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Innovation, economic diversification and human development

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  • Hartmann, Dominik
  • Pyka, Andreas

Abstract

In this paper we bridge a gap between innovation economics and the human development approach by analyzing positive and negative effects of different types of economic diversification on social welfare. Economic variety is a driver and outcome of economic development. However, diversification leads to ambiguous effects on the well-being of human agents: on the one hand, increasing variety augments the freedom of human agents to choose. On the other hand, it can overburden their capabilities to make economic decisions and can deteriorate their well-being. It becomes clear that human development policy has to go hand in hand with an industrial policy that promotes qualitative economic diversification. Depending on its dynamics, this diversification can be achieved via related and unrelated variety. We can expect a better design of development policies from a better understanding of the co-evolutionary development of variety, freedom of choice and well-being.

Suggested Citation

  • Hartmann, Dominik & Pyka, Andreas, 2013. "Innovation, economic diversification and human development," FZID Discussion Papers 65-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    • Handle: RePEc:zbw:fziddp:652013
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    2. Buhari Doğan & Oana M. Driha & Daniel Balsalobre Lorente & Umer Shahzad, 2021. "The mitigating effects of economic complexity and renewable energy on carbon emissions in developed countries," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(1), pages 1-12, January.
    3. Athanasios Lapatinas, 2016. "Economic complexity and human development: a note," Economics Bulletin, AccessEcon, vol. 36(3), pages 1441-1452.
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    5. Muhammad Ali & Uwe Cantner, 2020. "Economic diversification and human development in Europe," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 10(2), pages 211-235, June.

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    More about this item

    Keywords

    innovation; economic diversification; human development;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian

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