Economic crises are historically times of industrial renewal. Less efficient firms fail while more dynamic ones emerge and expand. Creative destruction is an essential engine of long term efficiency in market economies, and it intensifies in downturns. Available data for many OECD countries point to a sharp increase in bankruptcies and business failures in recent months. New business models and new technologies, particularly those allowing a reduction in cost, often arise in downturns, as was the case with low-cost airlines which grew out of the recession of the early 1990s. As dominant players weaken, they open space for new players.
