Geography Reference
In-Depth Information
1.00
TIME
t
0.75
TIME
t
+ 1
0.50
INCUMBENT PLANTS
ENTRANTS
0.25
EXITS
REGIONAL AVERAGE
TECHNOLOGY
0.00
0.00
0.25
0.50
0.75
1.00
LABOR INPUT COEFFICIENT
Figure 2
.
1
Plant technology, variety and aggregate regional change
at that time. The population of plants operating at time
t
+ 1 is the set of incumbents
from time
t
plus new plants that were not in business at time
t
. These new plants we call
entrants and they are denoted by open circles. In Figure 2.1, the ellipses that bound the
techniques of production for a given time provide a representation, and a measure, of the
extent of technological heterogeneity in the regional economy. The existence of variety is
key to the operation of evolutionary mechanisms of change.
We can use the population-based arguments of evolutionary accounts to outline the
dif erent processes responsible for shifts in aggregate regional technology over time.
Until the recent development of plant-level micro-data, these processes were hidden in
aggregate measures of technology, the movements of which were often, and wrongly,
ascribed to technological change in general. Indeed, changes in aggregate regional tech-
niques of production result from the following processes, that operate in quite distinct
ways at dif erent times and in dif erent places (Rigby and Essletzbichler, 2006):
1. Technological change in incumbent plants.
2. Dif erential growth (selection) of incumbent plants.
3. Plant exit.
4. Plant entry.
Thus, in Figure 2.1, as incumbent plants adopt new technologies between times
t
and
t
+ 1, so they move in technology space and tend to pull the region's average technol-
ogy along with them. The adoption of dif erent techniques of production in incumbent
plants might represent innovation, the introduction of new techniques to the economy,
or imitation, the copying of techniques already in use. Even if incumbent plants do not
alter their techniques of production, as long as they experience rates of growth that dif er
from one another, aggregate technology in the region will shift as individual plants exert
more or less weight on the aggregate measure. The entry and exit of plants over time also
shifts the region's technology, so long as the entering and exiting plants have techniques
