1 Long term innovation waves – the potential dissonance between Europe and Asia.

The paper is in a very preliminary form! The main idea of this paper is to put the present economic situation into a long term historical perspective and discuss the prospects of new innovation waves and their implications for Europe and Asia. In this version of the paper, the Asian perspectives are restricted to China, while Europe is treated with some more detail. In the first section, a historical generalization is presented from the observation of different structural epochs in modern economic history, forming long waves. In the following section, some general implications are discussed regarding economic growth and innovations for the next decades of upswing in a new long wave out of the present crisis. Furthermore, the structure of two innovation systems – based on formal science and market-led interaction respectively – are contrasted in relation to assumed trends in innovation. The final section opens a discussion on conditions for innovation and growth in Europe and China (Asia) over the next decades. A historical framework of big waves and long waves The framework is a long term pattern of three big waves in the economic history of the modern world, or a sequence of three industrial revolutions- The first industrial revolution took off in the late eighteenth century with steam engines and the factory system as the major innovations. It was geographically centered in Britain and on the Channel. 2- The second industrial revolution accelerated from the late nineteenth century with the electrical motor, the combustion engine, sophisticated machinery industry and scientifically based industries. This revolution had a geographically widened center with Germany/Continental Europe and northeastern USA (the North Atlantic economy) as leading parts.- The third industrial revolution was a the late twentieth century phenomenon with the breakthrough of microelectronics and with knowledge intensive interaction between industry and services. Once again, the geographical strongholds widened considerably with Western USA and Eastern Asia (the Pacific Economy) joining the old the Nort