## Book Review: The Data Detective by Tim Harford – IMF F&D

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**Canonical URL:** [Book Review: The Data Detective by Tim Harford – IMF F&D](https://www.imf.org/en/publications/fandd/issues/2021/03/book-review-power-of-creative-destruction-aghion-antonin-bunel)

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## Bibliographic details
- Authors: ANDREW BERG
- Published: March 1, 2021

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### Overview
- Reviewer: ANDREW BERG, deputy director, IMF Institute for Capacity Development.
- Publication: F&D Magazine, Growing Pains; March 2021.
- Read time indicator: Less than a minute(0 words) Read.
- Reviewed book: The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations by Philippe Aghion, Céline Antonin, and Simon Bunel.
- Book details as presented: Belknap Press, Cambridge, MA, 2021, 400 pp., $35.00.

### Core arguments and framing
- The dominant neoclassical paradigm leaves a “black box” labelled “total factor productivity” that governs how inputs become output.
- The authors' research program opens that black box through the lens of “creative destruction,” in the tradition of Joseph Schumpeter.
- Growth is driven by entrepreneurs who innovate, creating new goods and raising productivity while destroying existing jobs and firms.
- The paradigm emphasizes:
  - Export markets rewarding the most innovative firms.
  - Imports and foreign direct investment bringing new ideas and competitive pressure.
  - Vibrant financial markets supplying capital to successful new firms.
  - A green technological revolution as the appropriate response to climate change.
- On inequality: Much inequality is presented as a necessary or even desirable price for incentivizing innovation.
- On recent history: Sustained productivity growth has increased well-being since the industrial revolution, and growth in China, India, and other developing economies has contributed to a fall in global inequality.

### Policy implications and recommendations
- Governments should:
  - Protect patents.
  - Avoid excessive taxation.
  - Insure the losers from the destructive part of creative destruction.
  - Accompany flexible labor markets with “active” labor market policies to help people find new jobs.
  - Support basic research.
  - Avoid being co-opted by yesterday’s innovators trying to entrench their position, which is easier in a democracy.

### Open questions and caveats highlighted by the reviewer
- Are “flexitarian” labor market policies truly adequate to address the losers from creative destruction?
- Is China facing a “middle-income trap” of failed transition to innovation-led growth, due in part to an imbalance between the state, the market, and civil society, as the book suggests?
- The book aims to point readers in a direction rather than answer every question; metaphors (e.g., “invisible hand” vs. “creative destruction”) shape how policy and problems are understood.

*Published in F&D Magazine, March 2021.*

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## Content in this bundle

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_Source: https://www.imf.org/en/publications/fandd/issues/2021/03/book-review-power-of-creative-destruction-aghion-antonin-bunel_