The Place of Institutions in Regional Economic Change

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Rules of the Game: The Place of Institutions in Regional Economic Change
Meric S. Gertlera
a
Department of Geography, University of Toronto, Toronto, Ontario, Canada
Online publication date: 11 February 2010
To cite this Article Gertler, Meric S.(2010) 'Rules of the Game: The Place of Institutions in Regional Economic Change',
Regional Studies, 44: 1, 1 — 15
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Regional Studies, Vol. 44.1, pp. 1 – 15, February 2010
Rules of the Game: The Place of Institutions
in Regional Economic Change
MERIC S. GERTLER
Department of Geography, University of Toronto, 100 St. George Street, Toronto, Ontario M5S 3G3, Canada.
Email: [email protected]
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(Received March 2009: in revised form October 2009)
GERTLER M. S. Rules of the game: the place of institutions in regional economic change, Regional Studies. Institutions exert a
pervasive influence on the evolution and character of regional economies. Yet, this role is poorly understood within recent
debates on neoliberalism, varieties of capitalism, and other approaches to the study of economic change. A reconstituted
institutional economic geography must accommodate individual agency, institutional evolution, interscalar relations, and
comparative methodologies. Examining recent work on universities in local economies, as well as on creativity-based strategies
and social inclusion/polarization, it is shown how locally distinctive institutional architectures shape evolutionary trajectories,
leading to differentiated social and economic outcomes. The paper then enunciates some important principles of methodology
and theory-building in institutional analysis.
Institutions
Comparative capitalisms
mies
Institutionalist methodologies
Evolutionary change
Universities and local economies
Creative econo-
GERTLER M. S. Les règles du jeu: le rôle des institutions dans le développement économique, Regional Studies. Les institutions ont
une influence omniprésente sur le développement et les caractéristiques des économies régionales. Néanmoins, ce rôle s’avère
mal-entendu dans les débats récents sur le néo-libéralisme, les tendances capitalistes, et d’autres façons d’étudier le développement
économique. Une géographie économique institutionnelle repensée doit comporter des méthodologies spécifiques aux agences
individuelles, à l’évolution institutionnelle, aux relations interscalaires, ainsi que des methodologies comparatives. A partir des
recherches récentes sur les universités situées dans des économies locales, aussi bien que sur des stratégies basées sur l’innovation
et sur l’inclusion/la polarisation sociale, on montre comment l’architecture institutionnelle, qui se distingue sur le plan local, influe
sur les trajectoires futures, ce qui entraı̂ne des résultats sociaux et économiques distincts. L’article expose d’importants principes
quant à la construction de méthodologies et de théories dans le domaine de l’analyse institutionnelle.
Institutions
Capitalismes comparatifs
Développement futur
trices
Méthodologies institutionnalistes
Universités et économies locales
Economies innova-
GERTLER M. S. Die Spielregeln: der Platz der Institutionen in der regionalen wirtschaftlichen Veränderung, Regional Studies. Institutionen üben einen umfassenden Einfluss auf die Evolution und das Wesen von Regionalwirtschaften aus. In den aktuellen Debatten über Neoliberalismus, Spielarten des Kapitalismus und weitere Ansätze zum Studium wirtschaftlicher Veränderungen wird diese
Rolle jedoch nicht ausreichend verstanden. In einer rekonstitutierten institutionellen Wirtschaftsgeografie müssen die individuellen
Handlungen ebenso berücksichtigt werden wie die institutionelle Evolution, die interskalaren Beziehungen und die Vergleichsmethodologien. Bei einer Untersuchung der aktuellen Arbeiten von Universitäten in Lokalwirtschaften sowie der kreativitätsbasierten Strategien und der sozialen Eingliederung bzw. Polarisierung zeigt sich, wie lokal unterschiedliche institutionelle Architekturen
evolutionäre Bahnen prägen, was zu unterschiedlichen sozialen und wirtschaftlichen Ergebnissen führt. Anschließend werden in
dem Beitrag einige wichtige Prinzipien der Methodologie und der Theoriebildung in der institutionellen Analyse formuliert.
Institutionen
Wirtschaften
Kapitalismusvergleich
Evolutionäre Veränderung
Institutionalistische Methodologien
0034-3404 print/1360-0591 online/10/010001-16 # 2010 Regional Studies Association
http://www.regional-studies-assoc.ac.uk
Universitäten und Lokalwirtschaften
Kreative
DOI: 10.1080/00343400903389979
Meric S. Gertler
2
GERTLER M. S. Las reglas del juego: el lugar de las instituciones en el cambio económico regional, Regional Studies. Las instituciones ejercen una influencia dominante en la evolución y el carácter de las economı́as regionales. Sin embargo, esta función apenas
se entiende en los recientes debates sobre neoliberalismo, variedades del capitalismo y otros enfoques para el estudio del cambio
económico. Una geografı́a económica institucional reconstituida debe acomodar a la acción individual, la evolución institucional,
las relaciones interescalares y las metodologı́as comparativas. Al examinar el trabajo reciente sobre las universidades en economı́as
locales, ası́ como las estrategias basadas en la creatividad y la inclusión/polarización social, observamos que las arquitecturas institucionales distintivas a nivel local forman las trayectorias evolucionarias lo que conduce a unos resultados sociales y económicos
diferenciados. En este artı́culo formulamos algunos principios importantes de metodologı́a y construcción teórica en el análisis
institucional.
