Empirical confirmation of creative destruction from world trade data
AbstractWe show that world trade network datasets contain empirical evidence that the dynamics of innovation in the world economy follows indeed the concept of creative destruction, as proposed by J.A. Schumpeter more than half a century ago. National economies can be viewed as complex, evolving systems, driven by a stream of appearance and disappearance of goods and services. Products appear in bursts of creative cascades. We find that products systematically tend to co-appear, and that product appearances lead to massive disappearance events of existing products in the following years. The opposite - disappearances followed by periods of appearances - is not observed. This is an empirical validation of the dominance of cascading competitive replacement events on the scale of national economies, i.e. creative destruction. We find a tendency that more complex products drive out less complex ones, i.e. progress has a direction. Finally we show that the growth trajectory of a country's product output diversity can be understood by a recently proposed evolutionary model of Schumpeterian economic dynamics.
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Bibliographic InfoPaper provided by arXiv.org in its series Papers with number 1112.2984.
Date of creation: Dec 2011
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Web page: http://arxiv.org/
Other versions of this item:
- Klimek, Peter & Hausmann, Ricardo & Thurner, Stefan, 2012. "Empirical Confirmation of Creative Destruction from World Trade Data," Working Paper Series rwp12-022, Harvard University, John F. Kennedy School of Government.
- NEP-ALL-2011-12-19 (All new papers)
- NEP-HME-2011-12-19 (Heterodox Microeconomics)
- NEP-INT-2011-12-19 (International Trade)
- NEP-TID-2011-12-19 (Technology & Industrial Dynamics)
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