In this episode of Trillions, hosts Joel Weber and Eric Balchunas interview Steve Hou, a quantitative researcher at Bloomberg Indices, about American innovation and its dominance in the global equity market. They discuss the factors contributing to the success of US companies, particularly in the tech sector, such as a culture that encourages risk-taking, the availability of risk capital, and a unified market. Hou introduces a systematic approach to identifying innovative companies by focusing on the persistence of R&D spending. The conversation also touches on the comparison between the US and Europe, with the US having a higher percentage of companies with persistent R&D growth. Finally, they address the rise of China as a competitor in innovation, noting its increasing R&D expenditures and the adoption of American cultural elements that foster entrepreneurship.
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