Schumpeter made a fundamental distinction between economic growth and economic development. Economic growth, for Schumpeter, is a gradual, continuous, and reversible process, representing quantitative changes that occur within the existing economic structure (e.g., increase in savings, population, capital). Economic development, on the other hand, is a discontinuous, spontaneous, and irreversible process driven by "innovations" introduced by entrepreneurs. These innovations disrupt the existing equilibrium ("stationary state") and lead to qualitative changes in the economic structure.
According to Schumpeter, a. Development is a discontinuous and spontaneous change in the stationary state. b. While growth is a gradual and steady change in the long run which, comes about by a gradual increase in the rate of savings and population. Which of the statement above is/are correct ?
Asked in MPSC CS Prelims 2023 · Topic: Nature of Indian Economy (Developing Economy Characteristics)
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