Schumpeter’s Theory of Economic Development: A Study of the Creative Destruction and Entrepreneurship Effects on the Economic Growth

Abstract

This paper provides a multifaceted review and analysis of the Schumpeter’s Theory of Economic Development and specifically the creative destruction effect intertwined with the business cycles, and their effectiveness in explaining the long-run economic growth by first, looking into the main features of this theory; second, comparing the fundamental similarities and differences of Schumpeter theory with respect to Marxism and Keynesianism, third; a comparison of “Schumpeter” effect vs. the “refugee” effect in recent published researches, and finally, the relationship of Schumpeterian and Kirznerian opportunities in modern entrepreneurship.

Keywords: Schumpeter, Creative Destruction, Capitalism, Kirznerian, Marxism, Keynesianism, Economic Growth, Business Cycle, Entrepreneurship

JEL Classification: A12, B13, B31, B52