Creative destruction, 1

Joseph Schumpeter in Capitalism, Socialism, and Democracy (1942) used the concept wich refers to the endless process of innovation and production by new production replace outdated ones. This restructuring process change major aspects of macroeconomic, long-run growth and economic fluctuations, structural adjustment and the functioning of markets.

The process of creative destruction affects over 50 per cent of productivity growth. In business cycle, declines during recessions, adding costs in downturns. This means the obstacles to the process of creative destruction have severe macroeconomic consequences.

Schumpeter, considered Creative destruction as "the essential fact about capitalism. The process restructuring major aspects of macroeconomic performance, growth and economic fluctuations, structural adjustment and the market.

At the microeconomic level, is characterized by countless decisions to create and destroy production arrangements. These decisions are complex, involving multiple actors and strategic and technological considerations. The efficiency of those decisions depends on managerial talent and hinges on the existence institutions that provide a right transactional framework.

Failure along this level have severe microeconomic consequences. Some of these are natural, as they derive from the complexity of transactions. Others are artificial, with their origins ranging from misconceived economic ideas about the achievement of human goals, as the inalienability of human capital. In low quantity, institutional limitations give rise to business cycle as those is observed in the most developed and flexible economies.