Ideas need an appropriable return, or the able stop trying and leave

The argument

A second argument for this explanation is specifically about new ideas. Advocates observe that developing something that did not exist before is unusually risky: most attempts fail, the costs fall on whoever makes the attempt, and the benefits, once the idea exists, are easy for others to take up. Proponents argue that this means innovation happens only where someone attempting it can expect to keep enough of the gain to justify the risk, and that nations which fail to provide this have in effect switched off their capacity to improve. Supporters argue that the ways this capacity is switched off are varied. Ideas may be appropriated by those with the power to do so, rewards may be captured by incumbents able to copy without consequence, recognition and advancement may be allocated by seniority or connection, and the people best placed to try may conclude that their effort is better spent elsewhere. Proponents emphasise the last of these, holding that the response to unrewarded ability is frequently exit rather than resignation, and that the departure of those most able to improve things is among the heaviest costs a failing country bears. Advocates conclude that this explanation accounts for the shape of national failure rather than only its existence. On their account countries that do not reward ideas do not simply grow more slowly; they stop generating the improvements that compound, so the gap between them and others widens even when nothing further goes wrong. Supporters hold that this is why failure can look like standing still while the standard of comparison moves away, and why reforms that reward contribution have produced effects out of proportion to their cost.

Premises

Counter-arguments

Critics argue that a great deal of innovation has been produced without appropriable private returns, through public research, military programmes and open collaboration. They also note that the departure of able people can benefit a country through the money and knowledge they send back. A further reply is that treating weak rewards as the cause understates how much innovation depends on prior investment in education and infrastructure, which failing states are typically unable to provide for reasons the other positions describe.

Rejecting the premises

[Rejecting P1] Much innovation is incremental and difficult to copy in practice, so the risk and appropriability problems are smaller than stated. [Rejecting P2] Publicly funded and collaborative research produces innovation with no private appropriation at all. [Rejecting P3] Able people also stay and work around poor incentives, and those who leave often send resources and knowledge back. [Rejecting C] Capacity to improve also rests on education and infrastructure, so rewards alone do not switch it on or off.