Innovation and Demand

Research output: Contribution to book/anthology/report/conference proceedingBook chapterResearch

Abstract

Economic evolution is an immensely complex phenomenon, so there is an obvious need of simplifying the way we handle this phenomenon. Since Nelson and Winter's pioneering formalisation of the Schumpeterian vision of innovation-driven evolution, the major simplification has been obtained by modelling the demand-side of markets in the simplest possible way. This strategy has allowed a gradual increase in the sophistication of supply-side aspects of economic evolution, but the one-sided focus on supply is facing diminishing returns. Therefore, demand-side aspects of economic evolution have in recent years received increased attention. The present paper argues that the new emphasis on demand-side factors is quite crucial for a deepened understanding of economic evolution. The major reasons are the following: First, demand represents the core force of selection that gives direction to the evolutionary process. Second, firms' innovative activities relate, directly or indirectly, to the structure of expected and actual demand. Third, the demand side represents the most obvious way of turning to the much-needed analysis of macro-evolutionary change of the economic system.
Translated title of the contributionInnovation og efterspørgsel
Original languageEnglish
Title of host publicationElgar companion to neo-Schumpeterian economics
EditorsHorst Hanusch, Andreas Pyka
Place of PublicationCheltenham and Northampton, Mass.
PublisherEdward Elgar Publishing
Publication date2007
Pages754-765
ISBN (Print)9781843762539, 1843762536
Publication statusPublished - 2007

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