Entrepreneurs and Economic Selection: An empirical test of Schumpeterian Competition

This paper suggests how George Price's general mathematical theory of selection may be applied to economic data; and it is discussed how Price's equation may be expanded and interpreted so that it describes the mechanisms of Schumpeterian competition and thus the industrial dynamics underlying the evolution of economic data. The model is applied to the evolution of Danish labour productivity and systematic differences are identiffied between manufacturing industries and service industries. It is argued that similar results for the US and Sweden may be extracted from productivity studies following a certain methodology. The paper concludes that George Price's general mathematical theory of selection can provide important building blocks for an empirical economic model inspired by Schumpeter. There are, however, a number of hurdles for future research; most notably arriving at a clear denition of populations of competing firms, as traditional industry classiffications do not suffice.