Diversity and Innovation in Economic Evolution

Abstract

The basic idea of the paper is to apply a multi-attribute notion of diversity
proposed by Nehring and Puppe to technological changes appearing as a
consequence of innovations in Schumpeter’s sense of the term in the production
sphere of the economy modelled by the use of the Arrow and Debreu topological
apparatus. The paper is inspired by the work of Malawski and Woerter who
used Stirling diversity concept to prove that innovative processes are the source
of growing diversity in the Schumpeterian vision of economic development. We
show that, under certain conditions, nondecreasing multi-attribute diversity in
the production sphere of the private ownership economy is a necessary and
sufficient condition for the occurrence of innovation in the economy under study.