IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Quantifying creative destruction: Entrepreneurship and productivity in New Zealand

  • John McMillan

This paper (a) provides a framework for quantifying any economy's flexibility, and (b) reviews the evidence on New Zealand firms' birth, growth and death. The data indicate that, by and large, the labour market and the financial market are doing their job. Creative destruction “revolutionizes the economic structure from within,” Joseph Schumpeter famously said, “incessantly destroying the old one, incessantly creating a new one” (Schumpeter, 1975, p. 83). Innovation in business - bringing new goods, new markets, new methods of production, new ways of organizing firms - is the “fundamental impulse that sets and keeps the capitalist engine in motion.” Does the economy have enough flexibility? Are there barriers in the way of entrepreneurship? This paper develops a framework for quantifying creative destruction. Applying the framework to New Zealand, I conclude that the sluggish productivity growth of the past fifteen years cannot be blamed on economic rigidities. The data depict an economy with ample creative destruction. Ascribing New Zealand's slow growth to a business-unfriendly culture is a misdiagnosis.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Taylor & Francis Journals in its journal New Zealand Economic Papers.

Volume (Year): 38 (2004)
Issue (Month): 2 ()
Pages: 153-173

in new window

Handle: RePEc:taf:nzecpp:v:38:y:2004:i:2:p:153-173
Contact details of provider: Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:taf:nzecpp:v:38:y:2004:i:2:p:153-173. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.