Innovation, Geography of

For more than a century, geographers and economists have developed theories on the spatial agglomeration of economic activity in response to three empirical observations:

• 1.
  A large portion of world output is produced in a limited number of highly concentrated core regions.
• 2.
  Firms in similar or related industries tend to colocate in particular places.
• 3.
  Both of these patterns seem sustainable over time.

While this outcome has most often been attributed to agglomeration economies, some scholars have long pointed out that the economic and institutional fabric of some areas promotes innovative behavior that further reinforces this pattern.

The most lasting contribution among the early analysts is the economist Alfred Marshall's “industrial districts.” Besides mentioning the external benefits that single-activity or closely related producers derive from sharing the fixed costs of common resources such as specialized [Page 1598]infrastructure and services, skilled labor pools, and specialized suppliers, Marshall emphasized that through colocation and frequent interaction, producers share a common knowledge base. By the middle of the 20th century, however, technological changes and the enhancement of labor and entrepreneurial mobility had led most regional growth and development scholars to conclude that “such local specialization … [had] become increasingly rare,” while, in contrast, “external economies on the broader basis of urban size and diversity [had] remained a powerful locational force” (Hoover & Giarratani, 1970, p. 121). This perspective, according to which innovative activities were seen as less relevant for industrial agglomeration, probably explains why, along with the development and/or refinement of analytical (mathematical) tools unsuited to the study of innovation, increasingly mechanistic and static “resources allocation” or “location-scanning” perspectives became dominant among analysts.

These theoretical approaches, however, proved unable to account for the spontaneous and spectacular rise in the 1970s and 1980s of numerous regions, from the Silicon Valley and Boston's Route 128 (Boston) in the United States to the so-called Third Italy, Emilia-Romagna, whose main characteristics were the spatial clustering of related and highly innovative firms. Scholars in disciplines ranging from geography and political science to sociology, business management, and economics thus began to (re)discover and further develop more qualitative and dynamic concepts and insights to explain how the industrial and social characteristics of a given place (ranging in scale from streets and industrial districts to cities and regions) provide or fail to provide fertile soil for innovative behavior or, in other words, how some areas act as focal points for innovative activities. These contributions emphasized not only that colocation gives related firms greater flexibility and the opportunity to quickly adapt to sudden shifts in market demand but also that some places are better than others at integrating the formal and informal collective processes essential to the production of continual innovation. Despite early and constant criticism that this “spatial interaction literature” features a number of ill-defined and overlapping concepts or frameworks (from “industrial districts,” “innovative milieu,” and “clusters” to “learning regions,” “regional innovation systems,” and “techno-regions”), its main message has always been twofold: (1) Where prosperity exists, it is regionally based and (2) the sources of this prosperity are to be found in the regions themselves and not in some exogenous factors.

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