Elgar original reference
Edited by David B. Audretsch, Oliver Falck, Stephan Heblich and Adam Lederer
Chapter 13: Entrepreneurship, Innovation and Economic Growth: Interdependencies, Irregularities and Regularities
1 Pontus Braunerhjelm The greatest danger for most of us is not that our aim is too high and we miss it but that it is too low and we reach it. (Michelangelo) INTRODUCTION Considerable advances, even breakthroughs, have undoubtedly been made during the last decades in our understanding of the relationship between knowledge and growth on the one hand, and entrepreneurship and growth on the other. Similarly, more profound insights have also been gained as to how entrepreneurship, innovation and knowledge are interrelated. Yet a comprehensive understanding is still lacking concerning the interface of all of those variables: knowledge, innovation, entrepreneurship and growth. The knowledge–innovation–entrepreneurship–growth nexus is intricate and influenced by forces that are likely to simultaneously affect all variables, at least partially, while others can be expected to have a unidirectional impact or affect only a few of these variables. The link between the microeconomic origin of growth and the macroeconomic outcome is still too rudimentarily modeled to grasp the full width of these complex and intersecting forces. Growth can basically be attributed the following fundamental forces: an increase in factors of production; improvements in the efficiency of allocation across economic activities; knowledge; and the rate of innovation. Given full employment and efficient allocation, growth is thus driven by knowledge accumulation and innovation. The process of innovation is typically modeled as a function of the incentive structure, i.e. institutions, assumed access to existing knowledge, and a more systemic part. Innovation also implies that the stock...
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