INDEX

• Acemoglu, Daron, 35, 36, 155
• Achievement, entrepreneurs and need for, 109
• Additive robots: defined, 156; effect on real wages, 157–158, 162, 163–164, 170–173, 186, 191, 193, 196–197, 199; factor-price frontier and, 176–177; growth effects of, 25–26; indigenous innovation responding to price incentives and, 193–199; innovation and, 199; long-run equilibrium case of, 183; relative prices, indigenous innovation, and, 27–28, 190–200; results of introduction of, 157–158; retrofitting conventional machines with, 157; as substitute for human labor, 158–164; two-sector model with zero technological progress and no innovation and, 191–193. See also Robots; Wage effects of additive and multiplicative robots
• Agency: dynamic economies and, 8–9; loss of sense of, 16; modern economies and people’s sense of, 3
• Aggregate employment, 186–187
• Aggregate output, GDP and relation among labor, capital, and, 32–34
• Aggregate production function: additive robot, 176, 179; multiplicative robot, 177–178
• Aghion, Philippe, 4, 35, 36, 37, 194
• Akcigit, Ufuk, 35
• AK model of endogenous growth, 164
• Algan, Yann, 124, 125, 143
• Amadeus, 97, 99
• Amador, João, 35
• American Airlines, 97
• Antitrust policy, dynamism and, 204
• Arinbjarnarson, Kolbeinn, 97, 99
• Aristotle, 13
• Arnórsson, Ágúst, 111
• Arrow, Kenneth, 4
• Artificial intelligence (AI): questions over application of, 203; redirection of innovation toward advances in, 17–18; robots and, 153–154
• Asset pricing relationship, two-sector model with zero technological progress and no innovation, 192
• Attitudes that characterize innovators, 87–88
• Australia: estimates of best-practice factors for, 66; values and indigenous innovation in, 116, 117
• Automation: responding to, 203, 205; study of innovation and, 36–37

• Balanced-growth path, 26, 157–158, 172–173
• Banfield, Edward C., 109–110, 125
• Banque de France data, 11, 38
• Barro, Robert, 34, 35
• Baumol, William, 35, 37, 106
• Belderbos, Rene, 35
• Belgium, level of traditionalism in, 129–130
• Bergeaud, Antonin, 38
• Bergson, Henri, 37–38
• Best practices: factors and estimates of, 66–67; frontier of, 35; intercountry differences in, 21; TFP and GDO per capita growth and catching up to, 46, 47
• Best-practice shocks, 55
• The Birth of the Modern (Johnson), 6
• Bisin, Alberto, 125
• Bloom, Nicholas, 199
• Bojilov, Raicho, 110, 116, 126
• Bowman, Nancy, 109
• Bretton Woods, 108
• British Airways, 99
• Brockhaus, Robert H., 109
• Brynjolfsson, Eric, 154
• Bureaucracy, innovation, entrepreneurship, and minimizing, 204
• Business culture, shift to short-termism in, 108
• Businesspeople, as source of indigenous innovation, 2, 6, 107
• Butler, Jeffrey V., 124

• Caddell, Patrick, 16
• Cahuc, Pierre, 124, 125, 143
• Calidris, 88, 97–101; Calidris Booking Integrity, 97; Calidris Empowerment solution, 97; Calidris Total Revenue Integrity, 97, 98; enjoyment, as key value at Calidris, 101; expansion of, 99–100; mutual success, as key value at Calidris, 100–101; operations and financing, 100; Oskarsson’s background, 98; product background, 98–99; values and keys to success at, 100–101
• Canada: ability to take advantage of US-based innovation shocks, 59, 60; estimates of best-practice factors for, 66; indexes of modernism and traditionalism and, 129; indigenous innovation in, 130; level of traditionalism in, 130
• Canonical correlations, 111, 112–115; main concepts, 120
• Capital: GDP and relation among labor, aggregate output, and, 32–34; malleability of, 156, 157; TFP index and, 38; used as conventional machines or robots, 156
• Capital accumulation equation, in two-sector model with zero technological progress and no innovation, 192
• Capital good: fall in price of and fall in value of new innovation, 198; fall in price reduces worker demand, 198
• Capital intensity, adoption of multiplicative robots and, 165
• Capitalism, enabling innovation, 107
• Capital series, 38
• Carter, Jimmy, 16
• CCP Games, 88–89, 90
• Center on Capitalism and Society, 5–6
• Cervantes, 10, 12, 13
• Cette, Gulbert, 38
• Children taught imagination, 121
• Children taught independence, 121; innovation and, 113, 114, 115
• Children taught obedience, 121: innovation and, 113, 114, 115, 118, 119; output and, 110
• Children taught tolerance, 121
• China: capital controls in 90; game developers in, 91
• Cobb, Charles, 32–33
• Cobb-Douglas: production function, introduction of multiplicative robots and, 182; technology, study of innovation and automation using, 36
• Coimbra, Carlos, 35
• Coleman, James, 125
• Communality coefficient, 120
• Competition: acceptance of, 24, 100, 109, 110, 113–115, 119, 121, 201; attitude toward, 112, 128–129; IT sector and, 82
• Conard, Nicholas, 2–3
• Confucianism, 127
• Consumption good, indigenous innovation responding to price incentives and, 195
• Consumption per capita: introduction of additive robots and, 157, 172, 180, 181, 196–197; introduction of multiplicative robots and, 158, 173
• Consumption-wage ratio, 186, 187
• Conventional machines: AI-enabled robots vs., 155–156; retrofitted with additive robots, 157
• Convergence: of GDP per capita, 38–39; of job satisfaction, 145; technology and, 46
• Copenhagen Stock Exchange, 102, 103
• Corporatism, 203
• Corporatist economies, 13, 107
• “Cost disease,” 37
• Country effects: on entrepreneurship, 142; relation between index of modernism and estimated, 132, 138, 139, 140–141; relation between index of traditionalism and estimated, 139, 140; relation between indigenous innovation and estimated, 141–142; relation between TFP growth and estimated, 140–141
• Country of origin: impact on entrepreneurial activity, 135–136; individual economic performance and, 124; probability of having high income and, 136; trust and, 125
• Cromie, Stanley, 109
• Cumulative imported innovation, estimates of, 73–74, 131. See also imported innovation
• Cumulative indigenous innovation, estimates of, 61–65, 69–73, 70–74, 131. See also indigenous innovation
• CybeleTech, 175

