Environmental Economics and Sustainability

8 ECONOMIC EVOLUTION IN CHINA'S ECOLOGICALLY FRAGILE REGIONS

Xiangzheng Deng

Chinese Academy of Sciences

Zhan Wang

Chinese Academy of Sciences and Beijing Forestry University

Chunhong Zhao

Texas State University

1. Introduction

The theory of economic evolution has argued that the endogenous innovation drives economic growth whether or not with a consideration of Location Theory (North, 1955; Solow, 1956, 1957; Arrow, 1962). From the perspective of endogenous innovation, philosophical explanations of economic evolution borrow some basic ideas from either Darwin's natural selection or Lamarck's biological evolution (Hodgson and Knudsen, 2006). In the process of economic evolution, it is debatable that innovations are spontaneous free wills or environmental adaptation for survival. Joseph Alois Schumpeter (1934) proposed that firms’ behaviours of the investment of the Research & Development (R&D) reflect the capability of innovations and entrepreneurships, indeed, which are endogenous engines to drive economic growth through a non-linear path back to a series of critical points in a dynamic equilibrium (Schumpeter and Opie, 1934; Nelson and Winter, 1982; Winter, 2003). It indicates that R&D can also lead to inefficient investment (Hunt, 2006). Ahmed (1998) addressed that innovation is also a culture because people who are living in different region create various ‘innovation cultures and climates’. In those ecological fragile regions, innovation culture does not only have been ...