Global Innovation Arbitrage: Drone Delivery Edition

by on August 25, 2016 · 0 comments

Dominos pizza droneJust three days ago I penned another installment in my ongoing series about the growing phenomenon of “global innovation arbitrage” — or the idea that “innovators can, and increasingly will, move to those countries and continents that provide a legal and regulatory environment more hospitable to entrepreneurial activity.” And now it’s already time for another entry in the series!

My previous column focused on driverless car innovation moving overseas, and earlier installments discussed genetic testing, drones, and the sharing economy. Now another drone-related example has come to my attention, this time from New Zealand. According to the New Zealand Herald:

Aerial pizza delivery may sound futuristic but Domino’s has been given the green light to test New Zealand pizza delivery via drones. The fast food chain has partnered with drone business Flirtey to launch the first commercial drone delivery service in the world, starting later this year.

Importantly, according to the story, “If it is successful the company plans to extend the delivery method to six other markets – Australia, Belgium, France, The Netherlands, Japan and Germany.” That’s right, America is not on the list. In other words, a popular American pizza delivery chain is looking overseas to find the freedom to experiment with new delivery methods. And the reason they are doing so is because of the seemingly endless bureaucratic foot-dragging by federal regulators at the FAA.

Some may scoff and say, ‘Who cares? It’s just pizza!’ Well, even if you don’t care about innovation in the field of food delivery, how do you feel about getting medicines or vital supplies delivered on a more timely and efficient basis in the future? What may start as a seemingly mundane or uninteresting experiment with pizza delivery through the sky could quickly expand to include a wide range of far more important things. But it will never happen unless you give innovators a little breathing room–i.e., “permissionless innovation”–to try new and different ways of doing things.

Incidentally, Flirtey, the drone deliver company that Domino’s partnered with in New Zealand, is also an American-based company. On the company’s website, the firm notes that: “Drones can be operated commercially in a growing number of countries. We’re in discussions with regulators all around the world, and we’re helping to shape the regulations and systems that will make drone delivery the most effective, personal and frictionless delivery method in the market.”

That’s just another indication of the reality that global innovation arbitrage is at work today. If the U.S. puts it head in the sand and lets bureaucrats continue to slow the pace of progress, America’s next generation of great innovators will increasingly look offshore in search of patches of freedom across the planet where they can try out their exciting new products and services.

BTW, I wrote all about this in Chapter 3 of my Permissionless Innovation book. And here’s some additional Mercatus research on the topic.

Additional Reading

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Adam Thierer

Adam Thierer / Senior Fellow in Technology & Innovation at the R Street Institute in Washington, DC. Formerly a senior research fellow at the Mercatus Center at George Mason University, President of the Progress & Freedom Foundation, Director of Telecommunications Studies at the Cato Institute, and a Fellow in Economic Policy at the Heritage Foundation.

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