Theory
Theory In Practice
Abstract
Creative destruction is an analytical framework devised by Joseph A. Schumpeter to explain the underlying economics of competition that generate economic growth, technical innovation, and improvements in living standards measured by gross domestic product (GDP). As a result of Schumpeter’s work, historical price analysis of competition has given way to non-price factors such as technical innovation that determine the successful firms in customer engagement. Policymakers and business leaders can apply this framework to limit unwanted outcomes of capitalistic competition and open new markets such as carbon credits to reduce pollution emissions, leading to new industries, firms, and jobs.
