas, but how?
Dialogue: 0,0:00:29.10,0:00:31.80,Default,,0000,0000,0000,,How do we get more\Nand better ideas?
Dialogue: 0,0:00:31.80,0:00:35.26,Default,,0000,0000,0000,,Individually, a good idea -\Nit might seem sort of random.
Dialogue: 0,0:00:35.26,0:00:37.55,Default,,0000,0000,0000,,Maybe it pops into your head\Nwhile you're in the shower
Dialogue: 0,0:00:37.55,0:00:40.11,Default,,0000,0000,0000,,or just before\Nyou go to sleep at night.
Dialogue: 0,0:00:40.79,0:00:44.78,Default,,0000,0000,0000,,But when we step back and look\Nat the creation of new ideas
Dialogue: 0,0:00:44.78,0:00:48.69,Default,,0000,0000,0000,,at a macro level,\Nit's definitely not random.
Dialogue: 0,0:00:48.69,0:00:51.98,Default,,0000,0000,0000,,There are key ingredients\Nthat spur more ideas.
Dialogue: 0,0:00:52.44,0:00:56.06,Default,,0000,0000,0000,,Ideas don't fall from the sky\Nlike manna from heaven.
Dialogue: 0,0:00:56.06,0:00:59.70,Default,,0000,0000,0000,,They grow in the soil\Nof good institutions.
Dialogue: 0,0:01:00.93,0:01:03.97,Default,,0000,0000,0000,,Let me give you a story\Nto help illustrate this point.
Dialogue: 0,0:01:03.97,0:01:06.73,Default,,0000,0000,0000,,You might never have heard\Nof the flying shuttle,
Dialogue: 0,0:01:06.73,0:01:08.88,Default,,0000,0000,0000,,but it was one of\Nthe most important inventions
Dialogue: 0,0:01:08.88,0:01:11.20,Default,,0000,0000,0000,,in the industrial revolution.
Dialogue: 0,0:01:11.20,0:01:13.60,Default,,0000,0000,0000,,The flying shuttle improved looms,
Dialogue: 0,0:01:13.60,0:01:17.17,Default,,0000,0000,0000,,making it easier to make fabric\Nquickly and cheaply,
Dialogue: 0,0:01:17.17,0:01:18.44,Default,,0000,0000,0000,,and that made it possible
Dialogue: 0,0:01:18.44,0:01:22.57,Default,,0000,0000,0000,,for people around the world\Nto have new clean clothes.
Dialogue: 0,0:01:22.57,0:01:25.67,Default,,0000,0000,0000,,For the very first time,\Nfashion became something
Dialogue: 0,0:01:25.67,0:01:28.42,Default,,0000,0000,0000,,that wasn't just\Nfor the very, very rich.
Dialogue: 0,0:01:28.42,0:01:32.07,Default,,0000,0000,0000,,The flying shuttle\Nwas invented by John Kay.
Dialogue: 0,0:01:32.93,0:01:35.35,Default,,0000,0000,0000,,And what did Kay get\Nfor his efforts?
Dialogue: 0,0:01:35.35,0:01:37.50,Default,,0000,0000,0000,,Weavers who thought\Nthat Kay's invention
Dialogue: 0,0:01:37.50,0:01:39.20,Default,,0000,0000,0000,,would put them out of work,
Dialogue: 0,0:01:39.20,0:01:41.24,Default,,0000,0000,0000,,they smashed the new looms,
Dialogue: 0,0:01:41.24,0:01:45.27,Default,,0000,0000,0000,,and they burned\NKay's house to the ground.
Dialogue: 0,0:01:45.27,0:01:48.44,Default,,0000,0000,0000,,Despite creating one\Nof the most important inventions
Dialogue: 0,0:01:48.44,0:01:52.26,Default,,0000,0000,0000,,to launch the Industrial Revolution\Nand improve the world,
Dialogue: 0,0:01:52.26,0:01:55.84,Default,,0000,0000,0000,,Kay, in fear for his life,\Nfled to France,
Dialogue: 0,0:01:55.84,0:01:57.99,Default,,0000,0000,0000,,where he ultimately died\Na poor man.
Dialogue: 0,0:01:57.99,0:01:59.29,Default,,0000,0000,0000,,I don't know about you,
Dialogue: 0,0:01:59.29,0:02:01.94,Default,,0000,0000,0000,,but if I saw\Nwhat happened to John Kay,
Dialogue: 0,0:02:01.94,0:02:05.31,Default,,0000,0000,0000,,I might not be too eager\Nto pursue my invention.
Dialogue: 0,0:02:05.31,0:02:07.75,Default,,0000,0000,0000,,Let's contrast Kay’s story\Nwith a great innovator
Dialogue: 0,0:02:07.75,0:02:10.43,Default,,0000,0000,0000,,from recent times, Steve Jobs.
Dialogue: 0,0:02:10.43,0:02:14.04,Default,,0000,0000,0000,,For his Innovations, not only\Ndid he earn lots of money,
Dialogue: 0,0:02:14.04,0:02:16.33,Default,,0000,0000,0000,,but also cultural awards.
