New General Theory of Economic Development : Innovative Growth and Distribution

Economic development, which refers to the process of progressive transformation of an economy, is a multifaceted term without a universal definition. This article presents the constitutive elements of economic development, such as growth, distribution, and innovation. Economic development has been ubiquitous with the economic progress of “developing” countries, but the changing economic circumstances of “developed” countries, such as stagnant growth, regional economic disparity within developed countries, and deepening income gaps among citizens of developed countries, have made this term also relevant to address the economic problems of developed countries. The mechanisms of economic development, with respect to both developed and developing countries, are elusive, and the existing theories have not been able to explain these mechanisms of economic development adequately. A general theory of economic development has recently been advanced to fill the gap. This theory offers an innovative approach by describing the process of development as a multidimensional, evolutionary process, but also exhibits its own gaps and inaccuracies. This article reviews the existing theories, including the general theory, and presents a revised theoretical framework to explain the process of economic development