Schumpeterian model

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The Schumpeterian model is a model of long-run economic growth model.

Called Schumpeterian growth theory or Schumpeterian growth paradigm, it is one of the two branches of innovation-based theory (the other being product-variety model). The Schumpeterian growth theory was developed by French economist Philippe Aghion and Peter 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.[1] The SM models growth as resulting from innovations involving creative destruction.[2]


The Schumpeterian growth theory is underlined by three main assumptions:

  • Growth is primarily driven by technological innovations.
  • Innovations are produced by entrepreneurs who seek monopoly rents from them.
  • New technologies drive out old technologies.[3]

See also

External links


  1. Aghion, Philippe; Howitt, Peter W. The Economics of Growth. 
  2. "The Schumpeterian Growth Paradigm". Retrieved 7 May 2018. 
  3. "The Schumpeterian Framework" (PDF). Retrieved 7 May 2018.