If ever there were a moment to witness creative destruction in action, now is it. If I had to bet on a sector that would benefit most from this process in the current financial crisis, it's ICT. My colleage Oleg Petrov in e-Development points me to a recent note from the World Bank on the experience of ICT during the Asian financial crisis. The note argues that creative destruction is exactly what happened during that episode:
...the point here is that the Asian financial crisis was actually beneficial in creating a Schumpeterian "gale of creative destruction" that swept through the failed telecom investment schemes of the mid-1990s (in this case based on narrowband networks) and prepared the ground for a fresh round of investment. The Republic of Korea was arguably hardest-hit by the Asian financial crisis, but it was also in the vanguard of the broadband charge, with the Government taking a leading role, alongside private enterprises...
...financial crises also create openings for disruptive technologies, and here, small companies hold an advantage. Google was born in 1998, in the middle of the Asian financial crisis, while Skype was born in 2003 at the very bottom of the dot.com slump.
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