Instituciones
Capitalismos comparativos
creativas
Metodologı́as institucionalistas
Cambio evolucionario
Universidades y economı́as locales
Economı́as
JEL classifications: O32, O43, P16, R23
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INTRODUCTION
The great social anthropologist Karl Polanyi famously
wrote over sixty years ago:
There was nothing natural about laissez-faire; free markets
could never have come into being merely by allowing
things to take their course. Laissez-faire was planned;
planning was not.
(POLANYI , 1944, pp. 139 – 140)
His point was to argue that self-regulating markets were
not, in fact, the natural and inevitable end-state of
capitalist economies, but instead required deliberate
and continuous political action – state intervention –
to be sustained over time. This key insight has become
one of the touchstones of the contemporary critique of
neoliberal ideology and politics in Western economies.
Yet, there is a second, and in some ways more
profound, insight embedded within Polanyi’s prose
that needs to be revived and remembered. By arguing
that markets were a political or social construction,
Polanyi also laid the groundwork for a broader conceptual framework for understanding how economic
practices are shaped by a set of socially produced
structures one might call rules. These are the written
and unwritten codes and norms that provide necessary
stability and predictability to enable basic economic
functions – production, distribution, consumption –
to unfold in an orderly way.
This paper’s starting premise is that institutions exert
an influence on the character and evolutionary trajectory of regional economies that is often subtle, sometimes dominant, but undeniably pervasive. Yet, in the
author’s view, this role is still poorly understood or
under-appreciated within economic geography. Evidence for this can be found in a number of debates
within the current literature in the field, in which a
number of caricatures have become dominant. It will
be argued instead for a reconstituted institutional economic geography, in which individual agency, institutional evolution and change over time, interscalar
relations, and comparative case study methodologies
have pride of place.
The potential inherent in such a reconstituted institutional approach will be demonstrated by exploring
two case studies drawn from recent research. First,
some dominant themes in the literature on clusters,
innovation, and the role of universities in local knowledge economies will be considered. The paper will
then critically analyse recent debates around the
impact of creativity based strategies on social polarization or inclusion. In both cases, the author hopes
to show how locally distinctive and evolving, multiscalar institutional architectures interact with the agency
of individuals and organizations to help create particular evolutionary trajectories over time, leading to
differentiated social and economic outcomes in urban
regions.
INSTITUTIONS AND ECONOMIC LIFE
As the opening quote from Polanyi makes clear, the idea
that the behaviour of individual economic agents is
governed by a universally shared pursuit of economic
rationality is one of the fundamental conceits of
neoclassical economics. Within this perspective, the
‘natural’ state of affairs under capitalism is for economic
resources to be allocated by (free, unfettered) market
exchange. Implicit in Polanyi’s critique are two important points that are frequently conflated. First, is the idea
that economic behaviour is guided by more than
simple, individual volition. Instead, Polanyi argued
that economic action is shaped by a set of rules that
are actively produced and reproduced over time.
Second, Polanyi takes issue with the idea that there is
only one such set of rules – only one ‘operating
system’ – that is logically possible under capitalism:
the so-called free market.
The first critique – that individual action is guided
by more than volition – is the starting point for most
institutionalist economics since at least the early twentieth century and the work of Thorstein Veblen. In this
tradition, economic practice is understood as being
shaped and constrained by a set of institutions that
Rules of the Game: The Place of Institutions in Regional Economic Change
govern individual behaviour. Veblen characterized these
larger forces as ‘settled habits of thought common to
the generality of men’ (VEBLEN, 1919, p. 239).
More recently, Rogers Hollingsworth places the
emphasis on ‘basic norms, rules, conventions, habits
and values of a society’ that organize and regulate
human activity (HOLLINGSWORTH , 2000, p. 601).
Geoffrey Hodgson goes a bit further in describing institutions as a form of:
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social organization which, through the operation of
tradition, custom, or legal constraint, tends to create
durable and routinized patterns of behaviour.
(HODGSON, 1988, p. 10)
In perhaps the most stripped-down expression of this
thinking, Douglass North sees institutions simply as
‘the rules of the game in a society’ (NORTH , 1991,
p. 3) that shape and constrain the behaviour of economic agents.
The present author’s own approach to this idea has
emphasized the Polanyian argument that institutions
and the conventions they propagate throughout the
economy are actively produced through social and political processes. Institutions have been characterized as:
Formal regulations, legislation, and economic systems as
well as informal societal norms that regulate the behaviour of economic actors: firms, managers, investors,
workers. They govern the workings of labour markets,
education and training systems, industrial relations
regimes, corporate governance, capital markets, the
strength and nature of domestic competition, and associative behaviour. . . . Collectively, they define the system
of rules that shape the attitudes, values, and expectations
of individual economic actors. Institutions are also
responsible for producing and reproducing the conventions, routines, habits, and ‘settled habits of thought’
that, together with attitudes, values, and expectations,
influence actors’ economic decisions. . . . Although
these institutionally shaped attitudes, values, and conventions influence choices and constrain decisions regarding
practices, they do not wholly determine them. There is
still a major role here for individual agency to produce
a variety of responses within the same sector, region,
and nation-state.
(GERTLER , 2004, pp. 7 – 8)
This approach builds on a well-established tradition
across a number of the social sciences – most notably
within industrial economics, economic sociology, and
comparative political economy – in which the
primary questions revolve around the following:
.
.
How institutions provide the structure to support the
myriad of economic transactions that occur on a daily
basis.
How institutions interact to produce distinctive
economic structures and sets of characteristic practices
within different geographical spaces (for example,
nation-states, supranational trade zones, and subnational regions).
.
.