Dialogue: 0,0:02:16.33,0:02:21.05,Default,,0000,0000,0000,,Jobs became an icon\Nthat people want to emulate.
Dialogue: 0,0:02:21.05,0:02:24.50,Default,,0000,0000,0000,,This goes back to institutions\Nand incentives.
Dialogue: 0,0:02:24.50,0:02:27.02,Default,,0000,0000,0000,,The institutions today\Nin the United States have enabled
Dialogue: 0,0:02:27.02,0:02:29.95,Default,,0000,0000,0000,,an amazing environment\Nfor entrepreneurs
Dialogue: 0,0:02:29.95,0:02:32.44,Default,,0000,0000,0000,,to thrive and create new ideas.
Dialogue: 0,0:02:33.35,0:02:36.57,Default,,0000,0000,0000,,If you have a great idea\Nin the United States, in America,
Dialogue: 0,0:02:36.57,0:02:41.09,Default,,0000,0000,0000,,American institutions create good\Nincentives to pursue that idea.
Dialogue: 0,0:02:41.09,0:02:43.77,Default,,0000,0000,0000,,You'll find incubators\Nand venture capitalists
Dialogue: 0,0:02:43.77,0:02:45.67,Default,,0000,0000,0000,,who can help you\Nstart your business,
Dialogue: 0,0:02:45.67,0:02:47.96,Default,,0000,0000,0000,,laws to protect your idea,
Dialogue: 0,0:02:47.96,0:02:51.41,Default,,0000,0000,0000,,a culture that idolizes innovators,
Dialogue: 0,0:02:51.41,0:02:54.64,Default,,0000,0000,0000,,and markets who will\Nreward you handsomely
Dialogue: 0,0:02:54.64,0:02:57.47,Default,,0000,0000,0000,,should your idea be\Nattractive to consumers.
Dialogue: 0,0:02:57.47,0:03:00.89,Default,,0000,0000,0000,,John Kay could only dream\Nof the sort of world
Dialogue: 0,0:03:00.89,0:03:03.12,Default,,0000,0000,0000,,where he could profit\Nfrom his work.
Dialogue: 0,0:03:03.12,0:03:05.76,Default,,0000,0000,0000,,In the United States\Nand in most of the world today,
Dialogue: 0,0:03:05.76,0:03:09.06,Default,,0000,0000,0000,,ideas are produced for profit.
Dialogue: 0,0:03:09.06,0:03:11.80,Default,,0000,0000,0000,,Seventy percent of the research\Nand development expenditures
Dialogue: 0,0:03:11.80,0:03:15.33,Default,,0000,0000,0000,,in the United States are funded\Nby the private sector,
Dialogue: 0,0:03:15.33,0:03:17.48,Default,,0000,0000,0000,,and an even higher percentage\Nare funded privately
Dialogue: 0,0:03:17.48,0:03:19.50,Default,,0000,0000,0000,,in places like Japan.
Dialogue: 0,0:03:19.50,0:03:21.81,Default,,0000,0000,0000,,So while an individual idea\Nmight seem
Dialogue: 0,0:03:21.81,0:03:24.17,Default,,0000,0000,0000,,sort of just like good luck,
Dialogue: 0,0:03:24.17,0:03:27.17,Default,,0000,0000,0000,,we see that ideas\Nspring from places
Dialogue: 0,0:03:27.17,0:03:31.39,Default,,0000,0000,0000,,that have the right institutions\Nin place to create new ideas
Dialogue: 0,0:03:31.39,0:03:33.57,Default,,0000,0000,0000,,and pursue those ideas.
Dialogue: 0,0:03:34.67,0:03:35.77,Default,,0000,0000,0000,,In the next video,
Dialogue: 0,0:03:35.77,0:03:38.38,Default,,0000,0000,0000,,we're gonna look\Nat one particular institution
Dialogue: 0,0:03:38.38,0:03:41.95,Default,,0000,0000,0000,,which is important\Nfor the production of ideas, patents.
Dialogue: 0,0:03:42.51,0:03:44.34,Default,,0000,0000,0000,,We'll also discuss the trade-offs
Dialogue: 0,0:03:44.34,0:03:48.25,Default,,0000,0000,0000,,of protection\Nversus the sharing of ideas,
Dialogue: 0,0:03:48.25,0:03:52.79,Default,,0000,0000,0000,,and what role can governments play\Nin the production of new ideas?
Dialogue: 0,0:03:54.43,0:03:56.07,Default,,0000,0000,0000,,- [Narrator] If you want\Nto test yourself
Dialogue: 0,0:03:56.07,0:03:58.04,Default,,0000,0000,0000,,click "Practice Questions."
Dialogue: 0,0:03:58.04,0:03:59.80,Default,,0000,0000,0000,,Or, if you're ready to move on,
Dialogue: 0,0:03:59.80,0:04:02.15,Default,,0000,0000,0000,,you can click\N"Go to the Next Video."
Dialogue: 0,0:04:04.94,0:04:07.54,Default,,0000,0000,0000,,You can also visit MRUniversity.com
Dialogue: 0,0:04:07.54,0:04:10.73,Default,,0000,0000,0000,,to see our entire library\Nof videos and resources.