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New Economics
Business Innovation Economics
From data collected for the period 1951-2001 and dubbed DINTEC™ (an acronym for Data on INnovation TEchnology and EConomics) a new and previously unknown equation called the Macroscopic Economic Lens Formula, or MELF (whose name is explained later) has been discovered. It incorporates new variables and works like this. Purchasers will pay more for higher performing products and services (described in Economics as having higher quality Q), while favoring a competitive duplicate C, offered at a lower price P. In symbols Q = G (P, C, I). For the first time, the cardinal quality of any product or service can be back-calculated from its price, a feat unthinkable using current methods. What it's not is important. It's not a regression equation, there are no quality attributes (Q is a single variable). Competition C does not have to be perfect. Exact algebra, more typical in Physics than Applied Economics connects Q, C and P, and that allows it to be validated by application (using DINTEC™) The MELF goes on to provide an algebraic link from quality to GDP (by relating a sum of prices Sum:P to a sum of qualities Sum:Q) and this leads to an unprecedented 100% determination of economic growth that is dominated by Quality consideration. In contrast and to force-fit labor and capital to GDP, current macroeconomics generates a residual called Total Factor Productivity, TFP, which is interpreted as a proxy for the impact of innovation on growth. But the MELF provides an exact fit. There is no residual. This breakthrough delivers a completely new and dominating role for innovation in growth accounting.
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Study New Knowledge on the Direct Economic Measurement of Innovation HERE Read Q&A from an interview conducted by the Royal Economic Society HERE
MELF Equation