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The Case for Economic Dynamism

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The Case for Economic Dynamism

And Why It Matters for the American Worker

EIG,

5 min read
3 take-aways
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What's inside?

American economic vitality could be reigniting after decades of stagnation.

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7

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Economist Joseph Schumpeter referred to “economic dynamism” as “the perennial gale of creative destruction” that displaces established industries and products and introduces new ones. But recent technology-driven upheavals in the US economy have not delivered revitalization, write policy experts John Lettieri and Kenan Fikri in this astute report for investors, executives and entrepreneurs. However, the authors do see some glimmers of renewed vitality and opportunity for start-ups and workers in the post-COVID-19 economic recovery.

Summary

The United States saw a decades-long decline in “economic dynamism.”

At its core, economic dynamism describes how fast – in scale and scope – businesses, labor and industries transform, reinvent and adapt to changing environments. Since the early 2000s, unparalleled waves of technological revolutions have reshaped the nature of work and capital investment. But the American economy languished. The proof of this stagnation lay in weak business formation and labor mobility, in corporate consolidation, and in a significant reduction in the number of initial public offerings (IPOs).

Across all sectors, the rate of start-ups dropped precipitously from 2006 to 2010, and then it flatlined through 2020. During the 2010s...

About the Authors

John W. Lettieri is cofounder, president and CEO of the bipartisan research and public policy think tank Economic Innovation Group (EIG), where Kenan Fikri is the director of research.

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