- New Horizons in Institutional and Evolutionary Economics series
Edited by Lars Magnusson and Jan Ottosson
4. Path dependence in economic geography 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 , 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...
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