Stan Metcalfe’s research while affiliated with University of Manchester and other places

Introduction This brief commentary is concerned with one idea, namely, that economic growth is the outcome of economic development, which, in turn, is an evolutionary process. To avoid any misunderstanding, by economic evolution, we mean a process that is driven by the emergence of economic variation and the consequential differential selection of different varieties of economic activity. These are phenomena that are characteristic of modern capitalism: the focus on a creative search for more profitable ways of conducting economic affairs, the focus on the efficiency in producing and the effectiveness of goods and services in meeting user needs, and the consequential focus on processes of investment of many different kinds, including investments in new knowledge of the natural and human-made worlds combined. The essence of the matter is competition as a dynamic process of rivalry between different ways of achieving similar goals, a process operating in the context of markets and the instituted ways in which they are regulated. This plays out on a global scale and induces an ever-changing division of labour and pattern of investment between and within different nations and regions, indeed, the most readily available evidence we have of economic evolution is provided by the rise and decline of different geographical locations for a particular economic activity. Think of the history of the Lancashire cotton industry, the Italian shoe industry, the American steel industry, and the Japanese automotive industry as transparent examples of the persistence and transformative power of evolutionary economic forces. In each case, we see how the differential development of economic competence has depended upon long sequences of innovations in technologies and organisational form so generating shifts in the balance of competitive advantage.