Entrepreneurship, institutions, and economic growth

In contemporary economic theory there are two primary approaches to explaining economic growth: economic analysis of institutions and macroeconomic modeling. The former approach analyzes the incentive structure generated by the framework of institutions governing a society, while the latter approach primarily focuses on availability and effects of particular inputs. This study begins by analyzing these two approaches from the perspective of modern Austrian economics, particularly Israel Kirzner's theory of entrepreneurship, and suggests that to better understand differing economic performances it is necessary to consider in detail the role of the role of the entrepreneur.; The study develops an argument showing that in Kirzner's model of entrepreneurship, the entrepreneur can be understood as the agent whose actions allocate resources to the uses which ultimately generate growth. The role of entrepreneurship in technological innovation is investigated. In the course of this argument, questions are addressed concerning entrepreneurial error, increasing returns technologies, and persuasiveness as an alternative to entrepreneurial discovery.; The institutional prerequisites of market entrepreneurship are analyzed, using ideas from property rights analysis, particularly the work of Steven Cheung and Yoram Barzel. An analytical distinction is drawn between the private domain and public domain which allows the effects of entrepreneurship within and outside of the market constraint to be contrasted. It is seen that growth-promoting entrepreneurship is dependent upon a particular structure of property rights and supporting institutions, in order to be able to build complex structures of capital which permit growth.; Mechanisms of institutional change and entrepreneurship in the public domain are investigated, expanding upon Douglass North's model of institutional change and lock in. It is argued that establishment of the institutional prerequisites constitute a political problem which societies must solve, but for which no mechanism akin to the market process exists. Institutional constraints which help to make the problem tractable are considered.