3
How institutions shape evolutionary economic trajectories over time.
How institutions provide overall stability for the
macro-economy, the conditions under which such
stability breaks down over time, and the processes
through which stability and coherence might be
regained in response to these periodic crises.
In addition to the long tradition of institutionalist
economic thought referred to above (also BARNES,
1997), several other bodies of work have been especially
influential in shaping one’s current understanding of the
role of institutions in economic life: the Regulation
School (BOYER , 1990; BOYER and HOLLINGSWORTH ,
1999), related institutionalist streams within political
economy (MAURICE et al., 1986; STREECK , 1992;
ZYSMAN, 1994; LANE , 1997; LAZONICK , 2001), the
‘national business systems’ approach (WEVER , 1995;
PAULY and REICH , 1997; WHITLEY, 1999; O’SULLIVAN,
2000, 2005; LAM , 2000, 2005), the national innovation
systems literature (FREEMAN, 1987; LUNDVALL , 1992;
NELSON, 1993), and the literature on varieties of
capitalism (ALBERT, 1993; HALL and SOSKICE , 2001).
These bodies of work all emphasize in their own way
the second point implicit in Polanyi’s critique: economies that are recognizably capitalist in orientation nevertheless evolve along distinctive paths that are shaped by
their own particular constellations of institutional structures – their own distinctive institutional architectures.
Implicitly, this collected work suggests that none of the
leading variants resembles the ‘textbook’ ideal of the
free, unfettered, self-regulating market. Even the
United States economy – long held up as a paragon
in this regard – has been shown to be the product of
a panoply of nationally distinctive institutional forms
through which the state defines ground rules, produces
incentives, and transmits signals to economic actors, as
well as redistributing income between individuals,
social classes, and regions.
INSTITUTIONS AND ECONOMIC
GEOGRAPHY
Despite the widespread recognition – at least outside of
mainstream economics – of the pervasive influence of
institutions in economic life, this approach has had surprisingly little sustained impact within economic
geography. While the early years of this decade generated a significant outpouring of institutionalist work
by economic geographers (MARTIN, 2000; AMIN,
2001; WOOD and VALLER , 2001), in retrospect this
proved to be a rather brief flowering of activity. As
PECK and THEODORE (2007) have pointed out
recently, this is more than a little ironic, given the inherently spatial nature of the central argument that capitalist
economic relations take on different contours and
characteristics within different geographically defined
4
Meric S. Gertler
institutional spaces. As PECK and THEODORE (2007)
put it:
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Economic geography and the varieties school ought to have
plenty to say to one another. But the conversation between
the two fields is a conversation waiting to happen.
(p. 36)
As is often the case, a few notable exceptions prove
the rule (COOKE and MORGAN, 1998; MASKELL and
MALMBERG, 1999; STORPER , 1999; CUMBERS et al.,
2003; WÓJCIK , 2003; CLARK and WÓJCIK , 2005;
BATHELT and GERTLER , 2005; GERTLER and
VINODRAI , 2005). The interest in regional innovation
systems and learning regions certainly served to foreground the role and importance of regional institutions
and distinctive ensembles of practice (or ‘culture’)
within economic geography from the mid-1980s
onward, although the manner in which regional and
national institutional architectures interact with one
another has still not received its due recognition
within the field. Michael Storper has introduced the
central concept of conventions into this literature, and
continues to demonstrate the many ways in which institutional context and rules shape economic transactions
(STORPER and LEAMER , 2001; STORPER and VENABLES,
2004; STORPER and RODRÍGUEZ -POSE , 2006). More
recently, the emergence of evolutionary approaches
within economic geography represents an important
focal point for institutionally inflected analyses of regional
economic change (BOSCHMA and FRENKEN, 2006;
MARTIN and SUNLEY, 2006).
Also especially noteworthy are the contributions of
Susan Christopherson (CHRISTOPHERSON, 2002),
whose analysis of national investment regimes demonstrates how the dominant rules that shape and constrain
investment time horizons and decisions produce the
societal conditions for nationally divergent competitive
advantages. Christopherson shows, for example, how
the ‘market governance model’ that dominates the US
economy favours those labour market and interfirm
practices that respond best to short-term investment
returns. In turn, this regime has promoted particular
sectoral strengths within the American economy,
focused on project-oriented industries, short-term contracts, high degrees of interfirm labour mobility, and
labour force turnover: sectors such as electronic media
and entertainment, advertising, management consulting, industrial and graphic design, computer, and
other professional services. These stand in stark contrast
to the sectors that dominate the ‘manufacturing model’
more typical of Germany or Japan. Indeed, the logical
conclusion of Christopherson’s work is that the very
concept of the firm itself – commonly assumed to be
an immutable and universal object – is in fact likely
to vary significantly from one national regulatory
space to another, reflecting the divergent sets of institutions governing capital and labour markets, corporate
governance, and interfirm relations.
Notwithstanding these promising exemplars in the
application of institutionalist thinking within economic
geography, it is clear that the influence of this approach
remains quite limited within the field. Indeed, one
could go further and state that we are in some danger
of erasing institutions almost completely from the analysis of economic processes and their geographies. The
reasons for this remain unclear. However, one could
contend that at least part of the blame must lie with
the underdeveloped toolkit that most economic geographers acquire as they make their way through graduate
school to a future career in the field. By ‘toolkit’, the
author is not necessarily referring to particular methodological tools (though this will be touched on
below), but rather a familiarity with cognate literatures
outside of geography per se that help one understand
the social foundations of economic processes and
practices.
