On the Role of the Innovative Entrepreneur in the Prosperity - and Decline - of Three Historical Economies

3 Pages Posted: 8 Feb 2010 Last revised: 10 Feb 2010

See all articles by William J. Baumol

William J. Baumol

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies; Leonard N. Stern School of Business - Department of Economics

Ying Lowrey

Tsinghua University

Pierre Mohnen

Maastricht University - UNU-MERIT

M. Ishaq Nadiri

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Thijs ten Raa

Tilburg University - Center for Economic Research (CentER)

Bas van Leeuwen

Utrecht University, Humanities; Free University, Humanities; Warwick University, Department of Economics

Jan Luiten van Zanden

University of Utrecht

Date Written: February 8, 2010

Abstract

Three historical papers on the influence of the innovative entrepreneur upon the achievements of their economies were presented at the annual meeting of the ASSA held in Atlanta in January 2010. The focus of the session was on the incentive structure built into the institutions of the three economies investigated, each of which had experienced an era of extraordinary economic accomplishment, followed by a period of marked decline.

Of course, the causes of these developments were complex - no single influence can be expected to provide the sole explanation. Yet, in each case, the evidence indicates that each economy’s pertinent institutions initially provided strong incentives that led individuals with enterprising propensities and abilities to devote themselves to the promotion of innovations that were beneficial to their economies, rather than pursuing activities that promised private gains at the expense of the general welfare. The historical evidence cited in each paper comports with the hypothesis offered by leading economic historians, which asserts that the activities undertaken by entrepreneurs are influenced heavily by the institutions present in their economies, which provide the incentives that determine the activities to which entrepreneurs choose to allocate their efforts.

The papers in this ASSA session examined evidence related to this hypothesis that indicates that the incentives, at least at the end of each economy’s prosperous periods, were such as to attract entrepreneurs away from the productive innovative activities in which these societies had achieved much success and prosperity. These studies offer important lessons for today’s impoverished economies, as well as for wealthy economies whose continued prosperity seems uncertain.

Keywords: Economic History, Entrepreneurship

JEL Classification: N, N9

Suggested Citation

Baumol, William J. and Lowrey, Ying L. and Mohnen, Pierre and Nadiri, M. Ishaq and ten Raa, Thijs and van Leeuwen, Bas and van Zanden, Jan Luiten, On the Role of the Innovative Entrepreneur in the Prosperity - and Decline - of Three Historical Economies (February 8, 2010). Available at SSRN: https://ssrn.com/abstract=1549752 or http://dx.doi.org/10.2139/ssrn.1549752

William J. Baumol (Contact Author)

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies ( email )

New York, NY
United States
212-998-8943 (Phone)
212-995-3932 (Fax)

Leonard N. Stern School of Business - Department of Economics

269 Mercer Street
New York, NY 10003
United States

Ying L. Lowrey

Tsinghua University ( email )

Tsinghua Yuan No. 1, Ming-Zhai 222
Beijing, 100084
China
+86-10-6279-5514 (Phone)
+86-10-6278-4663 (Fax)

HOME PAGE: http://www.rwxy.tsinghua.edu.cn

Pierre Mohnen

Maastricht University - UNU-MERIT ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
31-43-3884464 (Phone)
31-43-3884495 (Fax)

M. Ishaq Nadiri

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States
212-998-8968 (Phone)
212-995-4013 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Thijs Ten Raa

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://center.uvt.nl/staff/raa/

Bas Van Leeuwen

Utrecht University, Humanities ( email )

Vredenburg 138
Utrecht, 3511 BG
Netherlands

Free University, Humanities ( email )

De Boelelaan 1105
Amsterdam, ND North Holland 1081 HV
Netherlands

Warwick University, Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Jan Luiten Van Zanden

University of Utrecht ( email )

Vredenburg 138
NL-3508 TC Utrecht, 3511 BG
Netherlands

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