Updated: 5/16/2006; 12:30:30 PM.

Ken Novak's Weblog
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daily link  Sunday, April 17, 2005

EU vs. USA: Thorough report from Sweden comparing the economies, with interesting results. "IF THE EU WERE A PART of the United States of America, would it belong to the richest or the poorest group of states? .. France, Italy and Germany have less per capita GDP than all but five of the states of the USA .. [Sweden], if it were a part of the USA, would rank as one of the very poorest states in that Union.. the American economy has been growing faster than the economies of many European countries in recent decades, not least those of countries like France, Germany and Sweden... This puts Europeans at a level of prosperity on par with states such as Arkansas, Mississippi and West Virginia. Only the miniscule country of Luxembourg has higher per capita GDP than the average state in the USA [and that is attributed to an influx of foreign capital]..

Per capita private consumption is far higher in the USA than in most European countries. In the USA the average person spends about $9,700 more on consumption annually, a difference of 77 per cent. The average American,
in other words, spends nearly twice as much (77 per cent more) on consumption as the average EU citizen. This is due to a higher level of GDP but also to taxation policy. Allowance for tax differences would reduce these big differences somewhat, but American consumption would still far outweigh its European counterpart."

Additional info found in an NYT article that constrasts these numbers with the common (faulty) perception of Scandinavian wealth.  The biggest factor was the growth rates in the 1990s, with the US adding 2% more GDP every year than the EU.

  11:22:45 PM  permalink  

Mere mortals and great ideas: FT Review of the new book Democratizing Innovation. "[The book] argues that "users are the first to develop many, and perhaps most, new industrial and commercial products". This being so, competitive advantage might be expected to flow to manufacturers who systematically harvest this crop of ideas. For example, 3M, the industrial products group, has had programmes in place since 1996 to harness ideas generated by lead users. After crunching the numbers, von Hippel found that "lead-user-developed product concepts" at 3M were likely to be more novel, enjoy higher market share, have greater potential to develop into an entire product line and be more strategically important.

Mass-producing products developed by lead users is only one possible approach. Alternatives include selling toolkits with which customers can build their own creations, or developing products that complement user innovations.

This latter strategy is useful in circumstances where - to the consternation of economists - lead users give away their innovations. Thus the Linux operating system was developed by members of the open-source software community, many of whom are lead users of computing power. Since Linux is freely available, commercial software companies are unable to sell proprietary versions. Instead, they have responded with software and services that complement Linux.

The toolkits approach has been used by companies including International Flavors & Fragrances, which supplies customers with the tools to design their own food flavours.

These examples turn on its head the traditional division of labour between producer and consumer. .. This has profound implications not only for corporate management but also for public policy. If the goal of policy is to increase social welfare by encouraging innovation - and if user-generated innovation really is more successful than other types - then rules and regulations should encourage this activity. At issue here is patent law, legal constraints on product modification and tax breaks for research and development. Why should manufacturers get all the incentives when users do such valuable work? "

  11:02:01 PM  permalink  


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Last update: 5/16/2006; 12:30:30 PM.