The Role of Creative Destruction in Business Cycles - an Empirical Analysis of the Polish Manufacturing Industry
DOI:
https://doi.org/10.18559/043ra190Keywords:
Processing industry, Empirical analysis, Business cyclesAbstract
The aim of this paper is to examine the influence of creative destruction on the business cycle. The Schumpeterian concept of the business cycle constituted a theoretical framework for empirical analysis. Econometric research was conducted on the Polish manufacturing industry from January 2004 to January 2014. Results from the research confirm that both creation and destruction were significant factors in determining economic activity fluctuations. The findings indicate that before the financial crisis both components of creative destruction determined changes in the business cycle, and their total effect produced an asymmetry of business cycle phases. In the post-crisis period, destruction was the sole factor influencing the business cycle. Generally, the study has confirmed Schumpeter's view of the destabilising role of creation on economic systems, and the favourable impact of destruction on economic growth.
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