Nobody downloaded yet

Analyse and critically assess Baumol's model of innovationbased of growth - Essay Example

Comments (0) Cite this document
Summary
Baumol (2002) defines innovation as a process which results into the emergence of new technology that results into improved or new products and processes in the market. He discusses the role of innovation in achieving economic growth, however he states that innovation has been achieved due to the existence of the free market economy and competition in the market.
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.1% of users find it useful
Analyse and critically assess Baumols model of innovationbased of growth
Read TextPreview

Extract of sample "Analyse and critically assess Baumol's model of innovationbased of growth"

Download file to see previous pages For this reason he states that competition and the free market economy has played a major role in encouraging innovation by enterprises in the economy which has resulted into economic growth.
According to Baumol (2002) capitalism is unique in its innovation characteristic and that the product of the capitalist society is economic growth. he notes that past economies such as medieval China were characterized by innovative and invention ideas but due to the economic system and characteristics innovation did not result in economic growth, the difference between these economies is that the modern economy is characterized by free competition and also that innovation is used as a competition tool in the market.
Firms in the modern world have two competitive weapons and they include prices and innovation, innovation in the modern world is the prime weapon and has become mandatory in the modern firms. The firm that do not undertake innovation face closure in the modern world, therefore they compete to outperform their competitor in innovative ideas in the market other than the use of price, this form of competition results into new and better products and processes that benefits consumers.
Firms result in frequent innovation as a competitive strategy and this innovation results into further innovation, innovation therefore becomes a routinised process. ...
He also notes that the Capitalist economy is driven by profit motives, these motives makes firms to perform tasks efficiently and effectively, and that the invisible hand controls firms in the market from deriving abnormal profits forcing a firms to provide better products in the market than its rivals. Baumol (2002) however states that economic growth does not solve other problems the society may face such as inequality and this is because economic growth only solves problems that depend on it.
On large and small entrepreneurs he noted that small and independent innovators provide a significantly startling result, he notes that a recent study by the small business association the frequency of citation of small firm patents is more likely to be among the first top one percent, Some of the products by independent and small firm innovation include the airplane, pace maker and the helicopter. This trend is expected to exist in future and that independent inventors over the years open up large firms that perform routine innovation.
Large firms on the other hand also contribute to innovation. Large firms specialize in product improvement, provision of user friendly products and finding new consumers for their products. These large firms are characterized by bureaucratic controls that ensure that innovation processes are incremental and predictable, for this reason these control restrict imaginative ideas which may result into disaster and that may also result to revolutionize into a new world.

Conclusion:
From the above analysis it is evident that Baumol analysis of economic growth advocates for the free market economy, the capitalist society promotes growth whereby it is ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Analyse and critically assess Baumol's model of innovationbased of Essay”, n.d.)
Analyse and critically assess Baumol's model of innovationbased of Essay. Retrieved from https://studentshare.org/miscellaneous/1529606-analyse-and-critically-assess-baumols-model-of-innovationbased-of-growth
(Analyse and Critically Assess Baumol'S Model of Innovationbased of Essay)
Analyse and Critically Assess Baumol'S Model of Innovationbased of Essay. https://studentshare.org/miscellaneous/1529606-analyse-and-critically-assess-baumols-model-of-innovationbased-of-growth.
“Analyse and Critically Assess Baumol'S Model of Innovationbased of Essay”, n.d. https://studentshare.org/miscellaneous/1529606-analyse-and-critically-assess-baumols-model-of-innovationbased-of-growth.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Analyse and critically assess Baumol's model of innovationbased of growth

Solow Growth Model

...). Solow growth model postulates that under equilibrium, the level of per capita income is determined by prevailing technology, rates of saving, rate of population growth and technical progress all which are assumed exogenous (Barossi-Filho, 2005, p. 37). Given that the rates of population growth and levels of saving are varying across countries, the model gives testable predictions on assessing how the two can influence economic growth of countries. Solow model has been criticized by different theorists given the assumptions made by this theory. This paper will explain the impacts of...
6 Pages(1500 words)Essay

Solow-Swan growth model

...sine the short run often makes the economy converge at a new steady output level. In the economy converges, the steady state is then calculated by the capital accumulation rate (Frank and Bernanke 15). On the other hand, the capital accumulation is calculated by savings rate as well as the capital depreciation rate. Graphical Representation The model begins with neoclassical production function presented by equation Y/L = F (K/L. making y the subject of the equation y = f(k), and this is represented by the red curve. Therefore, output per worker translates to capital per worker. From the graph, n = population growth rate, y = output/income per, k = capital per worker, worker, s =...
4 Pages(750 words)Essay

