Presidential Address: Innovation in retrospect and prospect

Abstract This paper asks whether innovation has slowed in recent decades. While there has been dramatic progress in information and communications technology, the recent record of innovation in the crucially important agriculture, energy, transportation, and health care sectors is cause for concern. The paper also considers whether the pace of innovation is sufficient to improve or even maintain living standards in the face of still rapidly growing population, global warming, and other challenges. I review the major market failures that lead to under‐provision of innovation and question whether current innovation policy, particularly patent policy, is effective in promoting innovation.