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Size Matters: Economy-Wide Scale Effects by CICC Research, CICC Global Institute (author) is a scholarly article available to read on EtoBox.

What is Size Matters: Economy-Wide Scale Effects about?

Size matters in an innovation economy. On the supply side, a large country usually has a higher GDP and large population. A higher GDP means that both its public and private sectors can commit more resources to innovation, hence higher R&D spending. On the demand side, a large population can contribute to large domestic demand. Domestic demand from large countries benefits innovation through economies of scale, economies of scope, and wealth effects. The first channel is through economies of scale. Demand from large countries helps reduce R&D costs per unit of output and enhances incentives for production-side R&D investment. Second, economies of scope can be better achieved through sizable demand, which also contributes to innovation. Diversified demand is conducive to the success of product differentiation strategies, which in turn encourages firms to increase their investment in innovation. Lastly, wealth effect affects consumers' participation in innovation, and also facilitates technological advancement. As consumers' spending power continues to improve, the proportion of consumers directly participating in innovation is also rising. This raises the overall investment in R&D r

Author

CICC Research, CICC Global Institute (author)

Publisher

Springer Nature Singapore Pte Ltd Fka Springer Science + Business Media Singapore Pte Ltd

Published

2024

Language

EN

ISBN

9789819982301