Joseph Schumpeter was an Austrian American economist and political scientist. He briefly served as Finance Minister of Austria in 1919. One of the most influential economists of the 20th century, especially related to the typology of innovation: 

  • introduction of a new product
  • introduction of a new method of production 
  • opening up of a new market 
  • conquest of a new source of raw materials
  • carrying out of a new organization of any industry, like the creation of a monopoly

According to Schumpeter, it is the introduction of new product and the continual improvements in the existing ones that lead to development.

Schumpeter identified innovation as the critical dimension of economic change.[25] He argued that economic change revolves around innovation, entrepreneurial activities, and market power. He sought to prove that innovation-originated market power could provide better results than the invisible hand and price competition. He argues that technological innovation often creates temporary monopolies, allowing abnormal profits that would soon be competed away by rivals and imitators. He said that these temporary monopolies were necessary to provide the incentive necessary for firms to develop new products and processes.[

Sources :http://en.wikipedia.org/wiki/Joseph_Schumpeter,  http://www.slideshare.net/vishnuchandradas/schumpeter-theory-of-economic-development-11555141

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