Papers in Evolutionary Economic Geography

March 20, 2017

# 17.07 The spatial evolution of the Italian motorcycle industry (1893-1993): Klepper’s heritage theory revisited

Andrea Morrison, Ron Boschma

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This paper investigates the spatial evolution of the Italian motor cycle industry during the period 1893-1993. We find support for both the heritage theory of Klepper and the agglomeration thesis of Marshall. Indeed, being a spinoff company or an experienced firm enhanced the survival rates, but we also found a positive effect of being located in the Motor Valley cluster in Emilia Romagna. Interestingly, this beneficial effect of a cluster could not be found outside the Emilia Romagna region. This might indicate the importance of a favourable local institutional environment, as propagated by the Emilian district literature.

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October 11, 2016

# 16.27 Industrial diversification in Europe: The differentiated role of relatedness

Jing Xiao, Ron Boschma, Martin Andersson

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There is increasing interest in the drivers of industrial diversification, and how these depend on economic and industry structures. This paper contributes to this line of inquiry by analyzing the role of relatedness in explaining variations in industry diversification, measured as the entry of new industry specializations, across 173 European regions during the period 2004-2012. There are significant differences across regions in Europe in terms of industrial diversification. Relatedness has a robust positive influence on the probability that new industry specialization develops in a region. A novel finding is that the influence of relatedness on the probability of new industrial specializations depends on innovation capacity. We find that relatedness is a more important driver of diversification in regions with a weaker innovation capacity. The effect of relatedness appears to decrease monotonically as the innovation capacity of a local economy increases. This is consistent with the argument that high innovation capacity allows an economy to ‘break from its past’ and to develop, for the economy, truly new industry specializations. We infer from this that innovation capacity is a critical factor for economic resilience.

July 4, 2016

# 16.17 Towards a theory of regional diversification

Ron Boschma, Lars Coenen, Koen Frenken, Bernhard Truffer

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This paper aims to develop a theoretical framework on regional diversification. Combining insights from the evolutionary economic geography literature and the transition literature, we argue that a theory of regional diversification should build on the current understanding of conditions for related diversification but additionally start to tackle processes of unrelated diversification by accounting for (1) the role of agency (institutional entrepreneurship) and the dynamic interplay between agency and context; (2) enabling and constraining factors at various spatial scales. We propose a typology of four regional diversification processes by cross-tabulating related versus unrelated diversification with niche creation versus regime adoption.

April 30, 2016

# 16.08 Resilience in the European Union: the effect of the 2008 crisis on the ability of regions in Europe to develop new industrial specializations

Jing Xiao, Ron Boschma, Martin Andersson

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This paper adopts an evolutionary framework to the study of industrial resilience. We present a study on European regions and assess the extent to which the capacity of their economies to develop new industrial specializations is affected by the global economic crisis of 2008. We compare levels of industry entry in European regions in the period 2004-2008 and 2008-2012, i.e. before and after a major economic disturbance. Resilient regions are defined as regions that show high entry levels or even increase their entry levels after the shock. Industrial relatedness and population density exhibit a positive effect on regional resilience, especially on the entry of knowledge-intensive industries after the shock, while related variety per se shows no effect on regions being resilient or not.

June 1, 2015

# 15.18 Evolutionary Economic Geography

Ron Boschma and Koen Frenken

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The chapter gives a brief overview of the most recent literature on Evolutionary Economic Geography (EEG). We describe how EEG has provided new and additional insights on a number of topics that belong to the core of the economic geography discipline: why do industries concentrate in space, how do clusters operate and evolve, how are innovation networks structured in space and how do they evolve over time, what types of agglomeration externalities induce urban and regional growth, how do regions diversify, and how do institutions and institutional change matter for the development of new growth paths in regions.

