Economic Geography

particular emphasis on innovation as a source of regional performance. But what
determines regional differences in innovation? Evolutionary theory stresses 
the importance of variety as a source of novelty. This accords with a Jacobsian
view of economic change, whereby innovation is promoted by local economic
diversity and heterogeneity, since this maximises both the scope for interaction
and the variety of market opportunities for new ideas. Many successful large 
city-regions fit this model. In contrast, numerous economists and economic
geographers have tended towards the Marshall-Arrow-Romer view that innova-
tion is stimulated by local economic specialisation, where it is driven by intense
rivalry between, and knowledge spillovers amongst, local firms in the same
industry (or in closely related industries). This is essentially the assumption
employed by Porter in his cluster model of regional competitive advantage, 
and by economic geographers in their studies of high-technology regions and
districts. Certainly some successful regions and localities fit this model, although
economic landscapes everywhere are littered with old specialised regions and
localities that were once innovative leaders, but which have long since lost their
prominence and are today’s problem areas. So local economic specialisation is
not of itself a guarantee of sustained competitive advantage.
This relates to another central idea of evolutionary economics that is highly
pertinent to the question of dynamic regional competitiveness, namely that of
path dependence. The concept of path dependence is intended to capture the
process by which the evolution of the economy is always the contingent outcome
between change and inertia. Economic choices and opportunities are always
conditioned to some extent by dependence on past structural, institutional,
social and technological developments. The economy is an irreversible historical
process, in which at any point in time the state of the economy depends on the
historical adjustment path taken to it. Technology and institutions are two of the
primary ‘carriers of history’ that result in path dependence. And both are char-
acterised by tendency for ‘lock-in’, that is for particular patterns of behaviour,
technological organisation, economic specialisation, institutional arrangements
and the like to become self-reproducing over time, despite other possible
patterns, activities and arrangements. The neo-Marshallian and related local
external economies referred to earlier tend to impart such lock-in, as do other
forms of inter-relatedness amongst local firms, sunk costs, and institutionalised
social routines and networks. Lock-in, in fact, is a pervasive feature of socio-
economic life. In a regional context, the emergence of economic, technological,
social and institutional structures can be heavily dependent on local context, but
once established, the very interactive, situated and continuity-preserving nature
of socio-economic activity is such that there are likely to be a tendency for the
selected structures to get ‘locked in’. Regional economies everywhere inherit the
legacy of their past development. Geographers invoking the concept of ‘lock-in’
have invariably tended to ascribe negative or sub-optimal connotations to it, to
view it as a barrier to change – the ‘weakness of strong ties’ argument. But this
is too one-sided a reading: ‘lock-in’ can also be a positive feature, the source of
Economic geography and the new discourse of regional competitiveness
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increasing returns and competitive advantage. Indeed, this is how self-reinforcing
development is typically initiated, and almost every regional economy – highly
successful as well as less prosperous – displays attributes and examples of lock-in.
What matters is why and under what circumstances lock-in turns from being a
positive process into a negative one, and why this varies across regions, how some
regions have proved better able to escape negative lock-in and to foster new
paths of development and competitive advantage: in short, why some regional
economies are more adaptive than others.
By viewing regional competitiveness as an evolutionary process, considerable
scope is opened up for the application and extension of key ideas from evolution-
ary economics – such as adaptation and path dependence – within economic
geography and regional theory more generally.