Romer's Recombination of Ideas
In 1990, Paul Romer challenged economic thinking by highlighting the role of ideas in driving growth.
Previous models assumed economic growth was driven by external factors like population increases, leaving little room for the role of the individual.
Romer asserted that:
- Action and investment within the economic system can drive growth.
- Ideas and innovation are the key drivers of growth, not external factors.
- Ideas are “non-rivalrous,” meaning they can be used repeatedly without being used up.
Romer’s critical insight was that people drove change and were not simply subject to it.
One of the pillars of his theory was the “recombination of ideas” – not only would ideas not get depleted by their use, but these ideas could serve as building blocks for new, more advanced concepts.
Recombining ideas involves:
- Breaking down existing paradigms into first principles.
- Understanding the fundamental truths.
- Identifying new applications.
Using this framework is a powerful way to take control of our growth trajectory and shape our future.
Jump Start
- Think of a recent experience you’d consider a success.
- Think of the factors that came together to make the experience successful.
- Think of a challenge you’re facing now – is there anything from your last success that could help?