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Ingenuity refers to the process of applying ideas to solve problems or meet challenges. The process of figuring out how to cross a mountain stream using a fallen log, build an airplane from a sheet of paper, or start a new company in a foreign culture all involve the exercising of ingenuity. Human ingenuity has led to technological developments through applied science, but can also be seen in the development of new social organizations, institutions and relationships. Ingenuity involves the most complex human thought processes, bringing together our thinking and acting both individually and collectively to take advantage of opportunities or to overcome problems.

Context is important because solving a problem requires that we imagine a range of possible solutions, assess what is available to us in our context, and then proceed with some course of action. Ingenuity isn't a linear process but involves various dimensions of human cognition, intention, learning and the creation of novelty. These processes interact with each other as we try out ideas, fail, learn, modify, and try again.

One example of how ingenuity is used conceptually can be found in the analysis of Thomas Homer-Dixon, building on that of Paul Romer, to refer to what is usually called instructional capital. In the case of Homer-Dixon, his use of the phrase 'ingenuity gap' denotes the space between a challenge and a solution. His particular contribution is to explore the social dimensions of ingenuity. Typically we think of ingenuity being used to build faster computers or more advanced medical treatments. Homer-Dixon argues that as the complexity of the world increases, our ability to solve the problems we face is becoming critical.

These challenges will require more than improvements arising from physics, chemistry and biology. We will need to consider the highly complex interactions of individuals, institutions, cultures, and networks involving all of the human family around the globe. Organizing ourselves differently, communicating and making decisions in new ways, are examples of social ingenuity. If our ability to generate adequate solutions to these problems is inadequate, the ingenuity gap will lead to a wide range of social problems. The full exploration of these ideas in meeting social challenges is featured in The Ingenuity Gap[1], one of Thomas Homer-Dixon's earliest books.

In his latest book, The Up Side of Down[2], he argues that increasingly expensive oil, driven by scarcity, will lead to great social instability. Walking across an empty room requires very little ingenuity. If the room is full of snakes, hungry bears and land mines, the ingenuity requirement will have gone up considerably.

Ingenuity is often inherent in creative individuals, and thus is considered hard to separate from individual capital. It is not clear if Dixon or Romer considered it impossible to do so, or if they were simply not familiar with the prior analysis of "applied ideas", "intellectual capital", "talent", or "innovation" where instructional and individual contributions have been carefully separated, by economic theorists.

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