The Political Economy of Innovation Development : Breaking the Vicious Cycle of Economic Theory

"This book finds that the R & D and technological innovation of a country is not a result, but a factor, of sustained economic growth. Bazhal develops Schumpeter's theory to argue that genuine economic growth - especially in transitioning and developing countries - is only possible with innovation. With a particular focus on the work of Ukrainian economists, Tugan-Batanobvsky and Vernadsky, the text seeks to move the discipline forward and explain why innovation has become a primary factor of economic development in recent decades and why its role will become even more dominant in the future. Chapters interrogate whether modern economic theory can explain how we ensure the effective functioning of the market economy. The book shows that explanations of economists and politicians regarding the nature of the current economic and financial crisis, and the causes of huge gaps in levels of wealth in market economies, demonstrates that there are not enough satisfactory answers to this question"-- Provided by publisher The Political Economy of Innovation Development 3 Contents 5 List of Figures 7 List of Tables 8 1 Introduction 9 2 Innovations: A known Unknown Phenomenon of Economy 22 2.1 Apparent Phenomenon of Innovations 22 2.2 Mainstream of Macroeconomics: Without “Innovations” 27 2.3 Innovations: The Known Unknown Factor of Economic Development 31 2.4 Innovations in the Main Neoclassical Models of Growth 33 2.5 “Total Factor Productivity” and “Creative Destruction” Versus Innovations 39 References 43 3 Key Features of Schumpeter’s Theory of Economic Development 47 3.1 Missed Pillar of Schumpeter’s Theory: Tugan-Baranovsky Concept 47 3.2 Schumpeter’s Invention: Innovation as Main Factor of Development 55 3.3 Neo-Schumpeterian Heterodox Theory of Economic Development 60 References 66 4 “Vicious Cycle” of Political Economy Without “Innovations” 70 4.1 Political Economy as Theory of the Wealth of Nations 70 4.2 Key Factors of Economic Development as Sources of Added Value 76 4.3 The Necrophilia Syndrome of Political Economy: Innovations-Healing 83 References 88 5 Innovation Development Versus Re-industrialization 91 5.1 Terminology Influences Economic Policy 91 5.2 Innovations in “Post-industrial Society” Conception 95 5.3 Innovations in Evolutionary Economics 98 References 100 6 Evaluating Innovations Impact on Economy 104 6.1 Quantitative Assessment of Innovations Efficiency 104 6.2 Sample of Estimating Structural Technological Dynamics 110 References 117 7 Human Capital and Innovation Development 119 7.1 Innovation Development and Increasing Wages 119 7.2 Productivity and Wages: Neoclassical Canon 120 7.3 Exogenous Increase of Wages: Evidences from Analogies 122 7.4 Why Wages Are So Different in Transition Economies? 126 References 131 Index 132 Front Matter....Pages i-ix Introduction....Pages 1-13 Innovations: A known Unknown Phenomenon of Economy....Pages 15-39 Key Features of Schumpeter’s Theory of Economic Development....Pages 41-63 “Vicious Cycle” of Political Economy Without “Innovations”....Pages 65-85 Innovation Development Versus Re-industrialization ....Pages 87-99 Evaluating Innovations Impact on Economy....Pages 101-115 Human Capital and Innovation Development....Pages 117-129 Back Matter....Pages 131-135