• Dalio, Ray, 201
• Deaton, Angus, 16
• Declaration of Independence, 127
• Deep learning algorithms, 175
• Deindustrialization, in American, Britain, and France, 15
• Democracy, capitalism and, 203
• Denmark: indexes of modernism and traditionalism and, 129; indigenous innovation in, 73; level of traditionalism in, 130; values and indigenous innovation in, 116, 117
• Dickens, Charles, 6, 12
• Dirigisme, 13
• Discontent, loss of innovation and, 15, 201–204
• Dissatisfaction, of many participants in Western economies, 15–16
• Douglas, Paul, 32–33
• Downward bias, growth accounting and, 80
• Dynamic economies: benefits of, 8–9; characteristics of, 13; emergence of, 7–8
• Dynamic general-equilibrium analysis, 179–182; additive robots, 179–181; multiplicative robots, 181–182
• Dynamism, 13; innovation and, 5; intercountry and intertemporal variations in, 107; modern values and, 9–10, 108, 111, 116, 204; question of loss of, 11–16; rise of, 6–8; roots of concept, 37; testing existence of, 14; testing theory of, 10–14

• Earned Income Tax Credit, 205
• Economic culture. See Values; Values, entrepreneurship, and innovation; Values, innovation and
• Economic freedom, innovation and, 112, 113, 114, 115, 121
• Economic growth: defined, 2; episodic nature of, 6
• Economic independence, 13
• Economic performance: innovation, job satisfaction, and, 25; innovation and, 25, 106–108; intercountry differences in, 3; intertemporal differences in, 3–4; societal values and, 12–13
• Economy, experiential dimension of, 3
• Education, reintroducing arts into, 204
• Effective capital intensity: adoption of additive robots and, 162; introduction of both additive and multiplicative robots and, 169–170, 171
• Elasticity of substitution, study of innovation and automation using, 36
• Elements of Economics of Industry (Marshall), 153
• Elites, role in traditional economies, 13
• Emirates (airline), 99
• Employment: effect of introduction of robots, 19; taxation and, 37
• Employment rate: innovation and, 112, 113, 115; values and, 118
• Endogenous growth, 4, 5, 36, 83
• Entrepreneurs: country of origin and, 124, 135–136; estimated country effects on probability of becoming, and having high income, 132, 135–136; personality characteristics of, 109; role in standard theory, 2, 3; Schumpeter definition of, 109
• Entrepreneurship, country effects on, 142. See also Values, entrepreneurship, and innovation
• Environment, modification of individual belief and attitudes and, 125
• Euler equation, 179, 181, 192
• European Values Study (EVS), 121–122, 145, 147
• Exogenous innovation, 11, 202. See also imported innovation.
• Experimentalism, the modern and, 6