This argument cannot be divorced from a consideration of other trends that have swept through economic
geography in recent years, which have diverted attention away from the hard work of documenting the
geography of capitalist institutions and their interaction
with local economic practices. First, at the risk of
reopening an old debate, the post-modern turn within
human geography did little to promote widespread
interest in structures and their systematic variation by
city, region, or nation-state. Second, as argued elsewhere (GERTLER , 2001), the still voguish adherence
to actor-network theory diverted collective attention
to the minutiae of everyday practice, as reflected in
texts, artefacts, and people. In the rush to document
the seemingly never-ending ways in which actors and
networks produce specific outcomes, sight was lost of
the larger institutional architectures that shape and constrain individual choices, and that create geographical
divides and discontinuities within the global economy:
in other words, ‘too much actor, not enough structure’.
More recently, however, it seems that the flurry of
energy and attention devoted to the geography of neoliberalism has – perhaps unwittingly – substituted a
kind of analytical shorthand in place of a more finely
grained appreciation for the geography of institutional
variation. The problem arises from a noticeable
tension that exists within the neoliberalism literature.
On the one hand, its original aim has been to document
and criticize the (seemingly inexorable) spread or ‘roll
out’ of policies that are guided by an unswerving
belief in the supremacy of open, competitive, ‘unregulated’ markets. On the other hand, as BRENNER et al.
(2005, p. 2) assert, it has more recently taken on the
project of describing and understanding the multiscalar
geographies of ‘actually existing neoliberalism’ and ‘the
contextual embeddedness of neoliberal restructuring
projects’. Most recently, the field has also begun to
turn its attention to considering the emergent forms
of contestation of the neoliberal ideal within cities,
regions, and nation-states (LEITNER et al., 2007).
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Rules of the Game: The Place of Institutions in Regional Economic Change
Encouragingly, this more recent thrust takes a decidedly institutionalist bent. For example, BRENNER et al.
(2005, p. 2) address their analytical gaze to ‘the legacies
of inherited institutional frameworks, policy regimes,
regulatory practices and political struggles’ and ‘the
path-dependent, contextually specific interactions
between inherited regulatory landscapes and emergent
neoliberal, market-oriented restructuring projects’.
However, despite this institutional reworking of the
neoliberalist line of argumentation, the ironic reality,
as LEITNER et al. (2007, p. 2) point out, is that the
dominant focus within the critical literature ‘on neoliberalization as a top-down process can inadvertently
reinforce its hegemonic status’. In other words, the
‘headline’ version of the neoliberalism narrative, in
which national and regional differences are being
erased in the unstoppable movement towards a universal
Thatcherian (‘There Is No Alternative’) paradise, has
deflected much effort and attention away from the
important business of acknowledging and documenting
geographies of contestation and the ongoing emergence
of locally and nationally distinctive paths. LEITNER et al.
(2007) argued – rightly, in the present author’s view –
that the most productive way forward is to encourage
more ‘close empirically grounded analysis’ (p. 2) of neoliberalism in order to advance one’s understanding of its
context-dependent nature and the possibilities for
alternative development models.1
If the neoliberalism literature can be accused
(however unfairly) of having effaced the possibility of
significant geographical variability in institutional
architectures and the social outcomes they favour,
other more explicitly institutionalist traditions may be
equally guilty of rendering a geography of variation
which is, in many ways, handicapped by its oversimplification and tendency to rely on caricature. Particularly
vulnerable here is the ‘varieties of capitalism’ approach,
which has come under considerable critical scrutiny in
recent years. PECK and THEODORE (2007) provide a
comprehensive overview of the concept and its shortcomings. Their sympathetic critique emphasizes,
among other things, the somewhat reductionist idealtypical categories underlying the approach – in particular, the central dualism between Liberal Market Economies of the United States, United Kingdom, and
Canada, and the Coordinated Market Economies of
Germany, Northern Europe, and Japan, which leaves
little capacity for understanding (for example) important new forms of emergent capitalisms in places like
China, India, and Brazil. Furthermore, they (and
others) criticize the overly static nature of the approach,
which emphasizes how inter-institutional coherence
produces system equilibrium, stability, and predictability, but says precious little about how such institutional
systems evolve and adapt to change over time. Finally,
and least surprising given their disciplinary identity as
geographers, they take the varieties school to task for
its ‘monoscalarity’ (PECK and THEODORE , 2007,
5
p. 36) – for fetishizing the national scale to the virtual
exclusion of all other scales of analysis.
What is equally clear, however, is that Peck and
Theodore see considerable benefit arising from a
closer mutual engagement between the varieties
approach and contemporary economic geography.
The varieties approach would bring a more rigorous
mid-level theorizing and institutionalist structure to
economic geography, while the latter would assert a
multiscalar lens and a central concern for the dynamics
of uneven development within capitalist economies.
That said, Peck and Theodore are justly critical of
much of economic geography for favouring one-off
‘single-location, single-industry or single-institution
case studies’, noting the ‘relative paucity of rigorously
comparative research designs’ (PECK and THEODORE ,
2007, p. 42). Moving beyond the varieties approach
per se, it is also clear that these authors see considerable
value in the larger project of developing a richer,
second-generation institutional economic geography,
one that is considerably more sensitive to the documentation and understanding of institutional variegation at a
number of different spatial scales.2
A RECONSTITUTED INSTITUTIONAL
ECONOMIC GEOGRAPHY
What then would a second-generation, reconstituted
institutional economic geography look like? While it
would be difficult to do full justice to a question as
ambitious as this in a single, relatively brief paper, a
number of key features will be sketched out. In the
author’s view, such an economic geography would be
characterized by at least four attributes.
