The New Three-Legged Stool of American Economic Growth

Abstract

Our interest in writing this article is to create a bridge between the scholarly and academic research on technological innovation and a private sector, for-profit business model that implements the ideas on innovation and entrepreneurship, primarily in metro regional economies.

In his popular work, "The Stages of Economic Growth: A Non-Communist Manifesto", (1960), W. W. Rostow explained how economies started out as pleasant pastoral peasant societies and evolved through multiple stages, ending up in the mass consumer market, high productivity economies, that looked remarkably like the U. S. economy in the late 1950s.

We begin by explaining that the series of speculative bubbles in the past 15 years have tended to obscure a dark economic fact that America's ability to innovate has been seriously damaged by the open border, bubble strategy.

During the 15 year era of bubbles, the formerly integrated American economy was replaced by two economies: a global market made up of 1500 large corporations, and the rest of the domestic economy, not plugged into the global economy.

The major issue for workers in the domestic economy is that while open borders work great for the 1500 global corporations, and all of the diminishing number of staff who work there, it does not work so great for the remaining 90% of Americans. The two economies are not integrated and the benefits of free trade, consequently, are not widely distributed in the American society.

We review contemporary economic speculation on how to solve the American bubble problem and conclude that future economic growth depends on 3 factors. We think these factors look like the 3 legs of a stool.

The First Leg of the Stool: Revival of Innovation At The Metro Regional Level

The Second Leg of the Stool: New Capital Markets to Boost Regional Economic Growth

The Third Leg of the Stool: Investing In Small Manufacturing Innovation Inside the Metro Regional Value Chains

Keywords: American economic growth, speculative bubbles, industrial value chains, radical innovation, niche markets, regional capital markets

JEL Classification: L16, M13, O31, O32, O33, O34, O38