Innovation, Competition and Growth: Evolving Complexiting or Complex Evolution

Abstract

This paper reports on the initial investigation into an evolutionary adaptive account of economic growth, innovation and competition. It starts from the premise that the economy is a system comprising multiplicity of agents, diverse in abilities and capabilities, interacting, adapting, reacting and constantly modifying the patterns on structures that they help to create. Two themes in special are explored in this context. The first it is enterprise as the primum mobile of modern capitalist economies. The second relates to the importance of the economic growth as an emergent phenomenon. The transformation processes involved can be broken down into three elements: micro-diversity, selection processes and development processes. It is the manner of interdependence between these three elements that defines the relation between innovation, growth and competition. We explore these issues in a model of growth whose forms differ in three dimensions: efficiency, investment behavior and processes of cost reducing innovation. The dynamics of Fisher´s principles are explored in this context. The main result of this paper can be summarized as being a critical assessment of the knowledge foundations of endogenous growth theory, a clear statement of the core elements in an evolutionary adaptive theory of growth and the analysis of economic growth through the use of replier dynamic processes.