Empirical confirmation of creative destruction from world trade data

Klimek P, Hausmann R, & Thurner S (2012). Empirical confirmation of creative destruction from world trade data. PLoS ONE 7 (6) DOI:10.1371/journal.pone.0038924.

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Abstract

We show that world trade network datasets contain empirical evidence that the dynamics of innovation in the world economy indeed follows 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.

Item Type: Article
Uncontrolled Keywords: Data base; Dynamics; Economic development; Financial management; Growth curve; Socioeconomics; Statistical model; Validation process; World Trade Flows database
Research Programs: Advanced Systems Analysis (ASA)
Bibliographic Reference: PLoS ONE; 7(6):e38924 (18 June 2012)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:46
Last Modified: 09 May 2016 14:23
URI: http://pure.iiasa.ac.at/9925

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