SCHUMPETER'S THEORY OF ECONOMIC DEVELOPMENT AND UNDERDEVELOPED COUNTRIES.

The article examines the theory of economic development in relation to underdeveloped countries from the view of economist Joseph Schumpeter. It presents the role of government in an underdeveloped country and the problem of financing innovations in underdeveloped countries. Schumpeter's theory is one of the very few theories, which aim at systematically explaining the process of economic development. Since the theory is exciting, widely known, and the major contribution of a great economist, it is inevitable that attempts have been made in the recent years to apply it to the case of present-day underdeveloped countries. It has been argued by many economists that the role of government in an underdeveloped country becomes essential either because the private sector has not the strength or lacks the willingness to enter certain activities or the private sector is willing to enter but sufficient ground has not been prepared for it to enter. It is this second reason which strongly suggests that, insofar as the public sector aims at providing basic facilities, it should be considered as enhancing the bourgeois interest.