Papers in Evolutionary Economic Geography

December 4, 2012

# 12.25 Co-agglomeration of Knowledge-Intensive Business Services and Multinational Enterprises

Wouter Jacobs, Hans R.A. Koster and Frank van Oort

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It has been argued that the relationship between knowledge intensive business services (KIBS) and multi-national enterprises (MNEs) within the regional economy is advantageous for urban and regional dynamics. It is likely that KIBS aim to locate proximate to (internationally operating) MNEs because of agglomeration externalities. The impact of MNEs on the birth of KIBS has rarely been examined, and the research on the new formation of KIBS has mainly adopted a case study approach, thus limiting the opportunity for generalisation. We have taken a more quantitative approach using a continuous space framework to test whether proximity is important for the co-location of KIBS and MNEs in the metropolitan area of Amsterdam in the Netherlands. Our results, controlled for other location factors, indicate that KIBS are co-agglomerated with MNEs and that the presence of a MNE significantly influences the birth of KIBS nearby, but the effect on such start-ups is considerably smaller than the positive effect of the presence of already established KIBS. We discuss the implications for urban and regional development strategies and policy initiatives.

November 24, 2012

# 12.24 Does local economic development really work? Assessing LED across Mexican municipalities

Andrés Rodríguez-Pose and Eduardo I. Palavicini-Corona

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Local economic development (LED) strategies are increasingly being recommended as an alternative or a complement to traditional development strategies. However, beyond a limited number of areas where ‘best practices’ have been identified, there has been little systematic monitoring of whether LED really works. This paper uses a purpose-built database of 898 municipalities in Mexico in order to assess, using a quantitative approach, whether the implementation of seven different components of LED – development plan, sustainability, entrepreneurship, capacity building, participation mechanisms, development links, and autonomy – has delivered greater human development across Mexican local governments. The results of the analysis indicate that municipalities engaging in LED during the last two decades have witnessed significant improvements in human development, relative to those which have overlooked LED strategies. The increase in human development has been greatest for those local authorities which have pursued capacity building, the establishment of additional development links and which have drafted a development plan. Greater independence from federal or state initiative has, by contrast, been detrimental for changes in human development at the local level.

# 12.23 Original innovation, learnt innovation and cities: Evidence from UK SMEs

Filed under: 2012 — Tags: , , , , — mattehartog @ 10:30 am

Neil Lee and Andrés Rodríguez-Pose

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One of the key benefits of cities is that they allow the exchange of knowledge and information between economic actors. This may have two effects: it may create the conditions for entirely new innovations to emerge, and it may allow firms to learn innovations from those nearby. Yet few studies have considered the impact of an urban location on whether innovations are original or learnt. This paper tests these hypotheses using large-scale survey evidence for over 1,600 UK SMEs. We show that while urban firms tend to be both product and process innovators, urban firms are disproportionately likely to introduce process innovations which are only new to the firm, rather than entirely original. Instead, the urban advantage in product innovation appears to come from a combination of the effects. The results highlight a need for a nuanced view of the link between cities and innovation.

# 12.22 Agglomeration vs. Organizational Reproduction: The Molds Cluster in Portugal

Filed under: 2012 — Tags: , , , , — mattehartog @ 10:25 am

Carla Costa and Rui Baptista

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The mechanisms driving regional clustering are examined by exploring two theories: agglomeration economies and organizational reproduction. While organizational reproduction through spinoffs dominates clusters’ early stages of growth, in clusters populated by small, vertically disintegrated firms accessing networks of external capabilities, agglomeration economies should emerge as a positive force. We examine just such a cluster: the molds industry in Portugal. Our empirical approach is twofold: first, we examine the early evolution (1946–1986) of the industry; second, we use detailed data on firms and founders for the period 1987–2009 to test the predictions of the two theories. We find that while organizational reproduction has played a major role in clustering, agglomeration economies recently have gained influence.

November 2, 2012

# 12.21 Clustering and firm performance in project-based industries: The case of the global video game industry, 1972-2007

Filed under: 2012 — Tags: , , , , , — mattehartog @ 12:10 pm

Mathijs de Vaan, Ron Boschma and Koen Frenken

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Explanations of spatial clustering based on localization externalities are being questioned by recent empirical evidence showing that firms in clusters do not outperform firms outside clusters. We propose that these findings may be driven by the particularities of the industrial settings chosen in these studies. We argue that in project-based industries, negative localization externalities associated with competition grow proportionally with cluster size, while positive localization externalities increase more than proportionally related to cluster size. By studying the survival patterns of 4,607 firms and 1,229 subsidiaries in the global video game industry, we find that the net effect of clustering becomes positive after a cluster reaches a critical size. We further unravel the subtleties of the video game industry by differentiating between exits by failure and exit by acquisition, and conclude that being acquired is best considered as a sign of success rather than as a business failure.

