University of Kiel, Germany Evolutionary Economic Geography, B.Sc. Geography

1. Lecture 1 - Introduction: economic geography and its recent paradigms
Evolutionary
Economic
Geography
Summer
Semester
2021
5th lecture
06/05/2021

2. 5) 06-05: Recap > Path creation > Resilience Thinking and
Strategies focused on Urban-Rural areas
6) 11-05: Constructing Regional Advantage, Related and
Unrelated Variety
7) 18-05: Evolutionary Economic Geography and Place-Based
Regional Policies, the Entrepreneurial Region
8) 20-05: Strategic Thinking in Regional Development, Strategic
Spatial Planning and Regional Attractiveness Strategies
Lectures, April, May, June 2021
Tuesday, 10:15 – 11:45 | Thursday, 10:15 – 11:45
OLAT

3.  During the 1980s, Paul David and Brian Arthur published several
papers that are now regarded as the foundation of path
dependency theory (David 1985; Arthur 1989, 1990).
 David and Arthur have both presented cases in which they have
asserted that less-than-optimal technologies became the
industry standard (enter a path dependence)
Recap 4th lecture
 Path dependency case studies are valuable for showing that less-
than-optimal technologies can survive and prosper, path
dependency is less useful as an explanatory mechanism for the
processes underlying these developments.
Martin Stack & Myles P. Gartland (2003) Path Creation, Path Dependency,
and Alternative Theories of the Firm, Journal of Economic Issues, 37:2, 487-494.

4. Recap 4th lecture: Essence
Stack & Gartland (2003)
 Inferior technologies have emerged triumphant in the
marketplace.
 Inferior / sub-optimal = inefficiencies
 To historical accidents, they minimize the role
firms/entrepreneurs played in creating and shaping their
economic environments (developing/creating/co-creating
paths).

5. Yes, history matters but Ideas too

6. Recap:
Path Dependence: Features & Problems
 ‘historical accidents’, have significant long-run effects on the technological,
industrial and institutional structure of an economy (path dependency tell
us).
 This immediately distances the notion from standard equilibrium economics,
where the past has no influence on outcomes, and the economy is assumed to
converge (typically instantaneously) to a unique equilibrium;
Martin 2009

7. (Martin and Sunley, 2006).
Are lock-ins inevitable?
Causes v.s. consequences
How paths emerge?
Recap:
Path Dependence: Features & Problems

8. (Martin and Sunley, 2006).
Availability resources
 Skilled labour force
 Supplies
(related/unrelated)
 Rooted practices
 Profit-making goals
Recap:
Path Dependence: Sources

9. (Martin and Sunley, 2006).
Geographers have shown how regional path dependence in specialized clusters
also occurs through such mutually reinforcing co-evolution of local economic,
technological and socio-institutional ‘arenas’, as in Kenney and von Burg’s
(2001) study of Silicon Valley’s creation and growth.
Recap:
Path Dependence: Sources
Explore tech niches
Intra/inter industry
exchanges

10. Yes, history matters but real time also

11. It is important to discuss path-creation
processes
This is because
 Diverse economies may have higher rates of firm start-ups as a consequence
of attracting a wider range of entrepreneurial individuals—and, one might
add, offering more scope for the creation of new markets – creating new
paths
(Martin and Sunley, 2006).
What differentiates:
Path emerge as being ‘chance’,
‘serendipitous’ or simply as
‘historical accidents’.
 Real-time influence
 Mindful deviation (from existing
path).
Path creation From path dependency

12. Path creation
How do technological, industrial and regional paths come into being?
1st: Paths originate in purely or mostly random events
Krugman (1991, 2001) has also argued that the process of industrialization in
the United States has been characterized by “small accidents” that have led,
via processes of localized increasing returns and cumulative causation, to the
establishment of persistent centres of production.
(Martin and Sunley, 2006).
Random
events

13. Some evolutionary economic geographers have proposed a second
account of industry emergence and path creation in the economic
landscape, termed a ‘window of locational opportunity approach’.
Path creation
(Martin and Sunley, 2006).
2nd: Paths originate from ‘window of locational opportunity’
How do technological, industrial and regional paths come into being?
To create new growth paths, regions will have to rely more on
knowledge and resources residing in other regions.
 presence of multinationals,
 the immigration of entrepreneurs, and a
 targeted government policy are all elements that come into play in
explaining new path creation (Binz et al., 2013; Dawley, 2014;
Neffke et al., 2017).
3rd: Paths originate from governance configurations/migration

