Entrepreneurship and Openness

Entrepreneurship and Openness

Theory and Evidence

Industrial Dynamics, Entrepreneurship and Innovation series

Edited by David B. Audretsch, Robert E. Litan and Robert Strom

A growing body of evidence has documented the critical role that entrepreneurs play in fostering economic growth. But entrepreneurs can only be expected to take risks in ‘open settings’, where individuals and firms are free to contract with one another. In this important book, leading economists explain and document the role of open markets, within and across national boundaries, in facilitating entrepreneurship, innovation and economic growth. The main message of this book is especially timely given growing concerns in developed countries in particular about off-shoring and openness to trade.

Chapter 1: Entrepreneurship, Trade Competition and the Explosion of World Trade

William J. Baumol

Subjects: business and management, entrepreneurship, economics and finance, economics of innovation, innovation and technology, economics of innovation

Extract

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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