Geography Reference
In-Depth Information
policy as exemplii ed by the DTI (1998): 'Our competitive future: building the knowledge
driven economy'. Among the research questions that this literature has given rise to, with
respect to this chapter, is what is the role of and what are the mechanisms for the transfer
of knowledge within and between spatial economies. Here it is argued that a contribution
to this task can be made by analysing the roles of specii c sectors such as KIBS and of net-
works. Research on the changes taking place in KIBS in the 56 largest cities in England is
reported to address the i rst of these tasks. Research on the existence and development of
regular business-to-business linkages that form relatively persistent networks in the City
of London and the greater south east is reported with respect to the second. Both show a
distinctive spatial distribution of the mechanisms for knowledge transfers.
The research reported leads to the conclusion that the spatial development of the
knowledge and information economy is likely to be cumulative and circular (Myrdal,
1957). Thus the regions like the greater south east in England that start with most of
the assets required in the new paradigm are likely to end up with more of them at a later
date. This process then becomes circular as the greater concentration of desirable assets
at this later time forms the basis for further cumulative gains in regions like the greater
south east in the longer run. As a result spatial economies are more likely to diverge in
the information economy than to converge towards some equilibrium path as predicted
by neoclassical theory.
In addition to this introduction and a set of conclusions the chapter is divided into
seven substantive parts. These deal respectively with the reasons for adopting an evo-
lutionary approach to economics, basic concepts in evolutionary economic theory,
knowledge, information, innovation and equilibrium, paradigm change, the information
economy and the spatial division of labour, knowledge spillovers and key sectors, the
role of KIBS, and knowledge spillovers, networks and spatial nodes.
2. Why adopt an evolutionary approach to economics?
Evolutionary economics as proposed by Nelson and Winter (1982) and developed by Dosi
et al. (1988) of ers an alternative and more 'realistic' theoretical approach to the understand-
ing of economic change in general and the roles of technological innovation in particular
than that proposed by neoclassical economic theory. It deals specii cally with some of the
main inadequacies of neoclassical theory. Principal among these are the over-importance
attached to markets as sources of information, the unrealistic assumptions concerning the
existence of equilibrium conditions and the neglect of the bounded rationality problem.
Briel y, the main dif erences between evolutionary and neoclassical economics on
these three points are i rst that it is argued in the former that prices and markets are by no
means the only social mechanisms that actively transmit economic information (Nelson
and Winter, 1982, p. 403). This is particularly important at critical eras of change in tech-
nological paradigms. Here markets do not usually instigate the innovations on which
they are based and are therefore seldom the prime movers (Dosi, 1982).
Second, one of the main reasons for the inadequacy of neoclassical market-based
assumptions is the importance attached to the notion that i rms and economies are
dynamically inclined to move towards equilibrium conditions. In contrast evolutionary
theory suggests that the explanation for economic change should focus on the conditions
where temporary convergence towards equilibrium is disturbed by endogenously deter-
mined innovative i rm behaviour (Nelson and Winter, 1982). Far from being a marginal