14. New green industries through path
creation implies the rise of new green
industries/business.
 Green path creation often rests on
academic spin-offs and new green
firm formation.
 Examples of such processes include
the formation of the
 photovoltaic industry in
Norway and Germany (Dewald
and Truffer, 2012).
Path creation: for example Trippl et al 2020

15. Types of green path development or creation
Trippl et al 2020
Types of green path development
 Path renewal
 Path diversification
 Path importation
 Path creation (standard terms)

16. Types of green path development
Greening of existing industries through path renewal processes
mainly refers to intra-path changes involving e.g. the
introduction of green technologies, organisational innovations or
business models that introduce eco-efficient practices in
established sectors.
 Path renewal
Shipbuilding industry
 introduction of fuel cell Technology - combining
hydrogen and oxygen into water in Norway
Holmen & Fosse 2017

17. Path renewal > Shipbuilding industry
fuel cell Technology

18. Types of green path development
processes through which knowledge and other assets from
existing green industries or brown sectors are transferred to
emerging green industries that might be either related or
unrelated to the established economic structures.
 Path diversification
Diversification into green industry
 Rise of environmental technology sectors in
 Upper Austria (Tödtling et al., 2014)
 Ruhr area in Germany (Grabher, 1993)
 Development of the offshore wind industry in Norway
Diversification processes from the oil and gas sector
(Steen and Hansen, 2018)

19. Path diversification – eg diversify energy sources

20. Path renewal / diversification – new paths Firm level
(micro) / industry level (meso) / territorial level (macro)
Berlin to offer subsidies
for Cargo Bikes
€1000 for conventional
cargo bikes and
€2000 for e-cargo bikes.
Source
Think about EEG
 Paths
 Niche
 Changes the economic
landscape
 Okay, we need this but is it
supporting equality –
integrative development?

21. Types of green path development
The settlement of green industries that are new to the region,
resulting from inflows and anchoring of non-local firms
migration also plays a role > talent, knowledge and other assets
 Path importation
 Offshore wind industry in North East England (Dawley, 2014)
 The on-site (OS) water recycling sector in China (Binz et al.,
2016) - importation of the OS technology

22. Migration patterns / policies play a role
Source
 Highly-educated labour force has a positive impact on innovation.
 This holds not only for highly-educated natives but also, with a smaller
coefficient, for high-skilled migrants.
 1% increase in the number of educated natives leads to a 0.3%
increase in the citation weighted number of patents
 1% increase in the number of highly-educated migrants leads to a
slightly less than 0.1% increase in patents

23. Migration patterns / policies play a role
Hunt and Gauthier-Loiselle (2009) list the outstanding successes of
high-skilled immigration to the U.S.:
 26% of U.S. based Nobel Prize winners in the 1990s are
immigrants
 25% of founders of public venture-backed U.S. companies in the
years 1990-2005 are immigrants
 25% of new high-tech companies with more than one million
dollars in sales in 2006 were founded by immigrants.
 50% of the engineers and scientists employed in Silicon Valley
are immigrants
Rashidi, Sheida; Pyka, Andreas (2013)

24. Path creation (also referred to as new path
development – see Trippl et al 2020)
New paths are created by knowledgeable
inventors and innovators who mindfully
deviate from past practices and engage in
the introduction and diffusion of new
technologies.
Institutional entrepreneurship (Battilana et
al., 2009; DiMaggio, 1988) used to explain
how institutions help change processes,
which are often necessary for new path
development, take place (Boschma, 2017;
Boschma et al., 2017).
Role of entrepreneurs – inventors:
Role of governance:

25. Three major theoretical frameworks for
evolutionary economic geography
The handbook of evolutionary economic geography

26. Origins of new paths (development or creation)
The handbook of evolutionary economic geography
 There is much evidence that local conditions continue to be important to
processes of firm spinoff and to the emergence of radically new technological
and innovation paths.
 While there is undoubtedly an unpredictable and uncertain dimension to path
creation, this should not be exaggerated so as to completely obscure the
deliberate selection of promising entrepreneurial ideas and the creative
deployment of preexisting resources, ideas and relationships.
Deliberate selection Accidental / Chance

27. Phases of economic evolution of an
technology industry or region
Key lesson
We should not underestimate the
role of purposeful (mindfulness),
deliberate and strategic action

28. Do you want a straightforward publication
recapping these 2 lectures?
Source, page 489
Path dependency does not leave any room for an entrepreneur to
„mind-fully“ play a role in shaping their environment. By mindful
deviation, path creation writers mean that entrepreneurs often need
to change the endogenized social practice, regulations, or
institutions away from an accepted, comfortable, or optimal
structure. This process has nothing to do with optimization, since it is the
role of the entrepreneur to endogenize a new sttucture from which they,
though not necessarily their competitors or customers, will benefit.

