2. Evolutionary economic geography: micro, meso and macro applications
Boschma and Frenken (2006) argued that applications of evolutionary economic geography
primarily fall under four categories: firm, sector, network and spatial system. Their scheme also
underlies the structure of the book with the various chapters being organised under one of these
four headings. Following figure 1, the categories follow from aggregating firms to their relevant
meso-levels of the industry in which they compete and the networks in which they exchange
commodities and share knowledge. Aggregating in turn the meso-levels to the macro-level, one
obtains the macro-level of spatial systems. Following this scheme, localities in spatial systems, be
it cities, regions or countries, can be characterised by their sector composition and their position
in spatial networks, and structural changes herein over time (Castells, 1996).
2.1 Entrepreneurship
We consider Evolutionary Economic Geography to involve a synthesis of evolutionary
economics and economic geography. Following evolutionary economics, our starting point is the
firm, which competes on the basis of its routines and core competences that are built up over time
(Nelson and Winter, 1982). Organisational routines and core competences consist for a large part
of learning-by-doing and tacit knowledge, which are hard to codify and difficult to imitate by
other firms (Teece et al., 1997; Maskell, 2001). Consequently, organisations are heterogeneous in
their routines, and persistently so (Klepper, forthcoming; Giuliani, forthcoming). Models can thus
no longer rely on assuming a ‘representative agent’, but have to account for heterogeneous firms.
This variety provides the fuel for selection processes, which causes some firms to prosper and
grow and others to decline and possibly exit. From this evolutionary process of firm dynamics
based on competition, innovation and selection, an emergent spatial pattern of economic activity
arises. This evolving economic landscape, as reflected by spatial heterogeneity in firms’ routines,
can be understood as the joint outcome of geographical proximity (enhancing innovation and
imitation) on the one hand, and spatial differences in selection conditions on the other (Boschma
and Lambooy, 1999; Essletzbichler and Rigby, 2005).
In the context of economic geography, firm location, or more generally, the locational
behaviour of firms, is a central explanandum (Stam, 2003). Demographically, the evolutionary
economic process unfolding in space and time is driven by entry of new firms, exit of incumbent