May 15, 2015

# 15.15 The Evolution of Specialization in the EU15 Knowledge Space

Dieter F. Kogler and Jürgen Essletzbichler and David L. Rigby

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Significant attention has been directed to processes of knowledge production in a spatial context, but little consideration has been given to the type of technological knowledge produced within specific places. In this paper we use patent co-classification data from the European Patent Office (EPO) to measure the distance between all pairs of 629 International Patent Classification (IPC) categories. A multi-dimensional scaling algorithm allows us to visualize these distances in a map of the EU15 knowledge space. We trace the evolution of that space from 1981 to 2005. The patent class distance data are combined with counts of patents by IPC categories to measure the average relatedness (specialization) of knowledge produced within each NUTS2 region. We show that knowledge specialization has increased significantly across EU15 regions over time and we report those regions that have the most specialized and the least specialized knowledge bases. Changes in the average relatedness of regional knowledge cores are decomposed to reveal the contributions of technological entry, exit and selection processes over space and time. In a final section of the paper, technological diversification and abandonment at the NUTS2 level are modeled as a function of proximity to the knowledge core of the region and to knowledge spillovers from neighboring regions that are mediated by social and spatial distance.

October 27, 2014

# 14.21 Institutions and Diversification: Related versus Unrelated Diversification in a Varieties of Capitalism framework

Ron Boschma and Gianluca Capone

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The Varieties of Capitalism literature has drawn little attention to industrial renewal and diversification, while the related diversification literature has neglected the institutional dimension of industrial change. Bringing together both literatures, the paper proposes that institutions have an impact on the direction of the diversification process, in particular on whether countries gain a comparative advantage in new sectors that are close or far from what is already part of their existing industrial structure. We investigate the diversification process in 23 developed countries by means of detailed product trade data in the period 1995-2010. Our results show that relatedness is a stronger driver of diversification into new products in coordinated market economies, while liberal market economies show a higher probability to move in more unrelated industries: their overarching institutional framework gives countries more freedom to make a jump in their industrial evolution. In particular, we found that the role of relatedness as driver of diversification into new sectors is stronger in the presence of institutions that focus more on ‘non-market’ coordination in the domains of labor relations, corporate governance relations, product market relations, and inter-firm relations.

September 23, 2014

# 14.18 Do spinoff dynamics or agglomeration externalities drive industry clustering? A reappraisal of Steven Klepper’s work

Ron Boschma

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Klepper’s theory of industry clustering based on organizational reproduction and inheritance through spinoffs challenged the Marshallian view on industry clustering. The paper provides an assessment of Klepper’s theoretical and empirical work on industry clustering. We explore how ‘new’ his spinoff theory on industry clustering was, and we investigate the impact of Klepper’s theory on the economic geography community. Klepper’s work has inspired especially very recent literature on regional branching that argues that new industries grow out of and recombine capabilities from local related industries. Finally, the paper discusses what questions on industry location are still left open or in need of more evidence in the context of Klepper’s theory.

January 14, 2014

# 14.01 Towards a Developmental Turn in Evolutionary Economic Geography?

Ron Martin and Peter Sunley

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Over the past couple of decades or so, there have been increasing moves within evolutionary theory to move beyond the neo-Darwinian principles of variety, selection and retention, and to incorporate development. This has led to a richer palette of concepts, mechanisms and models of evolution and change, such as plasticity, robustness, evolvability, emergence, niche construction, and selforganisation, This opens up a different framework for understanding evolution. In this paper we set out the main characteristics of the recent and ongoing ‘developmental turn’ in evolutionary theory, and suggest how these might inform a corresponding ‘developmental turn’ in evolutionary economic geography.

September 26, 2013

# 13.15 Merger and acquisition activity as driver of spatial clustering: the spatial evolution of the Dutch banking industry, 1850-1993

Ron Boschma, Matté Hartog

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This paper investigates the extent to which merger and acquisition activity contributed to the spatial clustering of the Dutch banking industry in Amsterdam. This analysis is based on a unique database of all banks in the Netherlands that existed in the period 1850-1993. We found that spatial clustering of the Dutch banking industry was not driven by the fact that banks performed better in the Amsterdam region: being located in Amsterdam decreased rather than increased the survival chance of banks. However, banks in Amsterdam were disproportionally active in acquiring other banks outside Amsterdam. Experience in M&As accumulated mainly in the Amsterdam region, which in turn had a positive impact on the survival chance of banks located there. Our findings suggest that M&A activity was a driving force behind the spatial clustering of the Dutch banking industry between 1850 and 1993.

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