The World of Innovation Where Imagination, Uncertainty, and Restlessness Reign

My paper, as its title suggests, illustrates both the distinctiveness and the importance of some of the key concepts that lie at the heart of Schumpeter’s illuminating approach to the understanding of the evolution of capitalist economic change. I do this by discussing three of the important puzzles that I examined along my academic research journey. The first was the puzzle presented in the 1970s and 1980s by the outstanding relative economic performance of the so-called Asian Tiger Economies: Hong Kong, Singapore, South Korea and Taiwan. This performance was often described. But it lacked a convincing explanation. Second, a similar mystery surrounded the explanation of Japan’s astonishing catch-up in the post-Second World War period in the Information and Communications Technology Industry. I paid particular attention to two issues: The Japanese Ministry of Trade and Industry’s (MITI’s) highly controversial national advanced research programmes, allegedly designed to facilitate the leapfrogging of the leading Japanese ICT companies over their western competitors. And the main determinants of the long-term evolution of these companies which gave them world-leadership in areas such as computers, semiconductors, and telecoms equipment. Third, I examine the determinants of the Telecoms Boom and Bust of 1996–2003 when in 2000–2001 an astonishing $2.5 trillion dollars were wiped off world stock markets. As my paper clearly illustrates, Schumpeter’s theory of economic development, particularly his conceptualisation of the way in which innovation drives what he calls the “fundamental impulse” that is the prime mover of economic change provides crucial insight into the explanation of all these three examples.