 Good afternoon. We are here in SOS, University of London, with one of the greatest scholars in innovation and technological change, Patence, Professor Browning Hall. We are very pleased to be here today with us. We are having this conversation while we are going to have also an important event here in SOS, organized by the Department of Economics and the School of Finance and Management, which is the Penrose Lecture, a new series that we have been organizing here, and Professor Browning Hall has been the first person who started with this series. The reason why we invited Professor Browning Hall is really because she has been one of the great scholars in this area of research, which is very much close to Edith Penrose work and so on. May I ask you, how did you start getting involved in this research? It's not unconnected to the interested Edith Penrose, but from a completely different side. My history is that I was an undergraduate physics major, and then I became a computer programmer in physics for four years, high energy physics, and then I switched to programming in economics because that's where the jobs were, and because I moved locations and it was easier, physics was very specialized and it wasn't always possible to get a job in that area. I gradually became more and more interested in the methods and using data in economics and so forth, because that's what I was doing with my computer programming, and I was really learning statistics at the same time. I came at it, there was a big concern that our productivity had slowed down in the United States and the person I was working for, Svig Rilichus, who is a professor of Harvard University, became interested in studying the role of research and development in productivity change and whether that was going to help to account for some of the productivity slowed down. I think in the end we more or less concluded that that might not be the case, but I was very interested in working with the patent data and working with the R&D data, and so that's where I started, and then as time has gone by, that topic, you could say I was lucky because I started on a topic which turned out to become much more important in the next two or three decades. R&D and patents literature morphed into the innovation literature, and I became highly cited because I was one of the early people in the area. So then I went to graduate school and got a PhD, so you see not everybody does things in the right order. So I guess that's how I got into the innovation field. Right. As you said, this is one of those topics which have become dominant in economics, but also in the development literature and in the policy, in the practice of policy. You mentioned the productivity puzzle as one of the topics that in a sense has been coming up since the beginning, since the time you were engaging in this topic. It's now back. What is your understanding and your opinion around how the productivity puzzle, in this specific historical moment, is unfolding? Yeah, I find that actually an interesting area of research. And recent research, both in the UK, in Europe, and in the United States, has exposed the fact that part of the productivity slowdown puzzle is that there's wider divergence within industry across firms. The most successful firms, in fact, their productivity is growing. But there are many, many, many other firms whose productivity is lagging. And this is related to issues, probably related to income inequality. If this is the case, what do we do about it? From an innovation economist perspective, we would like to ensure that entry is not too expensive for people with good ideas. And regulated sectors, as we know from our experience, for example, in the telephone sector, the breakup of AT&T was driven by technological revolutions in telephone service. And we would not have, if we had insisted on maintaining telecoms monopolies, we would not have all the benefits we have today from the mobile telephone sector. It's very interesting you mentioned lots of economics you're interested in is starting from policy issues, right? Real issues mentioning about the late policy of Slovenia who used to say, right, economics has to be about rigor but also relevance, right? And this is one of the probably issues that characterized our work here in the Solace and Economics department where we try to engage and make our students engage with lots of the policy issues. In your lecture also now you were mentioning about the importance of the institutional environment, right? The policy dimensions that enter into it in terms of shaping, designing the way in which the market develops and more particularly how the innovation process develops into it. Right. What do you make of the current discussion that has been a resurgence of interest for industrial innovation policy, technology policy? In these days we know in the U.S. the Trump administration has been discussing about rebringing some industries into a quite industrialized type of country and of course this is another big topic here in the UK. Yeah that's true it is a big topic here and it's after all it's a topic in western Europe too. I don't rule out industrial forms of industrial policy or technology policy especially in smaller countries that have a need to specialize to some extent because they can't do everything on the frontier. But I'm not in favor of the form we're taking now which is that we'll just you know keep everybody out therefore then we can we can preserve industry for one thing it's not going to happen. The workers in the steel industry have been quoted as saying this is 40 years too late because you can't these mothball factories can't be brought back. And one of the interesting evolutions has been that first of all the manufacturing sector share has stabilized in the United States but there is a question which you're not going to stop but it is true that the