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The Innovative Enterprise and the Developmental State: Toward an Economics of “Organizational Success”

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Investment in productive capabilities provides the foundation for economic growth.

We live in an economic world of constant innovation, characterized by new technologies, new markets, and new competitors. As Joseph Schumpeter understood in The Theory of Economic Development, first published a century ago, investments in productive resources that can result in real per capita productivity growth must be investments in superior productive capabilities that can generate new products using new processes (Schumpeter 1934). They must be investments in innovation

The basic argument of this paper is that investment in innovation is an organizational process. Investors in innovation may be households, governments, or businesses. These three types of social actors often collaborate in developing and utilizing productive resources to generate productivity growth.