• Face2Gene, 175
• Factor intensity: introduction of additive robots and, 177, 180; introduction of multiplicative robots and, 176, 177, 178, 184, 185
• Factor-price frontier, 176–179, 187
• Factory building and physical structure prices: introduction of additive robots and, 180–181, 183, 184–185; introduction of multiplicative robots and, 182, 184–185
• Factory buildings and physical structures: long-run equilibrium with endogenous supply of, 183–184; wage effects of robots and, 26–27. See also Wage effects of additive and multiplicative robots, alongside factory buildings and physical structures
• Failure: innovators and acceptance of, 23, 91; the modern and, 6
• Fairness, attitude toward, 128
• Fertility rate, 122; innovation and, 112, 113, 114, 115; values and, 118
• Fidelity Fund, 102
• Financing: for Calidris, 100; for Össur, 102–103; for Plain Vanilla, 92–94; for Solfar Studios, 90
• Finland: estimates of best-practice factors for, 66; indigenous innovation in, 73; TFP growth and recovery in indigenous innovation, 73, 75; values and imported innovation in, 115, 116, 117
• Finnair, 99
• First Industrial Revolution, 8, 155
• Floating exchange rate, effect on growth rates, 108
• Flourishing, 13. See also Mass Flourishing (Phelps)
• France: ability to take advantage of US-based innovation shocks, 59, 60; cumulative indigenous innovation in, 61–65, 69–72; deindustrialization in, 15; discontent over slow wage growth in, 203; estimates of best-practice factors for, 66; indexes of modernism and traditionalism and, 129; indigenous innovation in, 21, 49; indigenous innovation in compared to US, 77, 79; slowdown in TFP growth in, 41; TFP growth rate and catching up with best practices, 73, 74; TFP index for, 39, 40; trends in GDP per capita, 38–39; values and indigenous and imported innovation in, 116, 117
• Frydman, Roman, ix
• Fridriksson, Thorsteinn, 92, 94

• Game of Thrones, 95
• G7 countries: estimated cumulative indigenous innovation, 71; propagation of US indigenous innovation shocks across, 59, 60
• GDP: cumulative growth of before 1941 to 2013, 42–43; growth and social trust, 123–134; relation among capital, labor, and aggregate output, 32–34; TFP growth and growth in, 21, 32, 39–41, 47; TFP index and, 38; trends in, 38–39
• General Social Survey (GSS), x, 123, 134, 136, 139
• German Historical School, 2
• Germany: cumulative indigenous innovation in, 61–65, 69–72; estimates of best-practice factors for, 66; indexes of modernism and traditionalism and, 129; indigenous innovation in compared to US, 78, 79; slowdown in TFP growth in, 41; TFP growth rate and catching up with best practices, 73, 75; TFP index for, 39, 40; trends in GDP per capita, 38–39; US-based innovation shocks and, 60; values and indigenous and imported innovation in, 116, 117
• Giuliano, Paola, 124
• Global productivity, need for indigenous innovation to grow, 49
• Golden Rules, of economic growth, 154
• Good life: conception of, 13; indigenous innovation and, 5
• Goos, Maarten, 155
• Graetz, Georg, 155
• Griffin, Emma, 6
• Grisby, John, 35
• Grossman, Gene M., 194
• Growth accounting, 32–34, 79–80, 84
• Growth effects of additive and multiplicative robots, 25–26
• Growth model, Solow’s, 19
• Guiso, Luigi, 124, 125
• Gunnarsson, Thor, 88

• Happiness: indigenous innovation and measured, 148–150; low levels of innovation and, 25
• Hayek, Friedrich A., 7, 37, 106
• Helpman, Elhanan, 194
• Hémous, David, 36
• Henson, Robin K., 114
• Heritage Foundation, 112
• High income, impact of countries of origin on, 136
• Hoffman, Reid, 92
• Hoon, Hian Teck, 37
• Horizontal transmission of values, 125
• Hotelling, Harold, 111
• Household consumption, introduction of additive robots and, 181
• Household intertemporal optimization: introduction of additive robots and, 179; introduction of multiplicative robots and, 181; in two-sector model with zero technological progress and no innovation, 192
• Howard, Philip, 204
• Howitt, Peter, 4, 35, 37, 194
• Human capital, economic growth and, 41
• Humanist values, 9–10
• Human labor: additive robots as substitute for, 158–164; multiplicative robots augmenting, 164–167
• Hume, David, 7, 37

