Financial System, Corporate Diversification and Technological Catching-up: South-Korea; an imitator to innovator
Javaid, Muhammad Nadeem
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Schumpeter emphasized ( 1943) that those who are starting “new things”, or innovating need to be provided with “profits for above what are necessary in order to introduce the corresponding investment” He argued that entrepreneurial profits (or quasi-rents) may some time be provided by the difficulty of imitating the new technology (or organization), but sometimes would have to be secured through “restraints of trade” like cartel arrangements. The thrust of Schumpeter’s argument is then that entry barriers of one form or another are necessary to provide incentives for innovation because it means doing “new thins”. While, Chang H. J. (1993) is of this opinion that establishing an industry in a developing country may not involve doing anything “new” from a global point of view, but poses a similar incentive problem, because it still is a “new thing” for that nation. Therefore this study probes Korean industrial Strategy from a Distinct angle of financial system and financial sector policies as an imperative determinant of technological catching-up.