Economic Theory of Innovation

The engine that drives prosperity in the modern world is the increasingly rapid emergence of use-ful knowledge. The aim of the paper is to present the basic ideas of the economic theory of in-novation. The first part of the paper outlines the theory of endogenous growth and technological change. The second part reveals the nature of innovation. The third part presents creative destruc-tion as part of technological development. The fourth part explains the paradox of progress: why we produce more from less. The fifth part outlines the future as an age of abundance.