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Innovation, economic diversification and human development

Dominik Hartmann and Andreas Pyka ()

No 65-2013, FZID Discussion Papers from University of Hohenheim, Center for Research on Innovation and Services (FZID)

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.

Keywords: innovation; economic diversification; human development (search for similar items in EconPapers)
JEL-codes: O10 O54 E11 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-dev, nep-ino and nep-knm
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fziddp:652013

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