ENTREPRENEURSHIP AND DIFFUSION OF INNOVATIONS
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motive is best understood and protected, through such institutional mechanisms as patent laws and individual and corporate property rights. Innovations in productive coordination and strategic planning are also distinguishing features of these economies, especially in the relatively newer and more technological industries, and in those serving multiple international markets. Industrialization in these systems has developed by serving both export and domestic markets, but placing more emphasis on the former. In the international division of labor, the advanced Schumpeterian economies have therefore been the locomotives of growth, diffusing innovations in a life cycle-type pattern toward the other economic systems. Capital and knowledge resource transfer toward the less developed countries from nations such as the United States and Japan have, for example, been very significant in promoting economic growth in the latter while aiding capital formation in the former.
      Advanced Keynesian economies exhibit relatively high degrees of regulation, with significant levels of protectionism and institutional rigidities. Large public sectors have in many cases attempted to take over the individual and corporate inventive role, usually with little or limited success. Given the institutional constraints on entrepreneurship, government-financed deficits have often substituted indigenous and foreign private investment as major sources of growth. Clearly, then, a much more limited inventive role and potential than that found in the advanced Schumpeterian economies is a major distinguishing feature of these economies. At the same time, capital markets supporting the investment role are likely to be less developed than those in the advanced Schumpeterian economies. Industrialization in these economies has often been helped by significant competitive and trade barriers and, in some cases, by a process similar to, but not as comprehensive as, import substitution. In varying degrees, most of the economies of Western Europe fit well into this typology.
      The less developed Schumpeterian economies are characterized by rapid imitation and adoption of entrepreneurial innovations diffused from the advanced Schumpeterian economies, especially in industries where significant productive comparative advantages can be found. In this context, industrialization usually occurs through massive foreign investment and the establishment of free-trade manufacturing export enclaves. Export oriented industrialization, comprising assembly-type but also capital goods manufacturing, is therefore most important, while industries that primarily serve domestic markets are protected or maintain low priority in development and incentive programs. These economies significantly excel, first, in the productive coordination role, especially where manufacturing processes have to be