labor share has fallen the labor the the number of employees in that sector have fallen right manufacturing sector itself is is very efficient. The history of the US is a very interesting story of a country which has been for many years building up its capacity using industrial policy and to a certain extent when entered in a phase of the industrialization as you mentioned right try to see how to recover you know in some of these areas. Well the thing about our industrial policy is is that it wasn't really conscious. I mean it's a question of it was there because the Defense Department funded a lot of research between 1941 and now and that has you know produced spun off a lot of technology but the reason they funded the research wasn't because we had a technology policy or an industrial policy other than the famous writings of Vannevar Bush back at the end of the war. It was primarily because the Defense Department had needs for certain you know items. So I distinguish between that and in the policy that says we are going to have a steel industry we will now take government money and pour it into the steel industry. Yeah I mean there are different things. Absolutely. Yeah it doesn't argue. I mean it is an unfortunate fact of the history of technological innovation that a great deal of it is associated with war. That is a very unfortunate fact. Well in a sense this is one of the all-inside Chris Freeman. Yeah Chris Freeman. Yeah Chris Freeman. He used to point out right. Yeah yeah the famous the famous horse stirrer. A major renovation. Exactly. Exactly. But I'm raising this issue because in a sense I think you know we are talking from from from the UK from London there is a big discussion about Brexit and there's been a big discussion around what are what is the situation in this country and how the industrialization has really threatened the fabric part of the society now that it's led to a certain type of reaction right. Yeah. In a certain extent and similarly we see some of these dynamics up there. Which makes me think that in a sense we are talking about probably one of the most fundamental topic in economic right which is not just if you are innovating or not but if the society the political economy of a certain country is able to sustain the pressure of change over time right. The way I think about it is that we do have a problem going forward which is indicated by our current problem which is the real problem is the technical change changes the skills you need and lives are getting longer and those two things are mismatched okay working lives are longer and we need them to be longer because we can't afford in the developed countries with you know population you know aging aging of the we can't have people with 30 years you know on social security or whatever we call it here I can't remember the word after their working life it just doesn't you know it doesn't add up and so we need people to work longer at the same time we have this technical change going on which is causing people to causing you know causing causing people to have skills that are no longer in demand and that's really what happened in the U.S. So far we've been talking about more developed countries but I know you you had some experience and you've been interested on development and development policy and so can you tell us something about your how how innovation look like from that perspective and how challenging it is to understand innovation that the technical change that's why you first of all it's a natural interest if you look at the world economy over the last over my lifetime say you know the last over my working lifetime the last 50 years the share of world GDP that's going to countries other than Western Europe and the United States and Japan is growing right so it's natural you're more interested in populations growing too it's natural to be interested it's not even fair to call it developing at some at some level some of these countries are you know developed to where the U.S. was you know less than a hundred years ago China in a sense is now becoming what U.S. was becoming in the beginning of last century right yeah I mean parts of China are still not you know well beginning of last century yes they're definitely I mean Mississippi would look like parts of China yeah that's that's probably true but I was thinking you know even I mean the country I've been studying somewhat Chile is at a very rapid GDP growth in the last 20 30 years GDP per capita growth yeah and and you know and there are other there are other examples of that Colombia even now that they've you know settled their settled their problems and Mexico certainly but again they have you know they have difficulties in some regions but you know when you go to Mexico City things look pretty developed one last question before we yeah we close what do you find being still something that the economies find very difficult to understand about innovation what is the puzzle about you know what the nature of innovation is about from your long view of your long-term perspective there of course well one of them is the question I raised in the last seminar which is do patents encourage innovation but I don't think we're going to find an answer to that I mean I really do think it depends you know it's where and when and so forth so it's always going to be a economist you know I have two hands I mean it's one the one end and on the other end the backup from innovation and talk about invention that's the one that the economists might think that they can try to understand it but I think it's very hard to understand that it's really a it's for the study of creativity you know for fields that are psychology perhaps or fields that are slightly slightly outside economics we probably have to finish thanks so much for your time and we hope to have you again here in SOS soon thank you thank you for the visit