Dynamic Efficiency and a Judgment-Based Approach to Entrepreneurship: An Integrated Thesis for Development Economics

Abstract

In this contribution, I will discuss an integrated version of entrepreneurship theory based on Jesús Huerta de Soto’s theory of dynamic efficiency (TDE) and the judgment-based approach (JBA) to entrepreneurship theory. There are similarities and interconnections between the two views. Both of them emphasize the incentives that private property rights provide to the entrepreneurs and the characteristics of entrepreneurial decision-making under uncertainty. I also argue that creativity and coordination as dynamic efficiency go beyond the neoclassical economics’ resource allocation criteria under static and given conditions and correspond to the risks and uncertain environment that the entrepreneurs face, which Frank Knight and the JBA emphasize. Finally, I argue that the new theory will also provide unique elements to the Austrian development economic theory.