Costs, incentives, and institutions in bridging evolutionary economic geography and global production networks

Abstract

Two of the most influential strands in economic geography and regional studiesevolutionary economic geography and global production networkshave run on parallel tracks with limited cross-fertilization. The Regional Studies Annual Lecture 2020 paper by Henry Yeung proposes building bridges across both strands to improve our understanding of the uneven distribution and evolution of economic activity across the world. He puts forward the concept of strategic coupling as the foundation of such bridges. In this reply I argue that strategic coupling will not suffice, unless the variations in costs and incentives for engaging in networks and the different capacity of cities and regions to assimilate the benefits of innovation diffusion through networks are taken into consideration.

Gaining lead firm position in an emerging industry: A global production networks analysis of two Scandinavian energy firms in offshore wind power

“…Nevertheless, the direction of causality in the link (coupling dynamics) between lead firms in GPNs and local economies may not necessarily be one-way traffic, in that the result is either the transformation of local economies or industrial upgrading through knowledge transfer from lead firms, or in worst case lock-in. As argued by Rodríguez-Pose (2021), networks facilitate knowledge transfer and thereby contribute to fostering innovations (and local and regional development). However, “Questions need to be asked about […] who participates in networks, what are their characteristics, motivations and goals, and who can reap the potential benefits of that new information and knowledge and transform them into innovation […] understanding the channels of interaction between those generating and transmitting the knowledge and those absorbing it is of paramount importance (ibid., 2021: 1012).…”

“…To answer this question, we develop a novel process-sensitive approach by bringing together the global production network (GPN) framework and the evolutionary industry life cycle (ILC) approach, thereby responding to the call for cross-fertilization of GPN and evolutionary perspectives (see e.g., Afewerki, 2020; Blazek and Steen, 2021; MacKinnon, 2012; Rodríguez-Pose, 2021; Yeung, 2021). On this basis, we conceptualize the lead firms’ evolutionary trajectory in the life cycle of a particular industry as a dynamic competitive capability development and enhancement process through which they attain their dominant position.…”