The spatial evolution-institution link and its challenges for regional policy

ABSTRACT

Contemporary economic geography acknowledges that regional economies develop in evolutionary processes, and that institutions matter in this process. Evolutionary dynamics have been classified into six types of path development (path extension, path branching, path diversification, path creation, path importation, and path upgrading) that serve to distinguish how precisely regional economies diversify or upgrade. Shaping these evolutionary dynamics is a major objective policymakers aim to achieve by applying regional policies with an evolutionary ambition such as smart specialization. However, there is a gap in understanding how the specific institutional arrangements found in regional economies condition these different types of path development. The article links path development to institutional context and identifies policy challenges for affecting evolutionary dynamics under the smart specialization approach.

KEYWORDS:

• Regional development
• EU cohesion policy
• smart specialization
• evolutionary economic geography
• institutions

JEL CODES:

• B52
• O43
• R11
• R12

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Acknowledgments

I am grateful to Neil Coe, Andrés Rodríguez-Pose, Michaela Trippl, and several anonymous reviewers for their comments. Of course, all remaining errors and omissions are my own.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 In this context, the varieties of capitalism (VoC) approach, itself an institutional concept, can serve to explain different institutional patterns between national economies (Hall & Soskice, 2001). The rich VoC literature with case studies from various countries offers an explanation for differing patterns of innovation and, by extension, path development.

2 A detailed description of the empirical evidence on the relationship between institutional context and smart specialization in those regions and countries can be found in Benner (2019). The following discussion builds on this evidence and draws specific conclusions for path development.

3 Since path development takes time, no statement on actual path development in the context of the fairly recent smart specialization experiences of these regions or countries can be made. What the following analysis does examine is how the institutional features of RIS3 and EDPs in the cases studied condition the possibilities for path development.

4 In methodological terms, qualitative case study research focusing on the EDP is unlikely to unveil actual lock-in. This holds true particularly for cases marked by institutional consistency. While the question of actual lock-in situations is not part of the case studies presented here, related risks are discussed below.