ABSTRACT
This chapter explores the digital economy through the lens of Joseph Schumpeter’s theory of economic development, particularly emphasizing the role of innovation, entrepreneurship and cyclical dynamics. The chapter revisits Schumpeter’s foundational concepts – creative destruction, endogenous innovation and the distinction between growth and development – and applies them to the digital age. It examines how digital technologies like artificial intelligence, blockchain, 3D printing and the Internet of Things serve as modern innovations triggering cycles of economic transformation. The discussion includes the rise of digital monopolies, the increasing importance of entrepreneurial figures and the shifting nature of productivity. A central theme is the paradox of declining productivity growth despite massive digital investment, analyzed through both the Schumpeterian cycle and the concept of secular stagnation. The chapter argues that the current digital transformation may still be in its installation phase, with broader productivity gains yet to be realized in the deployment phase. This theoretical integration provides a framework for understanding the structural dynamics and challenges of innovation-led economic change in the digital era.
