Business dynamics is a central feature of market economies with broad impacts on labor markets, technical progress and economic growth. The process of Schumpeterian creative destruction is at the heart of the innovative process and productivity growth in modern market economies. Businesses and organizations that develop and/or adopt new and improved products, services and processes grow and displace those that don’t. Recent research suggests a substantial fraction of productivity growth is accounted for by the shifting of outputs and inputs away from less productive to more productive businesses as part of this ongoing creative destruction process. However, in spite of the potential importance measures of business dynamics are relative newcomers in official economic measurement and have not yet been fully integrated into the broader measurement framework.

Presented at the Comparative Analysis of Enterprise (Micro) Data Conference, Budapest, Hungary.