Background to the International Workshop in Evolutionary Economics

Background

In 1999 and 2003, the University of Queensland School of Economics and the ESRC Centre for Research in Innovation and Competition (CRIC) at the University of Manchester jointly organized international workshops, in Brisbane and Manchester respectively, dealing with the interface between evolutionary economics, complex systems science and the large literature on innovation theory and policy.

These gave rise to two very successful edited volumes, published by Edward Elgar: Frontiers of Evolutionary Economics: Competition, Self-organizationand Innovation Policy (2001) and Evolution and Economic Complexity (2004).

It is now eighteen years since Evolutionary Macroeconomics was published but, despite the fact that this book sold very well, no widely accepted evolutionary approach to macroeconomics came into being in the 1990s. What we have in the evolutionary economic literature are only fragments of macro analysis and modeling, mainly in the area of economic growth.

Meanwhile, macroeconomics has become, increasingly, an application of neoclassical microeconomics. Real business cycle theory, thought to be highly unrealistic and impossible to use by most economists a decade ago, has now gained official credence with the award of the Nobel Prize to Edward Prescott. Endogenous growth theory, although sometimes associated with the ideas of Joseph Schumpeter, is a construction built upon Robert Solow's neoclassical theory of economic growth. Even New Keynesian macroeconomists have publicly distanced most of their ideas from those of John Maynard Keynes, preferring work with a theory which has a neoclassical 'long run' that is deviated from in the 'short run' because of the presence of asymmetric information and incompleteness in markets.

It is intended that the 2005 workshop will lead to new perspectives on the micro-foundations of macroeconomics that will help us to understand more clearly how processes such as innovation lead to beneficial macroeconomic outcomes and how economic systems that are recognized as being complex and adaptive can fluctuate endogenously through phases of inflation and recession. It is hoped that the macroeconomics of developing countries can also be better understood using these perspectives, bearing in mind just how inappropriate standard macroeconomics often is in such conditions. Since macroeconomics has always been a 'policy science', discussions of policy would seem to be appropriate. For example, innovation policy and policies to provide better information and communications infrastructure are generally felt to be 'a good thing' but the macroeconomic benefits of different policies of this kind are rarely quantified because there are very few models available to use for this purpose.


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