The Ingenuity Gap: Can Poor Countries Adapt to Resource Scarcity?

Abstract

"As human population and material consumption increase in coming decades, scarcities of natural resources will increase in some regions. Will societies be able to adapt? The present article builds on three key insights derived, in part, from 'new growth theory' in economics. First, ideas are a factor of economic production; second, not only can ideas for new technologies contribute to production, so can ideas for new and reformed institutions; and, third, the generation and dissemination of productive ideas is endogenous, not just to the economic system, but also to the broader social system that includes a society's politics and culture. The article argues, therefore, that to understand the determinants of social adaptation to scarcity, analysts should focus on the society's ability to supply enough ideas, or 'ingenuity.' As scarcity worsens, some poor societies will face a widening 'ingenuity gap' between their need for and their supply of ingenuity. Most importantly, their supply of social ingenuity (in the form of new and reformed institutions) will be vulnerable to stresses generated by the very scarcities the ingenuity is needed to solve. Scarcity often causes intense rivalries among interest groups and elite factions that impede the development and delivery of institutional solutions to resource problems. A society with a serious and chronic ingenuity gap will face declining social well-being and perhaps civil turmoil."