One of the specific problems socialist economies had was keeping up with capitalist countries technologically. a....

One of the specific problems socialist economies had was keeping up with capitalist countries technologically.

a. Can you think of any reason inherent in centrally planned economy that would make innovation difficult?

b. Can you think of any reason inherent in a capitalist economy that would foster innovation?

c. Joseph Schumprter, a famous Harvard economist of 1930s, predicted that as firms in capitalist societies grew in size, they would innovate less. Can you suggest what his argument might have been? d. Schumpeter’s prediction did not come true.

Modern capitalist economies have had enormous innovations, can you provide explanations as to why?

Expert Solution

(a) A centrally planned economy market is regulated by government. Government does not provide any kind of incentives to firms tor innovation. Innovation requires liberty of profit- maximization. Government advocates all the business activities in a centrally economy, so the firms do indulge in innovation.

(b) Firms are tree to innovate and make profit in a capitalist economy. Freedom to make profit provides an incentive tor new innovation. Cash prizes and patent rights are given in capitalist economy tor new innovation. This gives incentives tor firms to innovate.

(c) An economist, Joseph Schumpeter's argument regarding innovation in capitalist economy might nave been that increasing size of firms is beneficial tor firms rather than innovation. According him, innovation is not beneficial tor innovations. Firms often try to expand their business activities rather than the innovation.

(d) Modern capitalist economies had enormous innovations because it has proved a profit maximization tool, and it helps many firms to maximize their profit. All most all the firms in a capitalist economy nave departments of research and development to enlarge advanced technological innovations.

e) Joseph Schumpeter's argument did not come true, because advanced technological innovations has improved quality products and reduced the cost of production. This has helped firms to maximize their profit. Thus, his argument did not come true.

Rahul Sunny answered 6 months ago

Are market economies necessarily capitalist and are command economies necessarily socialist? Why or why not?

What are the two main problems that caused the demise of socialist economies in Russia and...

What are the two main problems that caused the demise of socialist economies in Russia and Eastern Europe?

As socialist economies transition toward capitalist systems, the government commonly sells publicly controlled companies and privatizes...

As socialist economies transition toward capitalist systems, the government commonly sells publicly controlled companies and privatizes these state-owned enterprises. Which type of economy is expected to generate higher values for the privatized assets, a planned socialist economy or a market socialist economy? Please explain your response.

One way of measuring how socialist or capitalist a country leans is to: A) measure how...

One way of measuring how socialist or capitalist a country leans is to: A) measure how much the government spends as a percentage of the economy. If the government spends very little we can assume that it leans capitalist. B) measure how much the government spends as a percentage of the economy. If the government spends very little we can assume that it leans socialist. C) measure how much it protects private property rights. If the government protects them with...

Discuss at least four of the major trade-specific problems of the Developing Countries

One of the biggest problems with centrally planned economies is that ... a. demand curves are...

One of the biggest problems with centrally planned economies is that ... a. demand curves are inelastic b. then typically have higher levels of corruption compared with market economics c. central planners have limited information on the true value of the various ways to utilize scarce resources d. they fail to reach economic efficiency because their policies limit global trade

Compare two countries one big economy and one small economy. Suppose that both economies have the...

Compare two countries one big economy and one small economy. Suppose that both economies have the same percentage of Current account deficit to GDP ratio. a) Why do you think current account deficit be an economic problem for these countries?, b) Would it be more problematic in small or big economies? Why?

The GCC countries economies had been growing steadily over past years since the financial crisis of...

The GCC countries economies had been growing steadily over past years since the financial crisis of 2008 and their economies grew at 3,16% in 2016. a) how long will take to double their economic growth? b) explain what factors might influence Kuwait,s future rate of economic growth

Some Economists argue that one of the reasons that economies in developing countries grow so slowly...

Some Economists argue that one of the reasons that economies in developing countries grow so slowly is because they do not have well-developed financial markets. Does this argument make sense? Discuss. Note: Your answers should be detailed with proper references.

As a developing countries make a transition to market-based economies, one of the first major capital...

As a developing countries make a transition to market-based economies, one of the first major capital investment is in "western-quality" hotels. Explain why brand-name hotel accommodations are a critical step in attracting foreign investment.

Question