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 Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp12-022.
Date of creation: May 2012
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Other versions of this item:
- Peter Klimek & Ricardo Hausmann & Stefan Thurner, 2011. "Empirical confirmation of creative destruction from world trade data," Papers 1112.2984, arXiv.org.
- NEP-ALL-2012-06-13 (All new papers)
- NEP-INT-2012-06-13 (International Trade)
- NEP-TID-2012-06-13 (Technology & Industrial Dynamics)
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