The role of innovation is often considered in the context of economic and technological development. Yet, it should be probed in the broader context of political and social wellbeing as well.
A number of nations are experiencing similar trends such as the continued erosion of the middle class, the loss of manufacturing jobs, and stagnant incomes, which point to a deterioration of economic and social wellbeing.
The decline of SMEs which hold up a large portion of an economy and increased unequal income distributions are associated with not only economic indicators such as living standards but also social wellbeing indicators like crime levels.
Along with financial reform and other necessary measures to bring back balance to the economy, industrial production and innovation which will spur the job/income growth are key drivers of economic recovery. Any policy interventions should be crafted in this framework.
In the case of U.S., new startups were the drivers for jobs. Unfortunately, entrepreneurial investment has been replaced by financial engineering (e.g., unfathomable derivatives).
Japan had a strong manufacturing based economy, but they squandered their world-class assets through bad debt and insolvent Kereitsu.
Korea had a chance to undertake a fundamental restructuring of its economy toward a solid innovation and production-based economy in the wake of the 1997 financial crisis.
The cases of the U.S., Japan and Korea show the importance of innovation and industrial production in the overall health of a nation. It may well prove that they are vital to sovereignty.
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