In truth, much of the disagreement seems to concern the political preferences of Kenneth Clarke, chancellor of the exchequer, and others, to which the economics of the matter are largely indifferent. What can be said with certainty is that national growth rates are affected not only by the capacity of companies and workers to enhance their efficiency, but also by their capacities for innovation. In this regard, innovation refers not simply to the development of new physical technologies, but virtually every aspect of the economic process, from indentifying or locating new materials, sources of labour, or means of financing and marketing, to reorganising jobs and work places. Endogenous growth policy involves all factors which contribute to such variegated innovation, as well as to efficiency. This view will not reassure political promoters on the hard left or the hard right.
Higher efficiency requires greater investment, which in turn requires capital-encouraging policies.
It also involves an enhanced commitment to enlarging the supply of public capital. Also, add to that the store of basic research. This should not be confused with ideological demands to roll back other forms of regulation, such as health or safety protections, which serve social policy ends and pose no threat to the competition that drives innovation.