The Evolution of Path Dependence

The Evolution of Path Dependence

New Horizons in Institutional and Evolutionary Economics series

Edited by Lars Magnusson and Jan Ottosson

The notion and interpretation of path dependence have been discussed and utilized in various social sciences during the last two decades. This innovative book provides significant new insights onto how the different applications of path dependence have developed and evolved. The authors suggest that there has been a definite evolution from applications of path dependence in the history of technology towards other fields of social science. They also discuss the various definitions of path dependence (strong or weak) and explore the potential applications of path dependence in new areas such as political economy and economic geography.

Chapter 4: Path Dependence in Economic Geography

Magnus Lagerholm and Anders Malmberg

Subjects: economics and finance, evolutionary economics


Magnus Lagerholm and Anders Malmberg1 When an industry has thus chosen a locality for itself, it is likely to stay there long: so great are the advantages which people following the same skilled trade get from near neighbourhood to one another. The mysteries of the trade become no mysteries; but are as it were in the air, and children learn many of them unconsciously. (Marshall, 1890 [1916], p. 271) [I]f there is one single area of economics in which path-dependence is unmistakable, it is in economic geography – the location of production in space. The long shadow cast by history over location is apparent at all scales, from the smallest to the largest. (Krugman, 1991c, p. 80) INTRODUCTION Economic geographers are interested in the spatial aspects of economic development. This interest can express itself in various ways. Some focus on macro analyses of the economic growth of spatial entities such as cities, regions or nations. Others are more interested in micro analyses of the development of firms or systems of related firms, such as industries, networks, production chains or clusters. In both cases, the two main concerns relate to difference in economic performance on the one hand, and difference in economic specialization on the other. Thus, macro analyses in economic geography depart from questions like: why do some regions (cities, nations) prosper while others do not? Why is there regional specialization and how are such patterns reproduced? Differences in regional economic development exist not only in a global context but...

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