29. Regional structural change
Path creation – dependency
Processes that change the components and elements, the
competencies and skills as well as the interrelationships of the
components and infrastructure of a specific region (Imbs et al. 2011).
Source
 the human capital stock of a region,
 economies of scale in production,
 positive and negative external effects from
knowledge and learning (agglomeration
effects, spillover effects),
 the productivity of the research sector
resulting from human capital, knowledge
production and learning and the closely
related level of (temporary) monopoly
rents,
 the speed of knowledge diffusion with the
possibility of imitating or adapting new
products

30. Regional structural change
Post-industrial
--
Neo-industrial

31. Regional structural change
New functions
--
Alternative
economic
activities

32. Examples: Regional structural change
Source
With the process of closing down both mines and steel production plants, huge
areas within the urban fabric fell out of use. Parallel to this, the numbers of
inhabitants in most cities within the region decreased, caused by migration and
other demographic changes. Hence, cities like Essen or Gelsenkirchen lost about
100,000 inhabitants > most rapidly shrinking cities in Germany.
Source
The
region’s
gray has
turned into
green

33. Examples: Regional structural change
Chicago, 1937

34. Examples: Regional structural change
Chicago, present

35. Examples: Regional structural change
Kuala Lumpur - 1920

36. Examples: Regional structural change
Kuala Lumpur – present

37. Evolutionary economic geography

38. Evolutionary economic geography

39. Defining resilience
Resilience
empowers
people to accept
and adapt to
situations and
move forward.
The capacity to
recover from
difficult life
events.
Resilience theory refers to the ideas surrounding
how people are affected by and adapt to things
like adversity, change, loss, and risk.

40. Defining resilience
Resilience thinking Resilience strategies
Evolutionary economic geography?
Source
Social-Ecological Systems & Sustainability Science
Source
A resilience thinking approach investigates how these
interacting systems of people and the environment can
best be managed in the face of disturbances and
uncertainty. Stockholm Resilience Center defines
resilience as the capacity of a system, be it an individual,
a forest, a region or an economy, to deal with change
and continue to develop within path or new paths.

41. Resilience v.s. evolutionary economic geography
(p86) is still in its infancy, and thus far
has been primarily ecological in focus,
its core ideas have been argued to be
applicable to a wide range of social,
political and economic contexts. (…) of
its notions resonate with those from
the theory of complex adaptive
systems, and is concerned with
processes not unrelated to those of
path dependence.
(p536) smaller and more geographically
peripheral centers may exhibit greater
bonding social capital, which while being
positive in terms of maintaining resilience
in times of economic hardship, may limit
the growth potential in stronger periods.
The institutional and social history of the
locality therefore becomes crucial for
understanding the economic evolution of
the region, and these arguments are linked
to evolutionary school.

42. Resilience v.s. evolutionary economic geography
 Resilience reveals a framework that goes beyond the
usual stability concept, since, in principle, a complex
system can be unstable but resilient (Reggiani 2004).
 Resilience can overcome the conventional debate
“unstable/stable node vs. stable/unstable network”;
 Resilience also reflects the capacity of a
network/firm/region to adapt itself to new states;
thus, evolution is formed by the switch of these
resilient entities from equilibrium state to another
Boschma (2015)

43. Resilience v.s. evolutionary economic geography
Boschma (2015)
 There is a tendency in the literature that resilience means to avoid
path dependence, or a move away from it, as if new growth paths
are detached from their past, and as if regions need to escape
from their historical legacy to achieve that.
 Boschma proposes a conceptualization of regional resilience in
which history is key to understand how regions develop new
growth paths, as pre-existing industrial, network and institutional
structures in regions provide opportunities but also sets limits to
the process of diversification
 Scholars have advocated an evolutionary approach to regional
resilience instead, in which the focus is on the long-term capacity
of regions to reconfigure their socio-economic structure (e.g.
Christopherson et al., 2010; Simmie and Martin 2010).
 From an evolutionary EG perspective > the ability of regions to
reconfigure their socio-economic and institutional structures to
develop new growth paths

44. Towards an evolutionary conceptualization of
regional resilience
Boschma (2015)
 From an evolutionary EG perspective > responsiveness of
individuals, organizations or systems to shocks:
 terrorist attacks,
 natural disasters,
 global warming,
 global economic crises,
 major plant closures,
 technologies becoming obsolete,
 fall of complete industries,
 political transformations, and so forth…
 Many economic geographers have investigated in the past how
regions responded differently to, for instance, de-
industrialization, the shift from Fordist to neo-Fordist types of
production (Piore and Sable, 1984; Scott, 1988; Chapple and
Lester 2010), and economic recessions in general (Domazlicky
1980).