The Export-Led Growth Model

...The Export-Led Growth Model Export-led growth has been a viable strategy for boosting the economic growth of the nation after the global economic crisis that impacted the demand in major marketing economies. Export-led growth is defined as the trade and economic policy that aims in speeding up industrialization activities in an economy in order to achieve comparative advantage. The extensive adoption of export-led growth has enabled many economies to achieve and sustain rapid economic growth. This model has also enabled many economies to sustain rapid growth in the competitive global...
7 Pages(1750 words)Essay

S-P-O model

...that is used to measure outcome of patients which contains questionnaires that details of what happens before and after treatment. This kind of method has the possibility of leading to the rise of associations that can be witnessed between overall evaluation and the outcome of the received healthcare. (Lukosius, 2004). With these ideas in mind, the health care system should make it compulsory to put into effect the ideas that can attract and retain the patients as well as the talented employees whose capability is good for the growth and development of the firms that conduct health care services. In SPO, it is advisable to embrace a conceptual model that encompasses three major health care delivery...
7 Pages(1750 words)Research Paper

Solow Growth Model

...Solow Growth Model: How far can the shortcomings of the Solow growth model be overcome by alternative models of economic growth Introduction: Robert Solow used the Cobb Douglas function of production to show that economic growth can still be achieved even if an economy uses exhaustible resources in its production process. He emphasised the importance of capital accumulation and the adoption of modern technology to achieve economic growth, He expressed the aggregate production function as Y =F (L, K, E, D) Where: L is labour K is capital E is a constant that has...
4 Pages(1000 words)Essay

Critically analyse financial statemebt

...Features of financial ments I. Introduction: of the financial ments To better understand the distinctive features of financial statements, it would be necessary to define the functions of a certain type of financial statement in a business organization. a. Income Statement – income statement summarizes the company’s operating performance over a specified period of time. It shows the total revenues of the business enterprise and the cost or expense of operating the business. Income statement’s determines whether a company is making a profit or losing money (Temte, 2005). b. Balance Sheet - balance sheets provides a summary of the value of a business enterprise’s assets, liabilities and equity at a specific point in time... of financial ments ...
1 Pages(250 words)Essay

Harrod-Domar Growth Model

...a) Does net saving rate promote economic growth? b) We use Harrod-Domar growth model to partially explain it. H-D model is “a functional economic relationship in which the growth rate of gross domestic product (GDP) depends directly on the national net saving rate(s) and inversely on the national capital-output ration (COR).” (P111, Todaro) There are several assumptions of this model. The first one is that H-D model is an investment drive growth model. Additionally today we often referred to this model as AK model whose...
7 Pages(1750 words)Essay

Critically analyse qualitative research articles

...Critical Analysis of Two Qualitative Research Articles Critical Analysis of Two Qualitative ResearchArticles Introduction Researchers who work in the social sciences such as psychology, sociology and anthropology are interested in exploring the behavior of human beings and their social interactions. For a long time, these researchers encountered rising difficulty in attempting to explain human behavior in quantitative terms(Hancock, et al., 2009). This difficulty gave rise to qualitative research methods. In addition to explaining human behavior, qualitative research attempts to explain social phenomena. This paper attempts to analyze, in a critical way, two articles that report qualitative research, paying special attention... especially...
5 Pages(1250 words)Essay

China's economic growth

...is the worst then on this scale in terms of growth, China is still at zero, not because they are currently experiencing growth, but because they have had such incredible growth that an adjustment is necessary and being conducted in a timely manner. Chinese growth is still considered to be better than almost every country in the world and they are in an enviable situation. References Al-Tamimi, N. M. (2013). China-Saudi Arabia Relations, 1990-2012. New York: Routledge. CIA World Factbook. (2015). China. Retrieved from https://www.cia.go v/library/publications/the-world-factbook/ Yan, S. (14, April 2015). Chinas economic growth drops to...
4 Pages(1000 words)Research Paper

Economic Growth - Solow Growth Model and Beyond

...rates, which is an exogenous factor (Dimand and Spencer, 2008). Additionally, the individuals in the Solow model as well as in some of his successors, lack motivation for the invention of new goods. Additionally, Dimand and Spencer (2008) mentions that one of the limitations of the model entail inability of the model to take into account entrepreneurship as well as the institution strength. Entrepreneurship can catalyze economic growth. Additionally, there is no explanation of how and why the progress in technology happens. This weakness has resulted to the developing of endogenous growth theory. The theory androgenizes the progress of technology and...
7 Pages(1750 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Analyse and critically assess Baumol's model of innovationbased of growth for FREE!

Contact Us