First, the next generation of institutional analysis
within economic geography needs to provide more
room for agency, as asserted by both individual economic agents (managers, workers, entrepreneurs, and
venture capitalists) and organizations such as firms, producer associations, unions, regional governance groups,
and universities. It might seem somewhat ironic that this
item should be placed at the top of the author’s wish list,
given the traditional focus of institutional analyses on
larger structures – and also, given the above remarks
about the shortcomings of actor-network theory (ANT).
Nevertheless, it seems that one of the most common pitfalls
of an institutional approach is the constant temptation to
want to ‘read off’ individual behaviour from national (or
local) institutional structures. To do so is to neuter individuals and organizations of the agency they assert on a daily
basis, through processes such as interfirm competition,
collaboration, politics, and class struggle, to name just a
few of the more important forms to consider. What is
being talked about here is, of course, the very stuff of
capitalism itself.
The discussion of agency introduces key questions
into the analysis, such as: What influence does corporate
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6
Meric S. Gertler
strategy, practice and culture have on the success of
firms and the economic vitality of the regions in
which they have invested? How do the individual and
collective actions of employees alter employers’
choices concerning investment, technology implementation, workplace organization, or the extent of their
collaboration with other firms? How do university policies, practices, and distinctive histories shape and define
the way they interact with the economy and society
around them? How do multi-stakeholder governance
organizations help shape development trajectories at
the local and regional level?
Second, a reconstituted institutional economic
geography must focus on the question of how individual
institutions – as well as their interaction with other institutions – evolve and change over time. As noted above,
this is a question that has been raised frequently in the
critique of institutionalist approaches, going back at
least as far as the debates associated with the work of
the Regulation School. But this question has only just
begun to evoke constructive responses. One of the
key questions here pertains to the locus of the motive
forces driving change. In a manner that is strikingly
reminiscent of 1960s theories of technological change
à la Robert Solow, the traditional approach has been
to assume that change is driven primarily by externally
generated crises rather than endogenous processes – the
institutionalist equivalent of Joan Robinson’s ‘manna
from heaven’. Clearly, what is needed here is a more
developed understanding of change, in which institutions evolve in response to both endogenous political
and economic dynamics as well as exogenous shocks
( JESSOP, 2001). Obviously, such an approach would
also build directly on the call for a more agencycentred institutional economic geography.
On this question of the dynamics of institutional
change, there are some encouraging developments
emanating from within the ‘varieties’ literature, where
the recent work of Kathleen Thelen is especially noteworthy (THELEN, 2004; STREECK and THELEN,
2005; HALL and THELEN, 2007). In a recent paper
with Peter Hall, Thelen offers a three-way typology of
different routes to institutional change (HALL and
THELEN, 2007, pp. 14 –20): reform (that is, institutional
change that has been explicitly directed or endorsed by
governments themselves, and which is largely based on
coalitionist politics); defection (in which key actors either
withdraw from membership in key organizations or no
longer behave according to the rules and practices prescribed by a pre-existing institution); and reinterpretation
(through which ‘the actors associated with an institution
gradually change their interpretation of its rules, and
thus its practices, without defecting or dismantling the
institution itself ’; HALL and THELEN, 2007, p. 18). Furthermore, in their introduction to an edited 2005 collection, Thelen and Wolfgang Streeck begin to sketch
out – in a way that evokes Doreen Massey’s earliest
work (MASSEY, 1978) – the processes by which new
institutional forms come to be ‘layered’ upon older,
pre-existing institutions, thereby setting in train a
dynamic of path-dependent, locally distinctive institutional evolution (STREECK and THELEN, 2005).
While these ideas provide some very useful starting
points, there is obviously still much more work to be
done here.
Third, it should be obvious by now that any reconstituted institutional economic geography needs to
have more ‘geography’ in it. That is, it needs to illuminate the processes by which institutions are produced
and reproduced at a number of spatial scales, from the
local to the national to the global, as well as promoting
one’s understanding of how these institutions shape and
constrain (but do not determine) economic action. At
the same time, it should also address the vexing issue
of interscalar institutional interaction. In other words,
one needs to understand far better than is done currently exactly how institutional forms and the incentives
they create at any one particular scale influence, are
influenced by, and interact with, the institutional architectures that are erected at other geographical scales.
A well-known case in point arises from the celebrated work of AnnaLee Saxenian (SAXENIAN, 1994,
2006) on the comparative fortunes of Silicon Valley
(California) and Boston’s Route 128 (Massachusetts).
Her analysis of Silicon Valley’s rise, decline, and subsequent resurgence in the late 1980s and early 1990s
put the spotlight on at least two unanswered questions
of direct relevance to this discussion. First, while Saxenian tended to emphasize the role of local institutions in
her story – represented by the concept of the ‘local
industrial system’ – much of the critical response to
her work raised questions about the equally significant
impact of federal institutional influences expressed
through defence expenditures and the like. Second,
the less fortunate fate of the comparator region in
Massachusetts begged the obvious question about how
essentially the same industry, operating within the
same national institutional framework, could fare so
differently in response to the same national and international competitive challenges. While Saxenian’s
explanation at the time placed the onus exclusively on
local institutions and distinctive cultures, subsequent
work by Michael Best has challenged this interpretation
(BEST, 2001). In particular, by documenting the emergence of a new model for industrialization within the
Boston metropolitan region whose contours look
remarkably similar to the open, mobility-based Silicon
Valley model described in Saxenian’s work, Best’s
analysis implicitly raises some fundamental questions
about the viability of more than one variety of ‘local
model’ for technology-based growth within the US
federal-institutional space. Let it be added right away
that the present author does not wish to conclude on
this basis that the institutional framework at the scale
of the nation-state necessarily crowds out any possibility
for interlocal variation – indeed, far from it. The point
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Rules of the Game: The Place of Institutions in Regional Economic Change
being made here is simply that we have not yet even
begun to have this important conversation.
