Adjustment Processes Within Economic Evolution - Schumpeterian Approach

This research is inspired by Schumpeter's theory of economic development and aims at analysing the outcomes of innovative and non-innovative changes implemented within economic evolution. A multiplicity of outcomes of economic processes leads to complexity of the structure of economic evolution. In order to examine innovative processes, the role of the circular flow, i.e. a form of the economy, which for Schumpeter was both the starting and ending points in the analysis of economic development, should be taken into account. In this context, we determine a simple model of economic evolution in line with Schumpeter's theory, using Hurwicz's concept of the adjustment process. This allows us to examine an impact of accessed information on diversification of economic processes. It should be added that in the model presented, non-innovative changes also play important roles, which is coherent with Schumpeter's theory. As a result, we prove, under some initial conditions coming from the mainstream of the Schumpeter's thought, that the economy under study can evolve in the direction of equilibrium and take a form of circular flow.