Creative destruction from world trade data

New paper:

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.

via [1112.2984v1] Empirical confirmation of creative destruction from world trade data.


  1. Ethan Hunt says:

    Excellent. Has Henry Blodget read this yet? O Henry's been gettin' down lately with some econometric theory [1]


  2. Am I the only one who thinks this is obvious?
    Mankind progresses, and produces, buys and trades more and more complex products.
    Hence, products you bought earlier become obsolete.

    Someone wrote a paper to validate this. Really?

  3. I wonder if this holds true in the natural world though. Perhaps it depends on the cause of the disappearance. Selection requiring appearance, disasters generating disappearance, small change evolves, large change revolves.