Fourth, and finally, it could be argued that there is a
pressing need for greater methodological variety to
support the production of a reinvigorated institutional
economic geography. As BARNES et al. (2007) have
recently pointed out, the field has become curiously
averse to the use of comparative methodologies,
preferring instead to employ thick description of individual cases. One consequence of this, as PECK and
THEODORE (2007) have argued, is that the work of
economic geographers has had limited purchase and
profile outside its own discipline. Clearly, if the core
projects of a new institutional economic geography
are to understand how institutions are produced, reproduced, and change over time, how these institutions
exert their influence over economic life, how these processes unfold at different geographical scales, and the
difference that geography makes, then much is to be
gained by adopting a comparative approach.
Going beyond the simple recognition that a comparative approach might be helpful in enabling one to tease
out the influence of institutions and agents on regional
economic change, a second set of methodological
challenges must also be met. How does one actually
carry out institutionally informed empirical research in
a systematic way? How does one operationalize the sometimes elusive concept of institutions, and how does one
account for and understand the layering of institutions
and their multiscalar interaction as described above.
Finally, how does one draw more general lessons from
the comparative analysis of particular cases that enables
one in turn to build up and advance theory? These questions are sufficiently large and significant to warrant a
book-length treatment on their own. However, one
way to begin to shed some light on them is to examine
them in the context of some concrete cases.
DOING INSTITUTIONAL ECONOMIC
GEOGRAPHY: SOME EXAMPLES
Of course, it is all too easy to pronounce or pass judgement on ‘what needs to be done’: it is far harder to put
these ideas and arguments into practice. For this reason,
this section now turns to two brief empirical examples,
drawn from the author’s current work, to help demonstrate the potential inherent in an institutional approach,
and to address through example some of the questions
outlined above. In doing so, a further objective is to
demonstrate how an institutional perspective helps
shed new light on some well-established debates
within economic geography and related fields.
The role of universities in local economies
Much ink has been spilled in trumpeting the new role for
universities in the contemporary knowledge economy.
7
No longer mere educators, universities have come to
be regarded as the new ‘anchor tenants’ in any successful
local economy. Today’s popular wisdom is that strong,
research-intensive local universities play a lead role in
kick-starting the process of local development based on
innovation (GIBBONS, 2000; KENNEY and PATTON,
2006). They allegedly do this by producing knowledge
that can be ‘commercialized’ in the form of patents,
licenses, spin-offs, and other means of realizing the economic value inherent in their intellectual property. They
may also ‘seed’ the local economy by developing – or
attracting from elsewhere – a cadre of ‘star scientists’
who drive this process of intellectual property production and realization, while also stimulating the
growth of local private firms with which they have established some kind of direct relationship (ZUCKER and
DARBY, 1996). The poster boys for this phenomenon
are undoubtedly universities like Stanford in the midst
of Silicon Valley, MIT in Cambridge, Massachusetts, or
the University of Cambridge in the UK. The policy prescription arising from this argument is deceptively
simple: build an MIT or a Cambridge, and the rest will
take care of itself, or – less ambitiously – prime the university research pump with generous amounts of funding
in hot new fields like biotechnology or nanotechnology,
and wait for the commercializable results to find their
way to the marketplace.
Within Canada, this discourse has found considerable currency, especially with reference to alleged
success stories such as the University of Waterloo in
Waterloo, Ontario – widely credited with having
spun off successful firms such as Research in Motion
(RIM), producer of the now-ubiquitous BlackBerry.
Not surprisingly, governments at all levels, from local
to national, have led the way in calling for a further elaboration and replication of this development model.
They have now taken to admonishing universities on
an ongoing basis for not doing a better job of transferring knowledge more effectively from the laboratory
to the private sector economy around it.
Over the past nine years, the author has been codirecting two large national studies of local economic
clusters, city-regions, and the role of regional innovation systems.3 The first of these was focused on the
goal of understanding the role and relative importance
of local actors, assets, and relationships in enabling
firms to make a successful transition to more knowledge-intensive forms of production. The questions are
as follows. Under what circumstances does ‘the local’
matter, and how important are local sources of knowledge and locally generated institutions in strengthening
the innovative capabilities of firms and industries? What
is the relative importance of non-local actors, relationships, and knowledge flows in shaping the development
trajectories of regions?
The present study was designed around twenty-six
local cases in different regions across Canada. The
cases were selected to ensure a range of local contexts,
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8
Meric S. Gertler
including larger and smaller metropolitan regions, as
well as non-metropolitan settings. The cases also
covered a range of sectors, from highly knowledgeintensive industries such as biotechnology, photonics,
and wireless equipment to more traditional, lowertechnology, and resource-based sectors such as wood
products, mining supply and services, and specialty
food and wine, as well as other manufacturing sectors
such as automotive parts, aerospace, and steel, where
knowledge inputs are used on an ongoing basis to
renew mature products and generate new ones periodically. The methodology, using both the quantitative
analysis of local economic data as well as more qualitative, semi-structured interviews with a range of local
actors (firms, workers, government agencies, financiers,
civic associations, and research organizations), allowed
for systematic comparisons to be made across the different case studies. This comparative framework enabled
the author and his colleagues to tease out the influence
of sub-national (provincial and local) institutions and
actors in shaping regional economic trajectories.
