Competition, Diversity and Economic Performance
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Competition, Diversity and Economic Performance

Processes, Complexities and Ecological Similarities

Clement A. Tisdell

This thought-provoking book explores the influences of market competition and diverse behaviours of economic agents on economic performance, particularly dynamic economic performance.
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Chapter 6: Diversity and the evolution of competitive economic systems

Processes, Complexities and Ecological Similarities

Clement A. Tisdell


Two major themes are developed in this chapter. First, diversity of relevant attributes driving the dynamics of socioeconomic systems, including industrial systems, is often needed to increase their likelihood of transiting to a superior economic state. However, many systems left to their own devices evolve to states in which they possess insufficient diversity to transit to a superior state. Even if systems continue to evolve when their diversity is reduced, their subsequent states may be less desirable than those that would have been achieved had a different pattern of (business) diversity prevailed. Evolutionary market mechanisms can be of this nature. Structural adjustment policies and globalization may be reducing industrial diversity. Hence, a danger exists that global industrial structures influenced by field effects will become ‘piled up’ and reduce the likelihood of the global economic system evolving to a superior economic state. Policy- makers seem to face a dilemma as far as market competition is concerned. Policies ensuring that the industrial structures and conditions required for perfect competition to occur are likely to lead to inferior dynamic economic performance compared to alternative possible structures. On the other hand, naked business competition involving Darwinian selection processes and the rise of large corporations with market power may also result in situations that have unsatisfactory evolutionary economic consequences.1 Therefore, deciding on the desirability of different industrial structures is very complicated.

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