• IBM, 97
• Iceland: capital controls in, 90; export orientation of Icelandic companies, 91; desirable qualities for employees at start-ups in, 91, 96; hierarchical structure of companies in, 90–91; indigenous innovation in, 73; infrastructure for innovators in, 90
• Icelandair, 98
• Iceland’s successful innovators, 22–23, 87–104; Calidris, 97–101; interviews, 88–103; Össur, 102–103; overview, 87–88; personal and cultural characteristics and, 89, 103–104; Plain Vanilla, 92–97; Solfar Studios, 88–91
• Iceland Stock Exchange, 102
• Identity politics, 203
• IGN enterprises, 93, 95
• Imaginativeness, dynamism and, 7
• Immigrants, TFP growth in fields with more, 36. See also Country of origin
• Immiserization, 181
• Imported innovation: defined, 21, 35, 49; relation between index of traditionalism and, 137, 138; TFP growth and, 35, 53, 130–131; trends in postwar, 57, 58, 59; values and, 115–117. See also Cumulative imported innovation
• Income: slow growth of, 202; universal basic, 205; urban vs. rural, 202–203
• Income inequality, study of automation and, 37
• Independence, children taught, 121; innovation and, 113, 114, 115
• Index of modernism, 24–25, 126–130, 201; relation between annual indigenous innovation and, 134, 137, 138; construction of, 127–128; by country, 129; country effects as proxies for, 124, 132, 139; inherited modernism and, 131; negative correlation between index of traditionalism and, 130; relation between estimated country effects and, 138, 140; TFP growth and, 124, 132, 133, 137
• Index of traditionalism, 24–25, 124, 120–126; relation between annual indigenous innovation and, 135, 137–138; by country, 129; negative correlation between index of modernism and, 130; relation between estimated country effects and, 139, 140; relation between imported innovation and, 137, 138
• Indigenous innovation, 5; additive robots, relative prices, and, 27–28, 190–200; businesspeople as source of, 107; choice of measure and possible bias, 79–80; decline in the West, 16–17; defined, 49; dynamism and, 5, 15, 204; economic performance and, 106–108; estimates of best-practice factors, 66–67; example of, 49–52; falling job satisfaction and low levels of, 25; from the grassroots, 13, 201; general model of, 53–55; impetus for, 50; inherited beliefs and, 131–137; during the IT revolution, 22, 68–84, 73–75; leaders in, 21–22; propagation of US, 57–60; reasons for failure of adoption of, 50; relation between estimated country effects and, 141–142; relation between index of modernism and, 134, 138; relation between index of traditionalism and, 135, 138; responding to price incentives, 193–199; sources of, 48–49, 205; TFP growth and, 35, 130–131; time series of, 11; transmission mechanism, 55–56; trends and global transmission, 50, 56–65. See also Cumulative indigenous innovation
• Indigenous innovation during the IT revolution, 22, 68–84; choice of measure and possible bias, 79–80; comparison of annual rates of indigenous innovation during the IT revolution, 73–75; cumulative indigenous innovation after World War II, 69–73; dynamics of indigenous innovation in major economies, 75–79; innovation in other industries and, 80–83
• Individual beliefs and attitudes, environmental modification of, 125
• Individualism, 12; entrepreneurship and, 109; modernity and, 10, 107, 127
• Inequality, attitudes toward, 128
• Inherited beliefs, indigenous innovation and, 131–137
• Initiative, exercising in dynamic economy, 8
• Innovation: adoption of innovation originating abroad, 49; attractiveness of, 96; difficulty of measuring level and growth of, 34; discontent and loss of, 201–204; dynamic economies and, 7–8; force of values and, 23–24; interaction with relative prices, 83, 84; job satisfaction, and performance in Western European countries and, 144–150; labor and direction of, 17–18; measure of, 79; micro-level data to study, 35–36; original ideas from people in general, 2–3; scientists as source of, 106–107; slowdown in, 15; sources of, 2–3; standard theory’s explanation of, 2; study of automation and, 36–37, 153–200; Western Europe and low rates of, 25. See also Imported innovation; Indigenous innovation; TFP growth; Values, entrepreneurship, and innovation
• Innovation, as source of rapid growth, 31–47; data and descriptive analysis, 38–46; stylized facts on, 46–47; TFP and, 32–34. See also TFP growth
• Innovation (TFP) shocks, 21, 34; global propagation of, 35; imported innovation and, 53; nontransmissible innovation, 54–55; transmissible, 54–56
• Innovators. See Iceland’s successful innovators
• Intercountry differences: in attitudes toward modern values, 11; in catching up to best practices, 21; in economic performance, 3; in indigenous innovation, 14
• International Federation of Robotics, 154
• Intertemporal differences in economic performance, 3–4
• Intertemporal shifts in indigenous innovation, 11
• Investment, loss in innovation and slide in rate of, 202
• Ireland: indexes of modernism and traditionalism and, 129; values and indigenous and imported innovation in, 115, 116, 117
• Italy: cumulative indigenous innovation in, 61–65, 69–72; estimates of best-practice factors for, 67; indexes of modernism and traditionalism and, 129; level of traditionalism in, 130; TFP growth rate and catching up with best practices, 73, 75; US-based innovation shocks and, 60; values and indigenous and imported innovation in, 116, 117
• IT industry: as innovation leader in US, 81; lack of transformative nature of innovations, 81–83
• IT revolution. See Indigenous innovation during the IT revolution

