Theory and Evidence
Industrial Dynamics, Entrepreneurship and Innovation series
Edited by David B. Audretsch, Robert E. Litan and Robert Strom
Chapter 1: Entrepreneurship, Trade Competition and the Explosion of World Trade
William J. Baumol Without the entrepreneur, knowledge [contributed by the inventor or scientist] might possibly have lain dormant in the memory of one or two persons, or in the pages of literature (J.-B. Say, 1807, 1836, p. 81). As we are all well aware, recent efforts – however incompetent – to enhance freedom of trade have been a source of marked controversy. One of the main fears they raise is that elimination or even weakening of restrictions will cut into employment opportunities and depress earnings in the economically advanced countries. And it should be clear that if these fears are well grounded, the entrepreneur is high on the list of those imperiled. Although I take an intermediate position on these matters, believing neither that enhanced trading is sure to shower benefits upon the wealthier countries nor that it is likely to inhibit prosperity and growth, that is not my main subject here. All I wish to draw from the preceding observations is that, although its specifics are under dispute, there is obviously a relationship between the volume and degree of freedom of trade and the reward of the entrepreneurs and the incentive for their activities. But, even more, I want to emphasize the other side of the matter: that the volume of trade and the ease with which it is carried out is a function of the degree of exercise of entrepreneurship. Here the story should be obvious, once it is recounted, but it is patently of critical importance both for policy...
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