policymakers demonstrate

Innovation and Growth: The Schumpeterian Perspective 51
income from around 90 per cent before 1991 to 57 per cent after 1991; and
(ii) move from a progressive tax schedule on capital income with a maximum
marginal tax rate at 72 per cent before 1991 to a flat rate of 30 per cent after
1991, Sweden has spurred innovation-led growth (as shown by the acceleration
in patenting and in productivity growth after 1991), while still maintaining
public services (health, schools and universities) of high quality and available
to all for free. Moreover, Sweden remains the second least unequal country
worldwide.
1.5 Technological Waves and the Debate on Secular Stagnation
1.5.1 The Debate
Based on the (apparent) slowing down of productivity growth in advanced
countries since 2001, Gordon (2012, 2013) holds that the IT revolution is over
and moreover, that the slowdown is there to last for a long period to come. His
view is that: (i) the IT wave exhausted its growth-enhancing power; and (ii) several
factors make the arrival of a new wave unlikely in the near future: in particular,
the demographic transition, the limits in the growth of educational attainment,
the rising income and wealth inequality resulting in mounting household
debts that add to government debts. We disagree with this pessimistic view for
at least three reasons. First, as pointed out by Dale Jorgenson and others, the IT
revolution has durably changed the technology for producing ideas: in particular,
it has made it easier for researchers to communicate and interact at long
distance, which has certainly contributed to increasing the flow of new ideas.
And we already see new ideas about to be implemented, which could revive
the IT wave, such as 3D chips and 3D printing. Second, there is an obvious
demand for new fundamental innovations, for example in renewable energies
and in bio techs, both by individuals and by governments. Third, as stressed by
Byrne et al. (2013), the apparent slowdown in the contribution of IT to productivity
growth, can be due to measurement problems: in particular Byrne et al.
(2013) make the argument that the BLS price index has not properly factored
in the continuous progress in semi-conductor technology: the rate of decline
in the price of semi-conductor embodying products has been underestimated
according to these authors.
But there is another consideration, made by Bergeaud et al. (2014), which
directly links to the focus of this chapter: the IT wave is diffusing with delays
to countries other than the US, and the delay is most important in countries
which have not yet fully implemented the structural reforms (university reform,
product and labour market liberalization) required for a successful transition to
innovation-based growth.