Geography Reference
In-Depth Information
other narratives to understand the development of place-specii c institutions and the
broader evolution of the selection environment.
It is increasingly clear that plants and industries do not evolve in a vacuum but co-
evolve with other economic agents and alongside the broader institutional settings that
sometimes develop within the regions in which they are embedded (Freeman, 1995;
Nelson, 1995). Setteri eld (1993) discusses how the rules and behavioral norms that
comprise institutions emerge from the interaction of economic agents and the struc-
tures that regulate their activity, in a process of hysteresis. David (1992) of ers a similar
claim, with positive feedbacks generating that hysteresis. These arguments are consist-
ent with the view that institutions are endogenously generated among populations of
actors that engage in sustained social interaction. Indeed, Setteri eld (1993) envisions a
process of institutional creation and selection that is explicitly evolutionary in nature. If
this interaction is bounded by the region that comprises the selection environment, it is
likely that a set of broad regional social structures will emerge to coordinate economic
activities. These institutional arrangements exist outside the boundaries of individual
economic agents to deal with common problems in a manner consistent with the claims
of Granovetter (1985).
Many questions surround the evolution of institutions at the level of the plant and
among groups of agents at the level of the industry and region. While some routines
might be developed through deliberate search processes, others come about by trial and
error. Cumulative feedback mechanisms between the existing institutional environment
and local agents may lead to path-dependence and lock-in of particular institutions. As
with technologies, institutions are neither predictable ex ante nor do they necessarily rep-
resent the most ei cient institutional form possible. Dif erent institutional frameworks
tend to operate at dif erent scales of analysis. In some instances (e.g. specii c industries)
local specii city may matter for explaining evolutionary change, while the local scale may
be irrelevant in others or overshadowed by the ef ects of global or national institutions.
The actual geographic extent over which institutions exert inl uence will be context spe-
cii c.
Evolution of regions
When we shift attention away from the single region to consider competition among
plants located in dif erent regions, some interacting and some not, then place-specii c
characteristics become increasingly important to the performance of individual plants
and to the regions in which they operate. And, once ei ciency criteria become dei ned
across regions, when previously independent selection environments merge, for example,
then a new evolutionary dynamic develops that couples evolution
in
regions with the
evolution
of
regions. In evolutionary terms, this leads to models that combine intra-
population dynamics with inter-population dynamics. It is to these issues that we now
turn.
Where social and geographic distances between regions are relatively large, trans-
port costs sui ciently high and connectivity between places thus relatively low, or
institutional dif erences sui ciently strong, regional economies may evolve independ-
ently. Economic change within each region can be reduced to an analysis of population
dynamics, and in a uniform selection environment, those dynamics are controlled largely
by heterogeneity in the characteristics of individual agents. Of greater interest in this
