Innovation and Entrepreneurship: What Drives Them
Robert Litan, Vice President for Research at the Ewing Marion Kauffman Foundation and a Senior Fellow of Economic Studies at the Brookings Institution explains why entrepreneurship is so important and how it can be promoted in an article for Foreign Policy Research Institute (FPRI) titled Innovation and the World Economy.
Litan explains that throughout history entrepreneurs have been the sources of the most radical, disruptive innovations that have made modern life what it is. “Just think about it — the car, the airplane, computers, computer software, air conditioning have changed the world. All of these break-through radical innovations were developed by individuals—by entrepreneurs — and not by large, existing enterprises,” he explains.
The article also discusses the vexing challenge of explaining the difference in growth rates between countries, and the role of the kind of economic system in explaining such differences, in particular the nature of capitalism. While no country fits entirely into one kind or another, they tend to have one or two of the four dominant types: oligarchic capitalism, state-guided capitalism, big-firm or managerial capitalism, and entrepreneurial capitalism.
Finally, the article looks at policy challenges in the U.S., such as the need for more entrepreneurship education, for an entrepreneur’s visa, and for a reversal of the unsustainable deficit.
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