ABU DHABI – In the 1949 British film The Third Man, the character Harry Lime observes that, during the Borgia family’s rule in Renaissance Italy, the country “had warfare, terror, murder, and bloodshed. But [it] produced Michelangelo, Leonardo da Vinci, and the Renaissance.” By contrast, he contends, Switzerland’s 500 years of democracy and peace produced little more than the cuckoo clock.
While the implication that innovation and creativity are born only of conflict is extreme – in fact, Switzerland is a world leader in innovation – Lime makes a crucial point. Although peace, order, and political stability are widely perceived as essential prerequisites for invention, entrepreneurship, and economic development, there have been many exceptions to this rule – especially when it comes to creativity and innovation.
The United States is consistently ranked among the world’s top ten countries for innovation, including by INSEAD’s Global Innovation Index. But, on the Global Peace Index, it is ranked 88th of 153 countries. Likewise, the United Kingdom and the Netherlands rank, respectively, fifth and sixth on the Innovation Index, but only 28th and 29th on the Peace Index. Conversely, Bhutan is among the top 20 most peaceful nations, but does not even make it onto innovation indices.
Of course, crime, terrorism, conflict, and political instability severe enough to cause a total breakdown of law and order significantly impede creativity and innovation. But some countries show strong resilience in the face of pervasive violence and volatility.
For example, despite widespread violent crime, Mexico and South Africa have high levels of innovation (measured by patent filing and trademark registration). When terrorism indicators are taken into account, Lebanon, Turkey, Jordan, and Israel emerge as resilient innovators. Just as peace and stability do not always lead to creativity and innovation, fighting and uncertainty do not necessarily deter it.
Although peace, political stability, and civil order are important factors to consider when selecting a location for a large-scale foreign production or service operation, they are far less important when it comes to sourcing creativity and making the related investments. In particular, creative industries, such as animation, arts, design, and software – which are mostly based on individual skills and talent – tend to be more resilient to conflict than others.
Given this, officials, investors, and business leaders in search of revolutionary ideas, cutting-edge solutions, and untapped talent should not allow turbulence in some societies, or tranquility in others, to influence their decisions excessively. In fact, stepping out of one’s comfort zone may offer significant benefits.
Some evidence suggests that the prevalence of uncertainty may boost competition, thereby sparking innovation. Furthermore, social environments that are characterized by lower levels of consensus and higher levels of violence may be more likely than their more harmonious counterparts to catalyze radical innovation.
Lebanon’s experience supports this assessment. Despite its long history of political violence, its creative industries are expanding. According to a 2007 study of Lebanon’s copyright-based industries, conducted by the World Intellectual Property Organization, the main challenges facing the country’s software sector – an important part of its economy – include restricted markets, intense competition, a brain drain (loss of human capital), inadequate technology policy, a lack of government incentives, and rampant piracy. Violence is conspicuously absent from the list.
To be sure, violence is always a problem. But countries like Lebanon have become resistant to its effects – for example, by developing creative industries – diminishing its negative impact on economic, social, and intellectual development. In 2005, 10% of all new businesses in Lebanon were in the creative sector, and the copyright-based industries contributed 4.75% of GDP.
Similarly, despite high levels of political violence, Nigeria produces more than 1,000 films annually. Indeed, Nigeria’s film industry is the world’s third largest, after the US and India, and is second only to oil production in terms of its economic significance to the country.
According to a 2010 United Nations report on the creative economy, global trade in creative goods grew at an annual rate of 14% from 2002 to 2008. Meanwhile, exports of such goods from developing countries, which tend to experience more violence, grew at a rate of 13.5%, reaching $176 billion (43% of total world trade in creative industries) in 2008. Although overall global trade declined by 12% that year, trade in creative goods and services continued to expand. This has significant implications for political and business leaders – especially in turbulent regions like the Middle East.
In order to bolster economic growth and innovation amid conflict and volatility, policymakers and investors should focus on building the creative industries. The resilience and adaptability that they provide are crucial to supporting long-term economic growth and job creation – no matter what the future brings.
Sami Mahroum is Academic Director of Innovation and Policy at INSEAD.
Copyright: Project Syndicate, 2013.