science

Neo-Schumpeterian economics

Neo-Schumpeterian economics is a science topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Neo-Schumpeterian economics rather than just read about it. In short: Neo-Schumpeterian economics is a school of thought that places technological innovation at the core of economic growth and transformation processes. It is inspired by the work of Joseph Schumpeter, who coined the term creative destruction for the continuous introduction of technological change that drives growth by replacing old, less productive structures with new, more productive ones.

Key takeaways

Neo-Schumpeterian economics belongs to science; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Neo-Schumpeterian economics to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Neo-Schumpeterian economics from memory before moving on to harder problems.

Reference excerpt

Neo-Schumpeterian economics is a school of thought that places technological innovation at the core of economic growth and transformation processes. It is inspired by the work of Joseph Schumpeter, who coined the term creative destruction for the continuous introduction of technological change that drives growth by replacing old, less productive structures with new, more productive ones. Where Schumpeter explained the innovation drive by an exogenous factor called entrepreneurial spirits, neo-Schumpeterian economists refer to endogenous factors such as science and technology policies and corporate strategies of research and development to explain innovation. Neo-Schumpeterian economics is a form of evolutionary economics and is closely related to innovation studies.

History In the aftermath of World War II, policymakers became increasingly convinced of the importance of science and technology policy. Quantitative research into the relation between economic growth and science and technology expenditures became a possibility with the global application of national accounts in the 1950s and the adoption in 1963 of the Frascati manual, an internationally accepted approach to measuring science and technology expenditures. In 1966, the Science Policy Research Unit (SPRU) was founded at the University of Sussex, which started a systematic and sustained research effort regarding long-term economic transformations and science and technology policy. Christopher Freeman, who was involved in the development of the Frascati Manual and was the first director of SPRU, published in 1974 his seminal book "The economics of industrial innovation". Together with Richard Nelson and Bengt-Ake Lundvall he coined the concept of National innovation systems. The international Joseph A. Schumpeter Society was founded in 1986 at the initiative of Wolfgang Stolper and Horst Hanusch. Since 1988 it has awarded the biennial Joseph A. Schumpeter award. In 1991 the Journal of Evolutionary Economics was founded that serves as a forum for the approach of economics in the tradition of Schumpeter.

References

Worked examples

Example 1 — a first encounter with Neo-Schumpeterian economics

Start with the simplest possible case. Write down what Neo-Schumpeterian economics claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In science, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Neo-Schumpeterian economics before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Neo-Schumpeterian economics ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Neo-Schumpeterian economics

In research: Neo-Schumpeterian economics appears in science research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Neo-Schumpeterian economics in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Neo-Schumpeterian economics is common in secondary-school and first-year university syllabi. It links to neighbouring topics Economic history stubs, Eponymous economic ideologies, Innovation economics, so understanding it makes those chapters shorter.
In everyday life: Look for Neo-Schumpeterian economics outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Neo-Schumpeterian economics in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Neo-Schumpeterian economics means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Neo-Schumpeterian economics out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Neo-Schumpeterian economics in simple terms?

Why does Neo-Schumpeterian economics matter?

Because it connects several science ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Neo-Schumpeterian economics?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Neo-Schumpeterian economics.