What is meant by the term “creative destruction?” How does the emergence of self-driving cars relate to this idea?

Creative destruction makes a firm's product or production methods outdated because new ways of doing business emerge.

It puts the firms at a disadvantage as the demand for their products falls.

For example, the handloom industry vanished due to the production of mechanized clothing that reduced the textiles' cost and prices.

Self-driving cars are an innovation in the automotive industry. This introduction can alter the market position or completely destroy the firms producing old-technology cars that need manual driving, provided they do not upgrade themselves with the changing technology.

Thus, the firms producing cars with outdated technology should invest in developing innovative products (cars) to withstand competition and earn profits in the long run. It will help in facing competition and survive creative destruction.

Thus, the self-driving car manufacturing companies will witness a loss of demand for their goods, and further, the output and revenue will decrease in the future. This will also lead to an increase in employment loss for drivers.