Innovation and Economic Growth

Bart Verspagen

in The Oxford Handbook of Innovation

Published in print January 2006 | ISBN: 9780199286805
Published online September 2009 | | DOI:

Series: Oxford Handbooks in Business and Management

Innovation and Economic Growth


Economic history addresses the issue of the way in which the record of economic growth is related to historical developments. This article argues that technological and organizational innovation are responsible for this lengthy period of gradually accelerating growth. Although this argument is appealing, in fact economic theories explaining any such relationship are far from straightforward. Growth theory is a field characterized by spirited scholarly debate. An important current debate is that between the evolutionary approach and the more neoclassically inspired “endogenous growth theory”. This article argues that the gap between these two approaches is rooted in fundamental differences in their basic worldviews. While the neoclassical tradition adheres to a worldview in which cause and effect are clearly separable, and growth is a steady state phenomenon, the evolutionary worldview is one of historical circumstances, complex causal mechanisms, and, turbulent growth patterns that appear to be far from a steady state.

Keywords: economic growth; organizational innovation; economic theories; growth theory; endogenous growth theory

Article.  11695 words. 

Subjects: Business and Management ; Innovation

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