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In an analysis of an evolutionary approach to innovation Suenaga examines how several countries and firms in the Asia Pacific move from imitating developed countries to generating innovation? Neo-classical economics often assumes that only one production curve exists for the whole economy of a country, when actually there are various production curves depending on the industry, product, and process, and the introduction of a new production curve involves high risk. Innovative, risk-taking entrepreneurs are required for the introduction of a new production curve, even in developing countries. With reference to the production capability required to improve productivity, i.e., to shift the production curve upwards, when workers and technicians accumulate production experience, they develop increased expertise, resulting in improved productivity. Economies and firms in the Asia Pacific have realized technological changes by engaging not only in simple imitation but also in ‘creative imitation’ (Kim and Nelson 2000). An example involves adapting technologies to their environments and applying them to other industries. What is the relationship between innovation and the division of labour? Smith (1776: 9) points out the following three effects of the division of labour: (1) an increase in productivity, (2) saving time, and (3) the invention of machines. Smith’s discussion specifically concerns the division of labour in a workshop, however the division of labour between factories or industries also stimulates an increase in productivity and the invention of machines. The ideas of Smith and Schumpeter appear to contradict one another at first glance: Smith’s ‘division of labour’ and the ‘new combinations’ which Schumpeter regards as a key factor in economic development. Suenaga inquires whether the main factor involved in economic development is a ‘dividing’ or a ‘combining’ one? The views of Smith and Schumpeter are not contradictory he argues but complementary. Specialization in particular processes is made possible by the division of labour, yet the possibility of a new combination is also born during these processes, and this encourages a further division of labour by extending the market. Suenaga (2015a) refers to this pattern of economic development as ‘Smithian = Schumpeterian development.’
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