The Relationship between Entrepreneuship, Innocation and Economic Essay

The Relationship between Entrepreneuship, Innocation and Economic Development - Essay illustrationA variety of theories and policy approaches have been advanced with Keynesian influenced stimulus packages being infused into Western economies with varying degrees of success. Still, a growing body of support has sour to the potentials of economic development occurring through entrepreneurship and innovation. Theorists such as Joseph Schumpeter argue that entrepreneurship and innovation argon core elements for economic development, and subsequent city and state governments have oftentimes-established incubators and assumption increased funding to ensure that innovation is supported. This essay examines the relationship between entrepreneurship, innovation and economic development. The essay also considers the role creativity and problem solution play in this relationship, with reference to both theory and examples from the business world. Analysis When examining the relationship bet ween entrepreneurship, innovation, and economic development perhaps the most groundbreaking theorist has been Joseph Schumpeter. While Schumpeters insights into economic development span a wide array of understandings, there are a number of specific considerations that are relevant for this specific mode of investigation. One of Schumpeters most important notions is that of creative destruction. ... Individuals such as Alan Greenspan have noted that this process underlines economic development. He notes, Capitalism expands wealth primarily through creative destructionthe process by which the cash flow from obsolescent, low-return capital is invested in high-return, cutting-edge technologies (Greenspan 2002). There are a number of specific means by which entrepreneurship and innovation carries out such creative destruction. In his text Theory of Economic Development Schumpeter argued that entrepreneurship didnt simply create new industries, but also resulted in the combination of pa st industries (Schumpeter 1982). One example of this is that the development of the steam engine combined with appearance development techniques to form the automobile. The development of the automobile then drastically shifts previously held economic and social structural elements, reenergizing the economy and contributing to economic development. While Schumpeters theories have received a degree of criticism that remain prominent and highly relevant in the contemporary world environment. In large part, Schumpeters understanding of entrepreneurship and innovation as contributing to economic development has been echoed through endogenous produce theory. This perspective contends that a nations economic growth occurs through internal rather than external factors. In this context of understanding its clear how Schumpeters theory on entrepreneurship is squarely rooted within the endogenous means of growth. While entrepreneurship is popularly viewed in terms of inventions and small b usiness owners, in further examining its impact on economic development hotshot must consider the more abstract notion of innovation