The Neoclassical Growth Theory of Robert Solow operates mainly with two factors of production, labor and capital. Although relevant back in the Fifties and Sixties, the combinations of these classical inputs, have today only little power of explanation. In fact, the neoclassical theory explains only two thirds, perhaps only one half of economic growth. The missing factor is called the Solow Residual.
Paul Romer of Stanford University, Palo Alto, understood in late 80´s to descend from the macroeconomical level into the microeconomic world. According to his research, growth occurs mainly when companies compete - and even more important: the companies compete today more and more with ideas and innovations. Romer´s theory is known as the New Theory of Growth or "Endogenous Growth Theory", because it suggests that the new ideas must a) be developed in-house and b) be kept confidential. If an innovation - say, the telephone - is used by everybody, it brings by no means any competitive advantage. It is only a part of one´s common infrastructure.
The World Trade Organization (WTO) Agreement has an Annex, the TRIPS -Agreement. The aim is to harmonise the intellectual capital legislation in all Member States. The most controversial and less-known article is Article 39: Protection of undisclosed Information. It means that all Member States have to set up a legislation to protect companies´confidential information, the trade secrets.
So far, only 20 countries or so, have a proper legislation to protect the trade secrets. Now, over 110 countries must create the laws and legal practice to protect this crucial factor of production. The problem is that the Article 39 leaves a wide spectrum of alternatives: from a minimum protection to the most rigorous laws to hold up any spill-over of the information from the companies.
If a Member State denies a proper protection of trade secrets, it will not get any high tech investors to the country. On the other hand, if a Member exaggerates the protection, there will be no spill-over and thus no diffusion of technology, and the country will perhaps never convergence with the modern industrialized countries.
This research gives suggestions how to formulate an adequate Strategic Theory of Trade and how to get the best out of the globalization. It also clarifies what it is all about in the Information Age: what is Knowledge, what is Data and Information. How to use these as a powerful tool to create an even better future for ourselves and for our nations.