If we seek to explain the success of those economies which have managed to grow significantly with those that have remained relatively stagnant, we find it difficult to do so without taking into consideration differences in the availability of entrepreneurial talent and in the motivational mechanism which drives them on. A substantial proportion of the energies of those who design plans to stimulate development has been devoted to the provision of means whereby entrepreneurs can be trained and encouraged.Historically fiscal policy has never worked as a stimulus measure because it is always enacted too late and ends up doing more harm than good. If we are being gracious we can perhaps say that the literature on this question is mixed. The central question we should be asking is how we can help entrepreneurs get back to creating the product and process innovations that drive our economy.
Friday, January 9, 2009
From William Baumol's seminal paper, "Entrepreneurship in Economic Theory," in the American Economic Review (1968):