• Japan: adopting best practices, 80; estimates of best-practice factors for, 67; indexes of modernism and traditionalism and, 129; indigenous innovation in compared to US, 78, 79; job satisfaction, male labor force participation, fertility rate, and employment rate in, 118, 119; as least innovative economy, 115, 116; slowdown in TFP growth in, 41; TFP growth rate and catching up with best practices, 73, 75; TFP index for, 39, 40; trends in GDP per capita, 38–39; US-based innovation shocks and, 60; values and indigenous and imported innovation in, 116, 117
• Jean, Sébastien, 125
• Jiménez, Miguel, 125
• Job achievement, 114, 115, 121
• Job initiative, 114, 115, 121
• Job performance, innovation and, 144–150
• Jobs, Steve, 92
• Job satisfaction, 122; downward trend in, 16, 25, 202; innovation and, 25, 112, 113, 115, 144–150; intercountry differences in, 3; nonmaterial performance, values and, 118
• Job security, 121; innovation and, 113, 115
• Johnson, Paul, 6
• Johnson, Simon, 37
• Jones, Benjamin, 36
• Jones, Charles, 36
• Jonsson, Arni, 92–93, 95, 96, 97

• Kaldor, Nicholas, 36
• Kaupthing, Össur and, 102–103
• Keefer, Philip, 110
• Kerr, William, 35
• Keynes, J. M., 1–2
• Knack, Stephen, 110
• Knight, Frank, 1
• Knightian uncertainty, 1, 2, 23
• Kocoglu, Yusuf, 38
• Kristinsson, Össur, 102
• Kydland, Finn E., 37

• Labor-adding robots, 19. See also Additive robots
• Labor-augmenting robots, 19. See also Multiplicative robots
• Labor productivity, cumulative growth in before 1914 to 2013, 42, 43
• Labor saving innovation, 19
• Lasch, Christopher, 16
• Learning by doing, 4
• Lecat, Rémy, 38
• Liberalism, 127
• Licht, Amir N., 109
• Life satisfaction, x, 16
• Lincoln, Abraham, 8
• Lucas, Robert E., 35
• Luther, Martin, 10
• Lynn, Richard, 109

• Machine learning, robots and, 153–154
• Macroeconomic life, mathematical expression capturing American, 32–33
• Macron, Emmanuel, 15
• Maddison, Angus, 38
• Mairesse, Jacques, 38
• Making a difference, modern values and, 10
• Male labor force participation, 122; falling, 144, 145, 147, 148, 202; innovation and, 112, 113, 115; values and, 118
• Manning, Alan, 155
• Marshall, Alfred, 7, 153, 205
• Marx, Karl, 7
• Mass Flourishing (Phelps): on emergence of modern life, 6–7; on factors making nations flourish, 111; on humanist values, 10; on indigenous innovation, dynamism, and modern values, 204; on intercountry and intertemporal variations in dynamism, 107; testing thesis of, 11; thesis of, 11; on values underpinning dynamism, 16
• Material performance, intercountry differences in, 3
• Material rewards, dynamic economies and, 8
• McAfee, Andrew, 154
• McClelland, David C., 109
• Merit goods, 13
• Michaels, Guy, 155
• Mirandola, Giovanni Pico della, 10
• Models of indigenous innovation, 18–19
• Modern ethic, values of, 107–108
• Modernism, innovation and, 137–142. See also Index of modernism
• Modern life, emergence of, 6–7
• Modern people, desire for satisfactions offered by modern economies, 9–10
• Modern values: dynamism and, 9–10, 108, 111, 116, 204; economic performance and, 12–13; intercountry differences in attitudes, 11; need for revival of, 204; question of loss of, 11–16
• Mohnen, Pierre, 35
• The Moogies (game), 92, 94
• Moser, Petra, 35–36
• Multifactor productivity. See TFP
• Multiplicative robots: augmenting human labor, 164–167; defined, 156; effect on real wages, 166, 167, 170–173, 182, 186–187; factor-price frontier and, 177–178; growth effects of, 25–26; long-run equilibrium case of, 183–184; results of introduction of, 158, 176, 178–179, 184. See also Wage effects of additive and multiplicative robots
• Murtin, Fabrice, 35
• Musk, Elon, 92
• Myrdal, Gunnar, 205

• National income: adoption of additive robots and labor share of, 164, 172; adoption of both additive and multiplicative robots and labor share of, 172; adoption of multiplicative robots and labor share of, 167, 173
• National science foundations, 205
• Nelson, Richard, 4, 35
• Neoclassical theory, 1; criticism of, 1–2
• Netherlands, estimates of best-practice factors for, 67
• Networking, Plain Vanilla’s use of, 96–97
• New development, response to, 128
• Nicholas, Tom, 35
• Nietzsche, Friedrich, ix, 13
• Nokia, 91
• Nonmaterial performance, intercountry differences in, 3
• Nonmaterial rewards: dynamic economies and, 8–9; fall off of, 15–16
• Nonroutine jobs, multiplicative robots and, 156, 168
• Nontransmissible innovation shock, 54–55
• Norway, estimates of best-practice factors for, 67

