Diversity and Innovation in Economic Evolution

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.