Entrepreneurship and Economic Development: What is the Difference Between Austrian and New Institutional Approaches?
What is the role of entrepreneurship in economic development from the perspective of neo-Austrian and new institutional economics and what is the difference between these approaches? Neo-Austrian economists claim that economic development is caused by entrepreneurial discovery. New institutional economists argue that structure of incentives determined by the institutional environment provides a guideline for entrepreneurial decision-making. Hence, an institutional environment that rewards rent-seeking does not provide opportunities for economic development. In this paper we offer a comparison of these approaches to show that both entrepreneurial discovery and institutional environment are closely related. Moreover, with the comparison we demonstrate that entrepreneurial decision-making plays more important role in economic development when an institutional change is taken into account.
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Volume (Year): 2010 (2010)
Issue (Month): 5 ()
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- Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-23, May.
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Nobel Prize in Economics documents
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- Knight, Frank H, 1942. "Profit and Entrepreneurial Functions," The Journal of Economic History, Cambridge University Press, vol. 2(S1), pages 126-132, December.
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