Schumpeterian Theory

Schumpeterian Theory, developed by economist Joseph Schumpeter, emphasizes the role of innovation in capitalism. It suggests that entrepreneurs create new products and processes, driving economic growth through "creative destruction." This means that innovation not only introduces new solutions but also disrupts and replaces older industries. Schumpeter argued that competition and innovation are essential for economic development, as they lead to increased efficiency and better products for consumers. In essence, while change can be disruptive, it is a vital driver of progress in the economy.