Asst. Prof. Dr. Burak Erkut (Director of the Vocational School and academician) from Bahçeşehir Cyprus University participated in the 32nd EAEPE Annual Conference “Evolution of Capitalist Structures: Uncertainty, Inequality, and Climate Crisis” and made a presentation on “Minsky meets Porter: Finding the Schumpeterian Traces”.
A brief summary of Asst. Prof. Dr. Burak Erkut’s presentation is as follows: When talking about economic development, theory and practice usually pre-define the goal for a country to be innovative and to be a producer of technology. However, little emphasis is given to what happens once a country becomes innovative and accumulates wealth as a result of its innovative activities. Two exceptional researchers who deliver answers to this question in their models are Hyman P. Minsky and Michael E. Porter. Minsky’s view is close to that of Keynes, implying government intervention to the markets; Porter, on the other hand, is close to the free market view of economics, being just on the opposite side to Minsky. Even though this fundamental difference between the two researchers exist, both of them have a similar prediction for the final stage of economic development. This final stage is when countries already accumulated wealth from innovative activities and try to protect this wealth by avoiding investing it into risky innovation projects. This stage of wealth protection leads to an ultimate decline, since no innovations are financed and other countries take over the competitive position of the wealth-protecting country. In Porter’s “Competitive Advantage of Nations”, cited already 105.000 times, the phenomenon described is the “wealth-driven stage” of competitive development. In Minsky’s work, it is the “money-manager capitalism”. By using two different perspectives of Porter and Minsky, the presentation shed light to the forgotten dimension of considering innovative countries as “stories of success”.