Empirical Confirmation of Creative Destruction from World Trade Data
We 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.
|Date of creation:||May 2012|
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- Philippe Aghion & Johannes Fedderke & Peter Howitt & Chandana Kularatne & Nicola Viegi, 2008.
"Testing Creative Destruction in an Opening Economy : the Case of the South African Manufacturing Inudstries,"
Documents de Travail de l'OFCE
2008-23, Observatoire Francais des Conjonctures Economiques (OFCE).
- Philippe Aghion & Johannes Fedderke & Peter Howitt & Chandana Kularatne & Nicola Viegi, 2008. "Testing Creative Destruction in an Opening Economy: the Case of the South African Manufacturing Industries," Working Papers 93, Economic Research Southern Africa.
- repec:dgr:uvatin:20040114 is not listed on IDEAS
- Ricardo Hausmann & Cesar A. Hidalgo, 2011.
"The Network Structure of Economic Output,"
1101.1707, arXiv.org, revised Feb 2012.
- Bartelsman, Eric & Haltiwanger, John & Scarpetta1, Stefano, 2004.
"Microeconomic evidence of creative destruction in industrial and developing countries,"
Policy Research Working Paper Series
3464, The World Bank.
- Bartelsman, Eric & Haltiwanger, John C. & Scarpetta, Stefano, 2004. "Microeconomic Evidence of Creative Destruction in Industrial and Developing Countries," IZA Discussion Papers 1374, Institute for the Study of Labor (IZA).
- Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
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