• Obedience, children taught, 121; innovation and, 113, 114, 115, 118, 119; output and, 110
• OECD countries: measures of values resulting attitudes and innovation, 23, 105, 145, 119; index of traditionalism in, 126
• Olsen, Morten, 36
• One-sector aggregate growth model, 155
• Opioid addiction, 16
• Organizational structure, innovation and flat, 23
• Oskarsson, Magnus, 97, 98–99
• Össur, 102–103; financing and management, 102–103; planning at, and macroeconomic development, 103
• Otis, Elisha, 106–107
• OZ: Calidris and, 100, 101; Oskarsson and, 99; Solfar Studios and, 88–89, 90

• Participants in standard market economy models, 34
• Patent system, innovation and, 35, 36, 107
• Penn World Tables, 11, 38, 130
• Peretto, Pietro, 36
• Personal fulfillment, through work, 205
• Personality characteristics, of entrepreneurs, 109
• Phelps, Edmund: dynamics of TFP and, 35; on dynamism and modern values, 111, 116; on factors that make nations flourish on wide scale, 111; on Golden Rules of economic growth, 154; indexes of modernism and traditionalism and, 126; on job satisfaction, 110; on modern values, 107–108; on relationship between economic performance and values and attitudes, 110; on taxation and unemployment, 37
• Physical structures. See Wage effects of additive and multiplicative robots, alongside factory buildings and physical structures
• Pigou, Arthur Cecil, 1
• Plain Vanilla, 88, 92–97; attractiveness of innovation and, 96; funding, 92–94; history, 92; necessary qualities in staff, 96; networking and, 96–97; planning, 95; product development, 94–95; trivia games and, 94–95
• Plain Vanilla Corporation (Delaware), 93
• Polanyi, Michael, 37
• Populism, rise of, 203
• Portugal, level of traditionalism in, 129
• Power distance, intercountry differences in, 101
• Prescott, Edward C., 37
• Price incentives, indigenous innovation responding to, 193–199
• Prices: additive robots, indigenous innovation, and relative, 27–28, 190–200; factor-price frontier and robotics, 176–179; interaction of innovation with relative, 83, 84
• Prisoner’s dilemma, trust and, 110
• The Process of Economic Growth (Rostow), 6
• Production function: adoption of additive robots and, 156, 161; adoption of multiplicative robots and, 156, 164–165; introduction of both additive and multiplicative robots and, 168; in Ramsey infinitely lived economy, 157
• Production possibility, indigenous innovation expanding, 107
• Productivity: formulas for evolution of, 52; intercountry differences in, 3; gains model, 4; growth rates across industries in US, 81–82; indexes, 38; low levels in Western world, 108; robots augmenting human, 154, 155; TFP as measure of, 79–80; in US, 80–81; in US IT sector, 81
• Profitability: of investing in additive robots, 163, 193, 196; of investing in multiplicative robots, 167
• Profit maximization: indigenous innovation responding to price incentives and, 194; introduction of additive robots and, 161; introduction of both additive and multiplicative robots and, 168–169; introduction of multiplicative robots and, 165
• Profits: rise in dynamic economy, 8; from successful innovation, 197
• Prospering, 13
• Protestant Reformation, 107
• Putnam, Robert D., 110, 125

• Quality life, conception of in traditional economies, 13
• Quiz Up (game), 92, 94; variations of, 95

• Ramsey, Frank, 1
• RAND Corporation, 4
• Rate of return. See Equality of rate of return
• Rawls, John, 205
• Real rate of interest: introduction of additive robots and, 157, 158, 162, 170; introduction of multiplicative robots and, 166, 170, 173, 181
• Real wages: introduction of additive robots and, 157–158, 162, 163–164, 172, 186, 191, 193, 196–197, 199; introduction of both additive and multiplicative robots and, 170–173, 184–185; introduction of multiplicative robots and, 166, 167, 173, 182, 186–187
• Red tape, economic performance and, 37
• Renaissance: individualism and 10, 11; modern values and, 7, 107
• Research activities, generating quality-improving innovations, 4
• Research and development (R&D): spillover weights and, 35; sustained innovation, growth and job satisfaction and, 4–5
• Restrepo, Pascual, 155
• Rewarding Work (Phelps), 205
• Ricardo, David, 1, 19
• Risk-taking, as characteristic of entrepreneurs, 89, 109
• Robb, Richard, ix
• Robinson, James, 37
• Robots: applications, 25–28; artificial intelligence and machine learning and, 153–154; consequences of introduction of, 19; conventional machines vs., 155–156; discontent over introduction of, 185, 203. See also Additive robots; Multiplicative robots; Wage effects of additive and multiplicative robots
• Romantic movement, modern life and, 7
• Romer, Paul, 4, 35
• Rostow, Walt, 6
• Routine jobs, additive robots and, 156, 168

