Jun 2, 2012

Classic article of the day

The basic hypothesis is that, while the total supply of entrepreneurs varies among societies, the productive contribution of the society's entrepreneurial activities varies much more because of their allocation between productive activities, such as innovation, and largely unproductive activities, such as rent seeking or organized crime. This allocation is heavily influenced by the relative payoffs society offers to such activities. This implies that policy can influence the allocation of entrepreneurship more effectively than it can influence its supply. Historical evidence from ancient Rome, early China, and the Middle Ages and Renaissance in Europe is used to investigate the hypotheses. Copyright 1990 by University of Chicago Press.
That is from Baumol's "Entrepreneurship: Productive, Unproductive, and Destructive" (1990). As he explains, the purpose of the article is to go beyond Schumpeter's theory of economic development. Baumol proposed the then novel argument that the institutinal arrangement (the rules of the game) explains why people use their entrepreneurial talents to different types of innovations (productive, unproductive, and destructive). He illustrates his arguments with examples from ancient Rome, medieval China, earlier middle ages, and other historical periods. 

No comments:

Post a Comment