"An Evolutionary Theory of Economic Change"

"An Evolutionary Theory of Economic Change," proposed by Richard Nelson and Sidney Winter, views economic development as an adaptive process similar to biological evolution. In this framework, firms and industries evolve by developing innovations and changing practices through trial and error. Successful strategies and technologies spread, while unsuccessful ones fade away. This theory emphasizes the role of routines, learning, and competition, suggesting that economic change is dynamic and shaped by ongoing experimentation rather than fixed rules, leading to diverse outcomes across different contexts. It highlights the importance of innovation and adaptation in economic growth.