• Sabre, Calidris and, 97–98
• Sabre Airline Solutions, 88
• Saddle-path stability: indigenous innovation responding to price incentives and, 196; introduction of additive robots and, 180, 188–189; introduction of multiplicative robots and, 182, 188–189; in two-sector model with zero technological progress and no innovation, 192
• Sala-i-Martin, Xavier, 34, 35
• Salomons, Anna, 155
• Samuelson, Paul, 1, 19, 154
• Sapienza, Paola, 125
• Scandinavian countries: indigenous innovation in post-World War II, 49; values and indigenous innovation in, 116–117. See also individual countries
• Schumpeter, Joseph, 1, 2, 3, 4, 108–109
• Schumpeterian innovation, 5, 14, 15, 17, 20
• Scientific advances: commercial application of, 4; as prime movers of economy, 2
• Scientists, innovation and, 2, 106–107
• Seater, John, 36
• Second Machine Age, 154
• Secular exhilaration, rise of, 4
• Secular stagnation, 4
• Self-expression, 10, 12, 111
• Self-support, worker, 205
• Sen, Amartya, ix, 205
• Sequoia Capital, 94
• Serial entrepreneurs, 88
• Sexton, Donald L., 109
• Shakespeare, William, 13
• Shane, Scott, 109
• Sherry, Alissa, 114
• Siegel, Jordan I., 109
• Sigurdsson, Jon, 102
• Silicon Valley, networking in, 97
• Silicon Valley Comes to Oxford program, 92
• Social capital, 111
• Social protection, 13
• Social security, 13
• Social trust, GDP growth and, 123–124
• Solfar Studios, 88–91; desirable qualities of employees and values of founders, 91; export orientation, 91; financing and macroeconomic environment, 90; history, 88–89; trust, 90–91; values and infrastructure, 89–90
• Solidarism, 13
• Solow, Robert M., 1, 2, 11, 14, 154, 155, 172
• Solow residual, 33, 34. See also TFP
• Southwest Airlines, 100
• Spain: estimates of best-practice factors for, 67; indexes of modernism and traditionalism and, 129
• Spillover weights, R&D policies and, 35
• Squared canonical correlation, 120
• Squared structure coefficient, 120
• Standardized coefficient, in canonical correlation, 120
• Standard theory: critical shortcomings of, 2–6; view of participant in, 3
• Start-up concept, 92
• Stonewater International, 99
• Structure coefficient, 120
• Success, modern values and, 9–10. See also flourishing; prospering
• Swan, Trevor W., 154, 155, 172
• Sweden: estimates of best-practice factors for, 67; imported innovation in, 71, 73; indigenous innovation in, 71, 73, 75, 130; level of traditionalism in, 129; TFP growth in, 42–43, 73, 75; values and imported innovation in, 115, 117; values and indigenous innovation in, 116, 117
• Switzerland, values and indigenous innovation in, 116, 117

• Tabellini, Guido, 110, 118, 125
• Taxation, employment and participation and, 37
• Technological progress: economic growth and, 2; success in innovation, fall in price of capital good, and increase in employment and, 198; through industrial research and diffusion of new methods, 4; two-sector model with zero technological progress and no innovation, 191–193
• TFP: defined, 31–32; indigenous innovation, imported innovation, and, 130–131; as measure of productivity, 79–80; modernism, innovation, and, 139
• TFP frontier, rate over time between TFP growth rate and, 44–46
• TFP growth: in America, 31–32; contribution of US transmissible indigenous innovation shock across countries, 59–60; cumulative growth before 1914 to 2013, 42–43; growth in GDP per capita and, 21, 32, 47; imported innovation and indigenous innovation and, 34, 35; index of modernism and, 132, 137; rate over time between distance to TFP frontier and, 44–46; relation between estimated country effects and, 140–141; slowdown in, 15–16, 20–21, 22, 41–42, 202; statistical structure of, 35; as sum of indigenous and imported innovation, 53; transmissible components of, 55–56; trends in, 39, 40
• TFP growth rates: index of modernism and, 24–25, 124, 133; index of traditionalism and, 24–25; IT revolution and, 74; plotted against corresponding country and country with highest TFP level in various time periods, 43–46; summary of global, 46–47
• TFP index, 38; trends in, 39, 40
• TFP shocks, as proxies for innovation shocks, 34
• Thatcher, Margaret, 16
• Theory of economy’s development through time, 1
• Time rate of change: introduction of robots and, 180, 182
• Time series of indigenous innovation, 11
• Time variation in inherited trust, 125–126
• Tocqueville, Alexis de, 7
• Total factor productivity. See TFP
• Trade, slow wage growth and, 202
• Traditional (communitarian) values, 12–13, 107–108
• Traditional economies, characteristics of, 13
• Traditionalism: assessment of, 127; average level of, 129–130. See also Index of traditionalism
• Transmissible components of TFP growth, 55–56
• Transmissible innovation shock, 54–56
• Transmission mechanism, for indigenous innovation, 55–56
• Transmission of values, 125
• Trust, 121; economic and social outcomes and, 125; entrepreneurs and, 109–110; Icelandic business relationships and, 90–91; innovation and, 113, 114, 115; social, 123–124; time variation in inherited, 125–126
• Twilight app, 95
• Two-sector model with zero technological progress and no innovation, 191–193

