Page 53 - Azerbaijan State University of Economics

Namiq Abbasov: The Nature of Innovatıve Economıc Growth and Development

Dırectıons of Its Formatıon

2. Application of new methods of production or sales of a product (not yet proven in

the industry);
3. Opening of a new market (the market for which a branch of the industry was not
yet represented);
4. Acquiring of new sources of supply of raw material or semi-finished goods;
5. New industry structure such as the creation or destruction of a monopoly position.
Schumpeter argued that anyone seeking profits must innovate. That will cause the
different employment of economic system’s existing supplies of productive means
[Schumpeter, J.A. 1934].

Also, it should be noted that the current stage of economic growth is based on the
effective use of knowledge and information. The introduction of new technologies
will help overcome crises and depressions, create new production opportunities as
well as obtain sustainable economic growth. Due to these factors, the world's leading
industrial countries are moving to a "new economy", which changes the role of
innovation in the economy, determines the pace of the innovation process and the
implementation of new mechanisms. Therefore, such an economy can be called an
innovative economy. Alvin Toffler's "Third Wave", published in 1980, it clearly
showed the results of technological process changes and introduced to a wide
readership. In the mid-1960s, Toffler noted that in the future, information
technology would become the main role in the economy, and then cause better and
faster technological changes than in the past. A. Toffler's "waves" concept describes
three types of societies and is based on the idea that these types of waves are
interchangeable. The first wave formed an agrarian society after the Neolithic
revolution. The second wave is the Industrial Age society, which emerged in
Western Europe after the Industrial Revolution and spread around the world. The
key aspects here are the nuclear family, a factory-type education system and a
corporation. A. Toffler noted that “The Second Wave Society is based on mass
production, mass distribution, mass consumption, mass education, mass media, mass
recreation, mass entertainment, and weapons of mass destruction”.

The combination of standardization, centralization, and concentration determines the
organizational method. The Third Wave is the post-industrial society, as a result of
the intellectual revolution. The third wave is based on the trend of demassification,
which is the tendency of the economy to abandon mass production, mass sales, mass
media and mass homogeneity. The result of the demarcation process is the transition
from mass production to large individual products, from large marketing to small
marketing, from monolithic hierarchical control organizations to free networks
[Alvin Toffler 1980: page 146].

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