October 21, 2012

# 12.20 Industry Evolution in Varieties-of-Capitalism: a Survival Analysis on Wind Turbine Producers in Denmark and the USA

Filed under: 2012 — mattehartog @ 7:42 pm

Max-Peter Menzel and Johannes Kammer

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Klepper developed a theory that explains the evolution of industries purely by the inheritance of firm-specific factors. Institutional approaches argue that the evolution of industries differ according to their institutional environment. We prose an extension of the heritage theory to analyse institutionally induced differences in evolutionary patterns. In doing so, assumptions from the Varieties of Capitalism approach on firm performance in different institutional contexts are integrated into the heritage theory. Such a perspective would expect that institutional differences affect the connection of a new industry to established resources. We apply a survival analysis of wind turbine manufacturers in Denmark and the USA, which represent different types of capitalism. We find that the industries differ both in entry pattern and performance. Compared to the US, the Danish industry forms slower and firms benefit when they adhere to already established resources like diversifiers, while others like startups of spin-offs perform worse.

October 8, 2012

# 12.19 Path dependence research in regional economic development: Cacophony or knowledge accumulation?

Filed under: 2012 — Tags: , , , — mattehartog @ 8:43 am

Martin Henning, Erik Stam, Rik Wenting

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The concept of path dependence has gained momentum in the social sciences, particularly in economic geography. In this paper, we explore the empirical literature on path dependence and path creation in regional economic development. We offer a critical reflection on these studies and outline commonalities and problems in research designs and empirical testing. Our review suggests that the popularity of the concept of path dependence in regional studies has led to a cacophony of studies rather than a purposeful accumulation of knowledge around the concept. To remedy this situation, we identify gaps and suggest guidelines for future empirical research on the role of path creation and path dependence in uneven regional development.

September 2, 2012

# 12.18 The Geography of Knowledge Relatedness and Technological Diversification in U.S. Cities

Filed under: 2012 — Tags: , , , — mattehartog @ 6:31 pm

David L. Rigby

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U.S. patent data and patent citations are used to build a measure of knowledge relatedness between all pairs of 438 major patent classes in the USPTO. The knowledge relatedness measures, constructed as the probability that a patent in class j will cite a patent in class i, form the links of a patent network. Changes in this U.S. knowledge network are examined for the period 1975 to 2005. Combining the knowledge network with patent data for each of the CBSAs in the United States permits analysis of the evolution of the patent knowledge base within metropolitan areas. Measures of knowledge relatedness are employed to explain technological diversification and abandonment in U.S. cities.

# 12.17 The co-evolution of proximities – a network level study

Filed under: 2012 — Tags: , , , , — mattehartog @ 6:22 pm

Tom Broekel

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Despite the growing number of studies, still little is known about how network structures and proximity relations between linked actors evolve over time. Arguments are put forward for the existence of co-evolution dynamics between different types of proximity configurations within networks. An empirical investigation tests these arguments using information on the development of 280 networks. Amongst others, it is shown that institutional and cognitive proximity configurations coevolve in the short as well as in the long-run. While institutional and social proximity configurations are only related in the long run. Moreover, temporal auto-correlation dynamics characterizes the development of cognitive proximity configurations.

August 28, 2012

# 12.16 When migrants rule: the legacy of mass migration on economic development in the US

Filed under: 2012 — Tags: , , , , , , — mattehartog @ 8:02 am

Andrés Rodríguez-Pose and Viola von Berlepsch

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This paper examines the extent to which the distinct settlement pattern of migrants arriving in the US during the big migration waves of the late 19th and early 20th centuries has left a legacy on the economic development of the counties where they settled and whether this legacy can be traced until today. Using data from the 1880, 1900 and 1910 censuses, we first look at the geography of migration across US counties in the 48 continental states. We then link this settlement pattern of migrants to current levels of local development – proxied by GDP per capita at county level in 2005 – while controlling for a number of factors which may have influenced both the location of migrants at the time of migration, as well as for the economic development of the county today. The results of the econometric analysis including instrumental variables underline that the big migration waves have left an indelible trace on territories which determines their economic performance until today. US counties which attracted large numbers of migrants more than a century ago are still more dynamic today than counties that did not. The results also show that the territorial imprint of migration has become more pervasive than all other local characteristics which would have determined and shaped economic performance in the late 19th and early 20th centuries.

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