How Do Pandemics Affect Innovation?

Scientists continue to draw lessons from the global health crisis introduced by the Spanish flu in order to gain insights into the repercussions of the latest one.

Amidst the imposition of lockdown measures worldwide in the spring of 2020, with the aim of curbing the transmission of COVID-19, a recent study from Rotman embarked on a quest to investigate the potential impact of stringent social gathering regulations on local innovation.

Utilizing their enforced physical seclusion, they meticulously extracted data from the 1918 influenza pandemic, meticulously examining patenting records alongside information pertaining to public health constraints across 50 major cities in the United States.

Lower invention

“We expected to observe that longer restrictions would lead to lower invention rates,” the researchers say. “After digging in our data, we found evidence that was opposite to that.”

Among the 50 cities examined, a notable subset of 17 encountered extended periods of restrictions during the multiple waves of the 1918 flu pandemic, surpassing 90 cumulative days. These measures encompassed prohibitions on public gatherings and closures of educational institutions.

Surprisingly, the cities enduring lengthier restrictions exhibited patenting rates that were consistently six to nine percent higher compared to cities with shorter durations of constraints. Moreover, once the influenza outbreak had subsided, these numbers witnessed a further surge, ranging between seven and twelve percent.

A certain environment

How can this phenomenon be explained? The researchers posited that cities subject to more prolonged restrictions fostered an environment of certainty, thereby preserving a crucial element in the innovation process. This element revolves around the necessity of investing time, resources, and acquiring knowledge, which collectively contribute to the flourishing of innovative endeavors.

“Uncertainty makes people less willing to carry out this investment because it makes returns less predictable,” the authors say. “Longer restrictions favored a coordinated and resolute response to the pandemic which anchored expectations and reduced uncertainty.”

There were differences of course between the two public health events. The 1918 flu was shorter and more intense, its main waves running between the spring of 1918 until April 1919 with the fall’s second wave being the most severe and the period when public health restrictions were imposed.

The COVID-19 pandemic, which lasted more than three years, saw the implementation of prolonged and wide-ranging restrictions. Notably, contemporary innovators possessed the advantage of leveraging virtual communication technologies, enabling them to sustain collaborative efforts with others despite physical distancing measures.

These contrasting circumstances pose challenges when attempting to extrapolate the extent to which the aforementioned findings could accurately anticipate innovation patterns during the COVID-19 crisis. It remains uncertain whether longer periods of social restrictions are ultimately more favorable for businesses in such emergencies compared to shorter durations. The distinct dynamics and contextual factors surrounding the COVID-19 pandemic make it difficult to draw definitive conclusions in this regard.

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