45. Towards an evolutionary conceptualization of
regional resilience
Boschma (2015)
 In an evolutionary framework, resilience in the
meaning of the capacity of a region to sustain
long-term development
 The capacity of a region to respond positively to
short-term shocks
 Long-term evolution of regions and their ability to
adapt and reconfigure their industrial,
technological and institutional structures in an
economic system that is restless and evolving
“resilience is considered as an
ongoing process rather than a
recovery to a (pre-existing or new)
stable equilibrium state …”
(Simmie and Martin 2010, p. 31).

46.  Resilience then depends on the ability
of regions to cope with structural
change (e.g. from heavy industry to
tourism destination), that is, to create
new growth paths,
 In order to counterbalance inevitable
processes of stagnation and decline in
their regional economy (Saviotti 1996),
as
 “No region can rely on its legacy of past
successes to succeed in the future”
(Swanstrom, 2008, p. 1)
 This requires a better understanding of
how regions can achieve adaptation
without a loss of adaptability, and
adaptability without compromising on
adaptation.
Towards an evolutionary conceptualization of
regional resilience
Boschma (2015)

47. All seems so nice and effective…

48.  Resilience in connection with regions might be a useful concept in
ecological and disaster studies, it is much less so in connection to regional
economies due to three main shortcomings:
 first, the focus on equilibrium and multi-equilibrium;
 secondly, the neglect of state, institutions and policy at several spatial
levels and
 thirdly, the neglect of culture and social factors affecting adaptability
(see also partly Pendall et al., 2007; Swanstrom, 2008).
 The resilience framework seems to stress more the recovering of existing
industrial structures (adjustment) rather than the promotion of adaptation
and renewal (totally new paths).
 We should be careful to take up another fashionable concept without first
carefully scrutinizing the value of it in answering key questions of our
subject, such as differences in regional economic adaptability.
Critique
Hassink, 2010

49. Regional Resilience: further readings
1.F_06-05 - Lect. 5 - Resilience Thinking and Resilience Strategies in a Spatial Context etc (OLAT)
A “whole-of-government” approach is
needed to design at the national, regional
and local lever economic development
policies, population and health policies,
labour market policies, and skills and
education policies targeting sustainable
and resilient regions.

50. Urban and Regional ‘Resilienz’ discourse
1.F_06-05 - Lect. 5 - Resilience Thinking and Resilience Strategies in a Spatial Context etc (OLAT)
 Birkmann (2008), for example, as well as
Greiving and Fleischauer (2009)
conceptualize resilience in association
with the discussion about climate
change and disaster management.
 Wherever cities are drawn into a
downward spiral of urban decline – may
it be through economic crisis,
deindustrialization, the loss of jobs,
social and political transformation,
outmigration or demographic change –
it is hard for them to recover, to operate
and provide services under conditions of
distress, to retrofit aging buildings and
neighborhoods, or to reorganize and
eventually reinvent themselves.
This calls for a broader
understanding of the term resilience

51. Resilience and path dependency theory
1.F_06-05 - Lect. 5 - Resilience Thinking and Resilience Strategies in a Spatial Context etc (OLAT)
 Development paths can lead to both
positive and negative effects. For this
reason the path concept is analytically
suitable for assessing resilience and
the adaptability of regional
development to new challenges in the
form of natural risks and longer-term
processes of change.
 Securing resilience with the goal of
sustainable development may also
require the overcoming of an
institutional path-dependent logic of
action as well as the adaptation of
development paths through mindful
deviation if they not only lead to
stability, but also to inflexibility.

52. Evolutionary economic geography

53. Lecture 1 - Introduction: economic geography and its recent paradigms
Thank you
Questions?
See you 11-05 (Tuesday): Constructing Regional
Advantage, Related and Unrelated Variety
(OLAT / Zoom)
Evolutionary Economic Geography