One of the questions of particular interest was the
role of local universities, community colleges, and
research centres within these cases. The investigators
were conscious of some major differences in the institutional architecture in this regard between Canada
and the United States (from which most of the successful examples in the literature had been drawn). At least
three are worth mentioning here. First, unlike the
United States, Canada’s parliament has not passed
federal legislation akin to the Bayh–Dole Act that
imposes a uniform national regulation governing the
ownership and use of intellectual property arising
from federally funded university research. As a result,
policies and practices pertaining to this issue vary
widely from one province to another and, within each
province, from one university to the next. This basic
difference in the institutional architecture between the
United States and Canada creates considerably more
room for sub-national institutions and agents to exert
their influence over local outcomes.
Second, unlike the United States, there are no
private post-secondary institutions in Canada. All of
Canada’s universities and colleges are publicly funded.
The consequences of this are many and varied but, for
the purposes of this discussion, three are especially pertinent: (1) differences in research intensity between
individual institutions are smaller relative to the variation found between universities within the United
States; (2) the primary mission for Canadian universities
is to provide a good standard of affordable education to
those who qualify for admission; and (3) compared with
their American peers – even state-supported ones –
Canadian universities rely on government grants for a
very large proportion of their operating income,
meaning they are less dependent on private philanthropy or technology licensing revenues for their financial viability.
Third, publicly funded research and development
constitutes a much higher proportion of total research
and development in Canada than is found in the
United States – or in any other Organisation for Economic Co-operation and Development (OECD)
country. This takes a number of dominant forms,
including research funded through federal granting
councils as well as research performed directly by
governments through publicly owned (federal and
provincial) laboratories.
With this background in mind, what did the case
studies reveal about the relationship between local
‘knowledge infrastructure’ and the emergence and evolution of innovative local economic clusters? In general,
it was found that, with a few notable exceptions, local
research infrastructure plays a supporting, not a causal,
role in the emergence of innovative local firms, and
where this role is significant, it is more complex and
multidimensional than the prevailing literature suggests.
In some significant instances, the local development of
advanced educational and research institutes clearly
follows the emergence of a dynamic local cluster,
rather than leading it. In other significant cases –
most notably in Ottawa, famously dubbed ‘Silicon
Valley North’, and home to well-known firms such as
Nortel, Cognos, and Newbridge Networks4 – the
wellspring for innovation and home-grown hightechnology successes was in fact federal research laboratories, not the local universities. Even in the case of
Waterloo, the most celebrated putative example of a
university spin-off – Research in Motion – was in
fact not a spin-off. Its founders included former University of Waterloo students, but their initial product line
was unrelated to the BlackBerry. What is more, Mike
Lazaridis, the firm’s co-Chief Executive Officer, has
famously gone on public record as stating that ‘technology transfer happens twice a year in Waterloo – it’s
called convocation’ (graduation).5
In other words – and this finding is borne out consistently across the case studies – the most profound and
lasting impact that Canadian universities and colleges
have on their surrounding communities is not exerted
through their role as ‘knowledge factories’ generating
readily commercializable technology, but instead is
achieved through their core function of producing a
well-educated and skilled labour force. Furthermore,
knowledge flows across the boundary between the university and the local economy in both directions and
along multiple channels, and here too (local) institutions, agents, and history have played a critical role
in helping shape this behaviour. Returning again to
the Waterloo case (BRAMWELL and WOLFE , 2008),
two of the most important practices facilitating this
flow are the widespread use of cooperative education
programmes, and a long-established practice of university faculty consulting with local industry. Both of these
practices, in turn, can be linked to the strong influence
of local actors in the manufacturing sector – many of
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Rules of the Game: The Place of Institutions in Regional Economic Change
whom were instrumental in the founding of the university in the first place, motivated by the desire to create a
reservoir of local competence to produce skilled labour
and help firms solve production problems. Moreover,
one of the largest immigrant groups in the region
originates from Germany, where apprenticeships are a
well-established component of the ‘dual education’
system within manufacturing industries. It should
come as little surprise that these same immigrants
were amongst the most enthusiastic supporters of the
co-op system.
This brief comparison between two noteworthy
Canadian cases – Ottawa and Waterloo – illustrates
the useful insights that can be yielded by the
institutional approach that has been outlined in this
paper. As noted above, the loosely articulated federal
institutional architecture, in which the Canadian state
has thus far shied away from imposing Bayh –Dolestyle national uniformity on university practices with
respect to technology transfer, has created considerable
room for provincial and local institutions and actors to
shape economic outcomes in this area. The unusually
prominent role played by the public sector in undertaking research and development in Canada, and the
presence of key federal laboratories in the Ottawa
(national capital) region have strongly shaped the path
of technology-led economic development in that city.
At the same time, neither of the two local universities
can be said to have led the process of generating
successful technology-based firms in the region.
In contrast, the Waterloo region was not blessed by
the presence of major federal research laboratories.
