EVOLUTIONARY ECONOMY is an economic theory that focuses on market developments and dynamics. The basic concept of evolutionary economics is that markets are not static places, but rather, markets are places where people interact to create value.
Evolutionary economics differs from classical economic theory which focuses on equilibrium. The main concepts in evolutionary economics are change and adaptation. Change here includes all kinds of changes, both structural changes and changes in behavior.
Adaptation means that individuals in the market will try to maximize opportunities and overcome obstacles. This concept focuses on how organizations and individuals can adapt and survive in an ever-changing environment. This concept is drawn from the theory of biological evolution, which emphasizes the importance of adaptation in an ever-changing environment.
This concept is very beneficial for entrepreneurs, as it provides a new perspective on how businesses can survive and grow in an ever-changing environment.
In short, evolutionary economics is a scientific study that examines economic phenomena from an evolutionary perspective. This study is conducted by comparing and analyzing economic systems in the past and in the present.
The purpose of this study is to understand how the economic system changes and develops along with changes in society and its environment. To study evolutionary economics, there are three main objectives:
Understand how the economic structure of a country changes over time.
Knowing the factors that influence changes in the economic structure.
Analyze how changes in economic structure contribute to economic growth.
CHARACTERISTIC
In evolutionary economics, there are 4 main characteristics, namely:
Innovation Innovation is the main factor that drives an economy. Without innovation, an economy will stagnate and will not be able to develop. Innovation can be a new technology, a new production method, or a new business model. All innovations have the potential to change the structure of the economy and provide benefits to society.
Competition Competition makes innovation a must. Without competition, companies will not try to develop better products or services. Competition also makes companies try to optimize production costs, so that the prices of goods and services will compete with the best on the market.
Structural change Evolutionary economics emphasizes the importance of structural change in economic history. Structural change is often perceived as a threat to economic actors, but in reality structural change is an inevitable process and is part of economic history.
Entrepreneurship Entrepreneurship is a very important factor in the evolutionary economy. Without someone who is willing to take risks, innovation will never be created. Entrepreneurship also makes companies strive to develop better products or services, so that the prices of goods and services will compete with the best on the market.
EXAMPLE
An example of the use of evolutionary economics in a country is as follows:
Determine the economic structure in accordance with the country’s potential.
Carry out structural reforms such as privatization, deregulation, etc.
Determine fiscal and monetary policies that are in accordance with country conditions.
Build adequate infrastructure to support economic growth.
The application of evolutionary economics can also be seen in a country like Indonesia. The state of Indonesia has a lot of very wide natural potential such as water resources, petroleum, natural gas, precious metals and others. Therefore we need an economic system that is able to manage this potential well so that there is no unbalanced development.
The application of evolutionary economics can also be seen in the Indonesian government’s policy of providing fiscal incentives to companies that invest in the country. Evolutionary economics can also be applied to an organization such as a company. Organizations that apply evolutionary economics will strive to continuously improve their performance by innovating and improving continuously.
This is done so that they can compete with other organizations and remain in the market. Evolutionary economics has been widely applied to a country to study market dynamics. In some cases, evolutionary economics has also been used to provide solutions to certain economic problems.
STRENGTHS AND WEAKNESSES
The advantage of evolutionary economics is that it emphasizes systems that change dynamically and not just statically. This provides a more realistic picture of what is actually happening in the real world. In addition, evolutionary economics also emphasizes the importance of factors such as luck and uncertainty, which are often overlooked by conventional economic theory. Because these factors are so important to economic development, evolutionary economics can provide a more accurate picture of what is really going on.
The drawback of evolutionary economics is that it tends to be more complex than conventional economic theory and may be difficult to understand for those unfamiliar with the concept. Also, evolutionary economics is often seen as a mathematically invalid concept. Because it emphasizes factors such as luck and uncertainty, evolutionary economics may be viewed as a subjective theory and not generally accepted.
Evolutionary economics is a study of science in the field of economics that explains how the ups and downs of economic growth. Evolutionary economics illustrates that evolution also occurs in economic sectors at varying speeds. In general, evolutionary economics analyzes the mechanism behind the ups and downs of a company’s business in a certain cycle. In addition, it also studies how the economic growth of a city, region or country to its potential collapse based on the cycle and speed. Like the concept of evolution in humans and other creatures where in the course of life there are certain organ parts that shrink or even disappear which naturally occurs for the purpose of making life more efficient and effective.
Likewise for companies that are constantly looking for ideas to be able to run their business effectively and efficiently. They make improvements in certain areas or even eliminate sectors that are no longer needed so that the business can run better. However, on the other hand, there are developments from external, especially competing companies to changing consumer behavior, so that it is no longer relevant to the company’s business. This is what triggers a decline in economic growth or even a fall. All this happens because evolutionary economics provides the possibility that companies whose businesses are no longer relevant, ineffective and inefficient will eventually be replaced by new corporate entities with businesses that are more practical and respond to changing consumer needs at the same time. So evolutionary economics needs to be studied carefully by the company that uses it as research to be able to increase the speed of growth and vice versa can reduce the speed of decline in the company’s business by looking for related factors, even if it can eliminate the possibility of a decline in the business.
