The Annual Ken Dixon Lecture
Is neoclassical growth theory dead? Why have the biggest industrial economies stagnated since the financial crisis? Is the idea of a competitive threat from China due to a lack of understanding of economic theory or is it a genuine danger to our standard of living?
In Windows of Opportunity, Lord Sainsbury argues that economic growth is not driven by productivity growth taking place across all sectors at the same time, but by innovation increasing production efficiency and competitive advantage in individual sectors.
And because the firms in a country are involved in a competitive battle with firms in other countries, an increase in production efficiency or competitive advantage in an industry in one country can lead to a decline in growth in the same industry in another country, contrary to the standard neoclassical growth theory. He puts forward a new theory of economic growth and argues that governments can improve the rate of innovation in their economies through their education and training policies, innovation policies and corporate governance policies. At a time when the UK is showing a rate of productivity growth since the Financial Crash lower than all European countries other than Italy, this talk could not be more timely.
David Sainsbury was Finance Director of J. Sainsbury plc from 1973–90, Deputy Chairman from 1988–1992, and Chairman from 1992–1998. He became Lord Sainsbury of Turville in October 1997 and served as Minister of Science and Innovation from July 1998 until November 2006. He is the Chancellor of the University of Cambridge.