On the Financial Mechanism of Long-wave Technological and Economic Changes

Abstract

This article analyses basic problems in financing of long-term technological and economic development in a market economy. The author demonstrates that the entire theoretical basis for transition from one wave of technological and economic development to another is now absent. In many investigations long-wave innovations in a financial system are considered as a complimentary mechanism that indirectly influences the economy and adds to already realized technological and economic innovations. The article maintains that innovations in a financial system precede and determine wide commercial success of a new technological and economic paradigm. This conclusion is based on historical and statistical data. The diffusion of new technological and economic principles is accompanied by special institutional change dynamics. The main characteristic of this process is a consequent change of phases: creation and destruction of informal relationships among innovators and their integration into a dominating institutional framework as the next step.