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Exhibition: The evolution of economic performance
Introduction: At least since Alchian [1950], economists have
known that Darwin's
theory about biological evolution could be used to describe the evolution
and the efficiency (performance) of economic systems. The three core
elements in the economic version of this theory are: 1) The transmission mechanism based on the
written and tacit (personal) knowledge about production and transaction
technology that one generation passes on to the next generation. 2)
The variation mechanism based on
deliberate innovations or stochastic shifts in production and transaction
technology. 3) The selection
mechanism based on competition that promotes the ‘survival of the
fittest’ production and transaction technology. The selection mechanism is
also based on systematic and scientific identification and selection of the
most efficient production and transaction technology.
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