• UK (United Kingdom): ability to take advantage of US-based innovation shocks, 59, 60; cumulative indigenous innovation in, 61–65, 69–72; deindustrialization in, 15; estimates of best-practice factors for, 67; as global TFP leader, 32; indigenous innovation in, 48, 49, 73, 74, 75, 76, 77, 116, 117, 130; level of traditionalism in, 129–130; TFP growth in, 20–21, 41–43, 47; TFP index for, 39, 40; trends in GDP per capita, 38–39
• Uncertainty: entrepreneurs and acceptance of, 9, 23, 91, 101, 103, 109; Knightian, 1, 2, 23
• United States: cumulative indigenous innovation in, 61–65, 69–72; deindustrialization in, 15; discontent over slow wage growth in, 203; effect of innovation shocks on productivity, 76–77; estimates of best-practice factors for, 67; fears over populism in, 203; GDP per capita trends, 38–39; as global TFP leader, 32; growth in GDP per capita and labor productivity in, 42–43; growth of GDP per capita and TFP in, 39–41; indexes of modernism and traditionalism and, 129; indigenous innovation in, 21–22, 48, 49, 57–60, 73, 74, 75, 116, 117, 130; indigenous innovation in compared to France, 77, 79; indigenous innovation in compared to Germany and Japan, 78–79; indigenous innovation in compared to UK, 76–77; job satisfaction, male labor force participation, fertility rate, and employment rate in, 118, 119; leadership in technological frontier, 80; level of traditionalism in, 129–130; as most innovative economy, 115, 116; productivity growth across industries, 81–82; TFP growth in, 20–21, 31–32, 39–42, 47; TFP index for, 39, 40; values and imported innovation in, 116, 117; values and indigenous innovation in, 116, 117
• Unity 3-D, 93–94
• Universal basic income, 205
• Uzawa, Hirofumi, 154

• Values: Calidris, 100–101; changeable nature of, 11; changes in societal since early 1970s, 16; economic performance and societal, 12–13; impetus of, 6–8; innovation and force of, 23–24; Solfar Studios, 89–90; that characterize innovators, 87–88, 91; theory of transmission of, 125; traditional, 12–13, 107–108. See also Modern values
• Values, entrepreneurship, and innovation, 123–143; indexes of modernism and traditionalism, 126–130; innovation and inherited beliefs, 131–137; innovation and modernism, 137–142; literature review, 125–126; overview, 123–124; TFP, indigenous innovation, and imported innovation, 130–131
• Values, innovation and, 105–122; canonical correlations, 112–115, 120; data, 111–112; graphs, 115–119; innovation and economic performance, 106–108; literature review, 108–111; overview, 105–106; variable descriptions, 121–122
• Veblen, Thorstein, 205
• Verdier, Thierry, 125
• Vertical transmission of values, 125
• Vitalism, 10, 12
• Voena, Alessandra, 35–36
• Voltaire, 13

• Wage effects of additive and multiplicative robots: introduction of additive robots, 19, 26–27, 154–155, 156–158; introduction of both additive and multiplicative robots, 168–172, 173; introduction of multiplicative robots, 19, 26–27, 154–155, 156–158. See also Real wages
• Wage effects of additive and multiplicative robots, alongside factory buildings and physical structures, 26–27, 174–189; dynamic general-equilibrium analysis, 179–182; long-run equilibrium with endogenous supply of factory buildings and physical structures, 183–184; overview, 174–176; robotics and the factor-price frontier, 176–179
• Wages: falloff of dynamism and slowdown of, 16; lack of increase in, 201–202; rise in dynamic economy and, 8
• Waldinger, Fabian, 35–36
• Walras, Léon, 1
• Weber, Max, 107
• Weimar Republic, 202
• Welfare state, innovation and, 23, 104
• Western European countries: innovation, job satisfaction, and job performance in, 25, 144–150; lower performance in continental, 150. See also individual countries
• Wicksell, Knut, 1
• Wilson, William Julius, 205
• Words with Friends app, 94
• Work, fundamental nature of, 205
• Workplace performance, values and, 110
• World Economic Forum, 102
• World Values Survey (WVS), 24, 110, 111, 124, 126–128, 148
• World War II (WWII): indigenous innovation before and after, 49; postwar trends in indigenous and imported innovation, 57, 58; US productivity growth during, 49; variation in TFP series before, 56
• Wright brothers, 36

• Youth unemployment and participation, values and, 111

• Zeira, Joseph, 36
• Zingales, Luigi, 125
• Zoega, Gylfi, 110, 111