Schumpeterian growth theory

The Schumpeterian growth theory is one of the two branches of innovation-based theory (the other being product-variety model). The Schumpeterian growth theory was developed by Aghion and Howitt (1992). it grew out of modern industrial organization theory. It focuses on quality-improving innovations that render old products obsolete and hence involves the force that Austrian-American economist Joseph Schumpeter called creative destruction.