Sixty-seven years ago, representatives from 44 nations convened in the small resort town of Bretton Woods, New Hampshire to make financial arrangements for the post-World War II economy. The meetings spawned the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade—the precursor to the World Trade Organization. While these institutions worked well for half a century, now that the commodity-based manufacturing system has evolved into a knowledge and innovation economy, the strains on the Bretton Woods system have become clear.

As countries increasingly recognize that innovation drives long-run economic growth, a fierce race for an innovation advantage has emerged. During the past decade alone, over three dozen countries have created national innovation agencies and strategies. Going forward, the challenge will be to balance countries’ pursuit of the highest possible standard of living for their citizens in...

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