If innovation is like a product, then it has supply and demand. Joel Mokyr emphasizes supply factors: factors that create innovation, such as scientific knowledge and educated craftsmen, but Allen thinks demand factors have been underrated. This book argues that many major inventions were adopted when and where the prices of various factors made it profitable and a good investment to adopt them, and not before. In particular, he emphasizes high wages, the price of energy, and (to a lesser extent) the cost of capital. When and where labor is expensive, and energy and capital are cheap, then it is a good investment to build machines that consume energy in order to automate labor, and further, it is a good investment to do the R&D needed to invent such machines. But not otherwise.
I learned a lot from this book; it is a classic in the field for good reason. I buy a weak version of the thesis, but not the strong version, for reasons that I explain in my review.
What if they gave an Industrial Revolution and nobody came?
The American Information Revolution in Global Perspective