Center on Democracy, Development and the Rule of Law is housed in the Freeman Spogli Institute for International Studies
CDDRL Working Papers, page(s): 35
September 2004
Creative destruction "revolutionises the economic structure from within," Joseph Schumpeter famously said, "incessantly destroying the old one, incessantly creating a new one." Innovation in business-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" (Schumpeter, 1975, p. 82). Does the economy have enough flexibility? Are there barriers in the way of entrepreneurship? This paper develops a framework for quantifying creative destruction.