Geography Reference
In-Depth Information
24 An evolutionary model of i rms' location with
technological externalities*
Giulio Bottazzi and Pietro Dindo
1. Introduction
The present contribution intends to pursue the analysis of the ef ects of the evolutionary
metaphor (Dosi, 1988; Freeman, 1986; Nelson and Winter, 1982) when applied inside
the domain of economic geography. In principle, the validity of the assumption of evolu-
tionary economics is all but obvious and the question of whether economic interactions
can be ef ectively thought of as an evolutionary process still open. With the clear risk of
oversimplifying the matter, we could say that the notion of evolution immediately entails
three consequences for the economic dynamics. First, it should move from simpler to
more complex structures. Second, it should progressively eliminate less ei cient struc-
tures and promote the development of more ei cient ones, irrespectively of the fact that
this process of elimination and promotion might take place through a mechanism of
adaptation by some of the economic actors or through an 'adoptation' by some of the
markets and institutions (Alchian, 1950). Third, the progressive change or renewal of the
dif erent actors and rules should proceed in a jointly integrated way.
Obviously, the central question is not whether the characteristics described above can
be considered to be present in economic systems, because they certainly are. The ques-
tion is whether the evolutionary accounting of their ef ects and causes allows for a deeper
understanding and a more reliable modeling of economic interactions. In the end, one is
interested to know if this accounting could help in the development of more ef ective poli-
cies. In principle, however, the ideas of evolutionary economic thinking can be applied to
the investigation of the dif erent domains of economics also without providing a certain
and indisputable answer to the previous question. Indeed, partly following, even if not
subscribing to, the Friedmanian idea that the ef ectiveness of a theoretical framework
should be solely judged on its ability to reproduce and explain observed phenomena, one
could simply start from the 'evolutionary' metaphor and see what consequences it brings
to the design of economic models. As argued in Frenken and Boschma (2007), the devel-
opment of an evolutionary approach to economic geography could suggest new ways
of explaining the observed patterns that characterize the uneven spatial distribution of
economic activities. In the spirit of the foregoing 'minimalistic' research agenda, we try
to complement the bottom-up theorizing suggested there with a deeper understanding of
the dif erences that an evolutionary inspired modeling is likely to produce with respect to
more traditional approaches.
To be brought to its completion our exercise requires a twofold specii cation. First,
we need to identify a simple formal model, based on clear assumptions, which can serve
as a generic analytical framework. Second, we have to consider which hypotheses are to
be put forward in order to imbue this model with the spirit of evolutionary economic
geography. We address the i rst requirement by choosing, as a starting point, the simple
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