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When is the Spirit of Capitalism Effective for Economic Development?

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  • Shiro Kuwahara

Abstract

By incorporating endogenous innovation and wealth preference into the growth model, this paper aims to combine two important factors of economic development ¡ª ¡°creative destruction,¡± as emphasized by Schumpeter (1912) and modelized by Aghion and Howitt (1992), and the ¡°spirit of capitalism,¡± proposed by Weber (1905). Zou (1994) introduced this ¡°spirit of capitalism¡± into the modern growth analysis by reinterpreting the Kurz (1968) model, wherein a preference on asset accumulation is introduced into the Ramsey model. By uniting these two factors, we obtain the result that this preference basically stimulates the long-term growth rate, and that it is effective when the economy has a too low innovation efficiency. However, the effect is small for an economy with a sufficiently high innovation efficiency.

Suggested Citation

  • Shiro Kuwahara, 2018. "When is the Spirit of Capitalism Effective for Economic Development?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 10(3), pages 70-82, March.
    • Handle: RePEc:ibn:ijefaa:v:10:y:2018:i:3:p:70-82
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    spirit of capitalism; wealth preference; R&D-based growth; no-growth trap;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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