Schumpeterian Growth

Document Type : Original Article

Author

University of Guilan, Rasht, Iran

Abstract

According to Schumpeter, in the capitalist system, development is rooted in the inevitable tendencies of the economic system to transcend the concept of equilibrium (Rosenberg, 1994). Entrepreneurial force is the driving force behind such a transition, and innovation is an important focus of this force, innovation in manufacturing, development of new goods, new processes and new ways of using raw materials and new markets (Schumpeter, 1934). In Schumpeter's early works, the role of entrepreneurship is mainly in directing profit-oriented activities in the private sector of the economy (Economic Development Theory Book). But in his more recent works, such as Capitalism, Socialism, and Democracy, Schumpeter extends the scope of this debate to larger and more general issues in which entrepreneurial processes are introduced as the main source of economic growth. The three main ideas underlie the Schumpeterian growth model: a) Growth is primarily influenced by Technological Innovations. B) Innovation is produced by entrepreneurs looking for monopoly rents. C) New technologies kick out old technologies (Aghion and. Schumpeterian growth model (Aghion and Howitt, 1992, 1998) is based on the theory of modern industrial organization (Tirole, 1988). Schumpeter's growth pattern focuses on innovations that obsolete previous products and therefore include a force that Schumpeter calls Creative Destruction. According to Aghion (2008), the Schumpeterian growth model has a regular, integrated, and at the same time operational framework for analyzing and developing economic growth policies.

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