Schumpeter's words that entrepreneurship is innovation have never seemed so appropriate as the nowadays, when modern capi- talism is experiencing a serious crisis and lost his strength during last subprime and eu- ro-debt crises. Introduction Joseph Alois Schumpeter is regarded as one of the greatest economists of the first half of the twentieth century. At that time he took part in the most important economic de- bates.
Introduction Economic growth, from the early period of economic history, engaged the attention of man and his governments. As far back as 17th and 18th centuries, writers like Adam Smith, David Ricardo, John Stuart Mill, as well as state theorist like Karl Marx, Friedrich List Karl Bucher, W Rostow, and neo classical economists such as Arthur Lewis  have all been preoccupied with the quest for unearthing the forces and processes that cause a change in the material progress of man.
This is also applicable to successive governments and states in these modern times. In Nigeria for instance, the broad objective of the national economic policy has been the desire to promote sustainable economic growth for the vast majority of Nigerians through the adoption of various monetary and fiscal policies.
Unfortunately, her economic growth performance has been characterized by fits and starts and the prospects of her rapid economic growth appear unachievable as reflected in her inability to realize sustainable full growth potentials and to significantly reduce the rate of poverty in the economy.
Several countries that have achieved rapid economic growth since World War II, have two common features. First, they invested in education of men and women and in physical capital.
Second, they achieved high productivity from these investments by providing efficient capital markets, competitive trade-leading roles, higher level of economic efficiency driven by technological capabilities, stable polity, appropriate economic policy and economic system, World Bank, .
However, as a result of market failure that may likely occur in the process of development, it may not be ideal to leave the process of economic development entirely to the market forces especially in the developing economies like Nigeria. Secondly, the quality of the government and its economic policies matter a lot.
The radical theorist and the early proponents of development economics were of the view that growth could be internalized. Developments in the world economies have shown that it is futile for economies to isolate themselves from rapidly integrating world, Essien and Bawa.
Economic growth is a key policy objective of any government. In addressing the pertinent issues in economic management, experts and economic planners have had to choose between or combine some of the macroeconomic variables.
Economic growth, proxies by Gross Domestic Product GDP confers many benefits which include raising the general standard of living of the populace as measured by per capita national income, making income distribution easier to achieve, enhance time frame of accomplishing the basic needs of man to a substantial majority of the populace.
Conversely, economic stagnation can bring destabilizing consequences on the citizenry, Lewis . Controversies that trail growth-related issues are many, but the present and more incontrovertible is the discourse on economic growth within the context of macro-economic behavior of the economy.
This is in relation to how the economic policy goals could be achieved by the available policy instruments. To date, the general consensus is that the rate at which declining economic growth rate is permeating the LDCs requires urgent policy response in order to bring about sustainable economic growth Essien and Bawa, .
Furthermore, the Nigerian economy is basically an open economy with international transactions constituting an important proportion of her aggregate economic activity.
Consequently, the economic prospects and development of the country, like many developing countries, rest critically on her international interdependence. Over the years, despite the considerable degree of her trade openness, her performance in terms of her economic growth has remained sluggish and discouraging, Odedekun .
The main objective of her trade policy is aimed at influencing trade process that can promote sustainable economic growth but this objective has become very difficult to achieve at present, Yesufu .
There is also an implicit belief that the Nigerian economic environment has been unable to attract foreign direct investment to its fullest potentials, given the unstable operating environment, which is characterized by inefficient capital markets, high rate of inflation, unstable polity, stringent policies and fragile financial system, among others.
Another major problem is the element of fiscal dominance. A size of fiscal deficit has an implication for domestic savings and investment and ultimately economic growth. In Nigeria, the main factor underlying these outcomes is the volatility of government expenditure arising from the boom and burst cycle of government revenue which is derived mainly from single export commodity oilwhose price is also volatile.
To worsen the problem, these expenditures are not channeled to productive sectors of the economy, Yesuf . Prior to Nigeria political independence inagriculture was the mainstay of the economy. The present heavy reliance on primary commodity has induced adverse terms of trade shocks leading to huge current account deficits and exchange rate volatility and consequently a weak external sector for Nigeria.
The trend in the current account amplifies the degree of import-dependence of the Nigerian economy. The deployment of the lean resources to finance huge debt service payments crowds out public investment in the productive sectors of the economy and with these developments, achievement of sustainable economic growth have become a difficult task.
Most of the reviewed studies have some methodological and conceptual problems that undermine their accuracy and thus their efficacy for effective policy purposes.
For instance, non- application of unit root test to reduce or if possible, eliminate spurious regression due to non-stationary properties of the time- series and the use of cross-country analysis that precludes the country specifics, may all lead to biased inferences, Engel and Granger  and Gujarati .
Recognizing the above gaps and challenges of the previously reviewed studies, there is need to reexamine the problem of economic growth holistically by applying Nigerian time series using modern analytical econometric techniques such as Co-integration, Unit root test, Error Correction Mechanism ECM and Granger Causality tests, to see if a more authentic result could be achieved for effective economic planning.
To achieve this objective, the following hypotheses are formulated to aid the analyses: There is no long run significant relationship between economic growth proxies by GDP and some generally accepted economic growth determinants namely — productivity index industrialstock market capitalization, foreign direct investment, trade openness, savings, government fiscal deficit, and inflation.
There is no causal relationship between economic growth and the selected economic growth determinants. The paper is structured as follows: Section one which precedes four other sections introduces the study. Section two discusses the related reviewed literature.
Section three provides the methodological issues.
Section four presents and analyses the data while section five concludes the study with policy recommendations. Review of Related Literature 2. Conceptual and Theoretical Issues The term economic growth is described as the positive and sustained increase in aggregate goods and services produced in an economy within a given time period.Marxism, a body of doctrine developed by Karl Marx and, to a lesser extent, by Friedrich Engels in the midth century.
It originally consisted of three related ideas: a philosophical anthropology, a theory of history, and an economic and political plombier-nemours.com is also Marxism as it has been understood and practiced by the . Schumpeter argued that the wellspring of innovation and technical change is found in giant corporations and in imperfect competitors.
We interpret the Schumpeterian hypothesis as implying “large firms are more than proportionately more innovative than small firms” (Kamien and Schwartz, ; Phillips, ). The Schumpeterian hypothesis tells us that there is a close relationship between innovation and market structure: only companies that have market power, at There are at least three aspects of Schumpeter's thoughts that make us understand how the shape of the market is essential for the development process (Schumpeter ).
1. The Schumpeter hypothesis links firms operating under a monopoly market structure as most important for technological innovation. Arrow, on the other hand, suggests most progress can be achieved in a perfectly competitive market.
THE SCHUMPETERIAN HYPOTHESIS Schumpeter argues in Capitalism, Socialism, and Democracy that the degree of innovation is positively correlated with short-run protection and market power (Schumpeter ). Schumpeter believes that a large firm needs short-run legal.
The financial instability hypothesis, pioneered by Hyman Minsky, explains how swings between robustness and fragility in financial markets generate business cycles in the economic system.