Creative destruction isn’t as important as you think

Sep 08, 2017

Sections Economics Video

Economist Joseph Schumpeter called creative destruction—the process by which the economy grows via innovation that disrupts incumbent businesses—the “essential fact about capitalism.” But though there are many examples of creative disruption that spring readily to mind, the phenomenon may be less pervasive than it appears. A group of researchers including Chicago Booth’s Chang-Tai Hsieh used employment data to measure just how powerful creative destruction’s effect on the economy is; they find that it accounts for as little as 13% of productivity growth over a 10-year period.