What is Evolutionary Economics?

Economic development is evolving--not because it wants to necessarily, but because it must. Evolutionary economics is reshaping many other fields relient upon economic reasoning. We should be thinking about how it can improve our thinking and action in the ED field in the future.

Evolutionary economics is a relatively new economic methodology that is modeled on biology. It stresses complex interdependencies, competition, growth, and resource constraints.

The first 200 years of economic theory was modeled primarily on physics — economic terminology like "labour force", "equilibrium", "elasticity", and "velocity of money", are no accident. Conventional economic reasoning begins with the definition of scarcity, then assumes the existence of a "rational agent" bent solely on the attainment of one goal — the maximization of her/his welfare as defined by that agent.

All relevant information is assumed to be held in common ("perfect information"), and the scheme of valuation ("preferences" or "tastes") used by the decision-maker is also assumed to be constant and native to the agent ("nonenvy" or "independent preferences"). Given the foregoing stipulations, the determination of the "rational choice" for any agent becomes a straightforward exercise in the differential calculus.

Evolutionary economics derives from a more modern tradition of inquiry, which does not take the characteristics of either the objects of choice or of the decision-maker as fixed.