The Geographic Foundations of Industrial Performance

Abstract

The question of economic geography and industrial performance is broached by noting that the modern world economy is in part made up of a mosaic of interdependent regional production systems. I describe the formation of these systems in terms of a transactions-based logic of increasing returns and agglomeration economies. This logic represents a fountainhead of competitive advantages and productivity effects. I then show how regional development over time converges on a path-dependent trajectory, and some of the underlying characteristics and effects of this process are delineated. Regional economic systems are also marked by well-developed forms of collective order (both formal and informal), and 1 argue that this is a domain in which there are important opportunities for beneficial kinds of public action and policy-making. Some of these opportunities are brought to the fore by showing how specific kinds of intra-regional institutions can boost industrial performance. In the conclusion, I re-affirm the proposition that in today's global economy, geographic space has not become less significant in terms of its economic effects; on the contrary, it has become markedly more significant.

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