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The Creative Destruction Approach to Growth Economics

Published online by Cambridge University Press:  08 September 2023

Philippe Aghion  and
Peter Howitt
Philippe Aghion
Affiliation:
College de France; LSE; INSEAD. Email: [email protected]
Peter Howitt
Affiliation:
Brown University, Providence, RI 02912, USA
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Abstract

In this article we introduce the Schumpeterian growth paradigm, where growth results from innovations that render previous innovations obsolete. We show how this paradigm can be used to elucidate enigmas in recent growth history, such as the growth take-off, secular stagnation, and the middle-income trap. We then illustrate how the Schumpeterian paradigm can be tested using rich micro data, focusing on the relationship between product market competition and innovation-led growth. Finally, we use the paradigm to question some common wisdoms on growth policymaking.

Type
Article
Information
European Review , Volume 31 , Issue 4 , August 2023 , pp. 312 - 325
Copyright
© The Author(s), 2023. Published by Cambridge University Press on behalf of Academia Europaea Ltd

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