Calestous Juma A
Policy and Complex Systems - Volume 1 Issue 1 - Spring 2014
Complexity , Innovation , and Development : Schumpeter Revisited
The role of innovation and entrepreneurship is increasingly getting policy attention in emerging countries . A growing body of literature is deriving its inspiration from the work of Joseph Schumpeter . His seminal 1911 book , The Theory of Economic Development , outlined a general framework for understanding the role of innovation and entrepreneurship in economic transformation . Despite Schumpeter ’ s influence on economic policies in industrialized countries , there has been little application of his work in emerging countries . On surface , the failure to apply Schumpeter ’ s ideas to emerging countries appears to be an intellectual oversight . To the contrary , this paper argues that the application of Schumpeter ’ s ideas to emerging countries was debated through the 1950s , but early architects of development studies deemed it to be irrelevant . The core of the rejection was an epistemological clash between Schumpeter ’ s systems approach to economic transformation and that of his critics who adhered to a more static , linear , and incremental view of economic change . Thus , Schumpeter ’ s central themes of innovation and entrepreneurship focused on endogenous transformation and evolution of economies , while his critics , who focused on the importance of central planning , relied on equilibrium models reflected in the role of bureaucracies as economic sources of stability .
Introduction 1
Those seeking to bemoan the fate of
emerging countries draw emblematic parallels with East Asian countries . One of the most evocative images is the claim that in the early 1960s Ghana and South Korea were at the same level of development . South Korea advanced to become an industrialized country now providing development assistance to Africa . Ghana , on the other hand , has gone through a serious of frustrating coups , economic stagnation , and negligible participation in the global trading system despite its gold mines and world-class cocoa plantations .
These cases conjure up images of a world of uneven growth dominated by inequities . Others have attributed the rise of East Asian economies to windfalls of the Cold War . But the seed of rapid economic transformation was planted in The Theory of Economic Development , Joseph Schumpeter ’ s seminal work published in 1911 . In this ground-breaking book Schumpeter outlined the epic role of innovation and entrepreneurship in economic development . 2 This was his bold attempt to depart from the
A
Harvard Kennedy School
1 This paper is drawn from the author ’ s draft book tentatively entitled , How Economies Succeed : Innovation
and the Wealth of Nations . I am grateful to Professor F . M . Scherer ( Harvard Kennedy School ) for sharing his insights and knowledge about Joseph Schumpeter that rekindled my interest to explore why Schumpeter ’ s Theory of Economic Development only marginally informs policy discussions on “ economic development .” I have also benefited from valuable comments and additional information from Richard Nelson ( Columbia University ) and Norman Clark ( The Open University , UK ). Finally , I thank Katherine Gordon ( Harvard Kennedy School ) and Katharina Lix ( Harvard College ) for their research support for this paper .
2 For an assessment of the evolution of Schumpeter ’ s view of the relationships between innovation and entrepreneurship , see J . Hagedoorn , “ Innovation and Entrepreneurship : Schumpeter Revisited ,” Industrial and Corporate Change 5 ( 3 ) ( 1996 ): 883-896 .
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