Geography Reference
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will merely need the adjustment of old institutions (see the Schumpeterian question of
whether major innovations need new or old i rms to develop).
It is somewhat discomforting that the same factors - relating to knowledge, routines
and institutions - tend to be used to explain both regional success and failure. Until
today, economic geographers, as well as their colleagues in the neighboring economic
and social sciences, have been only partly successful when it comes to identifying - let
alone predicting - the branching points when successful specialization of cities, regions
or nations turns into negative lock-in. At one point in time, we may establish as a fact
that, for example, a specii c form of industrial relations or some other institutional
arrangement is major a cause of the industrial growth and dynamism of a city, region or
nation. At a later point, we may discover that the very same institutional arrangement
creates inertia and prevents the industry of the region from successfully meeting the chal-
lenge posed by the emergence of new competitors elsewhere. Such analyses run the risk
of getting stuck in a functionalist type of explanation that ends up very close to circular
reasoning: the cities, regions or nations that do well are those that are equipped with the
appropriate institutional structure, while the dei nition of an appropriate or even supe-
rior institutional structure is the one found in territories that perform well.
The problems of how to build an empirically justii ed theoretical understanding of
institutional dynamics at the level of cities, regions or nations in relation to individual
agency on the one hand, and external shocks on the other, remain interesting challenges
to evolutionary economic geography.
4. An evolutionary approach to the cluster life cycle
Having identii ed myopia as a key micro-level constraint in knowledge development, and
pinpointed institutional adjustment - or lack of adjustment - as a key factor in directing
knowledge processes at the aggregate level of cities, region or nations, in this section we
apply these concepts to a paradigmatic economic geographical case at the meso level:
that of the rise, growth, decline and possible rejuvenation of spatial clusters of similar
and complementary economic activity.
Much may be learnt about the role of space and place in economic processes by trying
to pinpoint the driving forces that make for agglomeration in space of economic activ-
ity. Indeed, some would claim that spatial clustering is the phenomenon that ultimately
motivates and dei nes the existence of economic geography as an academic discipline
(Fujita et al., 1999, p. 4).
Early attempts to dei ne the economic advantages gained by agglomerative behav-
ior were framed by a division into two sorts of agglomeration economies (see Dicken
and Lloyd, 1990; Hoover, 1937). Thus, urbanization economies came to denote those
advantages to be gained by location in a large and dense urban area, while the notion of
localization economies referred to advantages gained by locating close to other similar
or related i rms.
It is the latter aspect of agglomeration that makes up the main focus of this section.
A note on terminology should be entered here. The phenomenon of spatial agglomera-
tion of similar and related economic activity is dealt with in the literature under dif erent
headings. Alfred Marshall's (1890) classical - and still in many ways unsurpassed contri-
bution to the topic - uses the concept of localization to analyze the coming into existence
of 'industrial districts'. In recent years, clusters and clustering have been the most widely