Instead, its vibrant technology-based economy seems
to rest on rather different foundations – most notably
a university whose deep commitment to close
collaboration with local industry has generated a
complementary set of structures and conventions:
(1) a well-developed system of co-op education;
(2) strong institutional norms that encourage and
value consulting to industry by faculty members; and
(3) university-based intellectual property rules that
confer ownership upon inventors. Moreover, agency
has also played a critical role here, first in the form of
business leaders (many with a German background)
and the university’s founding President, who were
instrumental in establishing the university and defining
its prevailing practice-oriented ethic, and more recently
in the form of entrepreneurs (many with a past connection to the university) who have founded a series of
leading companies in software, wireless communications, and related technologies.6 This is a critically
important point. The presence of a local institutional
context that was broadly supportive of technology-led
development constitutes necessary but not sufficient
conditions. Without the agency of local entrepreneurs,
and the knowledge, initiative, experience, and social
networks they represent, firms like Research in
Motion would not exist today.
9
The creative economy: prosperous and inclusive?
Few issues have stimulated more debate within the past
few years than the so-called creative class thesis and
related ideas about the creative city. Richard Florida
has been both an inspiration and a lightning rod for
this discussion (FLORIDA , 2002, 2005, 2008). While
Florida has many fans, his work has generated more
than its share of ‘controversy’ (for example, KOTKIN,
2005; and PECK , 2005). Without wishing to recite
chapter and verse the major contours of this debate,
suffice to say that one of the most pointed criticisms
has been the argument that those US cities that rate
most highly on Floridian indicators – such as the gay
index, the bohemian index, the melting pot index, or
the coolness index – also happen to be those places in
which social and economic polarization has increased
most dramatically in recent years. Indeed, the claim
has been made that this is far from coincidental; that
the rapid transition to a creative economy in these
cities has induced – or at the very least, exacerbated
– this social polarization dynamic. Critics on the left
such as PECK (2005) have attributed this unfortunate
correspondence to the neoliberal policy agendas they
see as being intimately intertwined with creative city
strategies across the United States. Within the US
context at least, the parallel development of the creative
economy and social polarization has been characterized
as inevitable.
Indeed, on this score, even Florida himself has
acknowledged and accepted this point, providing
empirical evidence to substantiate at least the geographical coincidence between his various indicators of local
creativity and galloping social polarization (FLORIDA ,
2008). However, his explanation, not surprisingly, does
not rest on arguments relating to the neoliberalization
of American cities. Instead, his thesis is that this polarization is part and parcel of a more fundamental economic
process in which returns to higher education and creative
capability are large and getting larger. This phenomenon
is paired with another dynamic that sees highly educated
and creative overachievers seeking out one another and
rushing to cluster in those places that promise the
highest earning potential in their chosen fields. The net
result is rampant socio-spatial polarization, which is
now manifesting itself at multiple scales: within individual city-regions, within nation-states, and globally.
Although Florida’s understanding of the roots of this
polarization differs from Peck’s – while Peck implicates
politics, Florida implicates economics – their conclusion
that this process is inevitable is remarkably consistent.
But is this the end of the story? The institutionalist
(and the Canadian) in the present author quite naturally
observes that this debate has raged largely within the
confines of the US political–economic–geographic landscape. This fact begs one very obvious question. To
what extent can the outcomes that have been so
clearly documented in the United States be explained
10
Meric S. Gertler
by its own distinctive institutional architecture, its
inherited institutional, political and historicogeographical legacy?
Another current project of the present author investigates the nature and evolution of creative economies
within Canadian city-regions. It is important to note
from the outset that the term ‘creative economy’ is
being used here to connote much more than another
analysis of the creative class and its lifestyle preferences.
The project is interested in three primary questions:
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.
.
.
To what extent, and in what ways, does creative work
pervade the various sectors that comprise Canada’s
urban economies? Here, ‘creative’ is being defined
in both occupational and sectoral terms, with the
latter including both ‘creative industries’ such as
media, the visual and performing arts, and design, as
well as other sectors such as software, computer
games, and biomedical technologies, in which creativity is a key input to the innovation process.
What role do particular social and economic attributes of places play in generating, attracting, and
retaining highly educated and/or creative workers?
Related to this, one is interested in understanding
the processes by which creative workers circulate
between different industrial sectors within diverse
local economies, stimulating innovation by acting as
vectors for the broader circulation of embodied
knowledge.
How do institutions at various spatial scales, from the
local to the national, influence the degree of social
inclusivity or polarization within creativity-led development strategies? Clearly, the premise behind this
question is that outcomes along these dimensions
are not preordained, and that local circumstances,
inherited institutional legacies, and local agency
might well influence the course of developmental
trajectories.
Therefore, what does the research reveal thus far with
respect to this third question? To begin, the author’s
work shows that Toronto’s (Ontario) creative
economy has developed rapidly since 1991. During
the period 1991 –2004, employment in creative occupations grew at more than three times the rate of the
total labour force in the Toronto census metropolitan
area (GERTLER et al., 2006, p. 13).7 Over this same
period, one can also find evidence of two distinct processes: one polarizing, the other working against this
trend. By way of example, consider the case of Toronto’s
large and well-established design workforce (GERTLER
and VINODRAI , 2004). The present analysis of employment income data from the 2001 Census documents
that the occupational structure of this sector is strongly
bifurcated by income and gender. Across the various
design disciplines,8 median incomes in Ontario in
2000 ranged from a high of C$60 900 in architecture
to a low of C$32 000 in the ‘other designers’ category
(incorporating theatre, fashion, exhibit, and other
designers). For male designers, the range between the
same occupations was from C$66 200 to C$38 400,
while the median incomes for women in the same
occupations were considerably lower and more
compressed: from a high of only C$40 400 to a low
of C$27 500. Subsequent analysis of these same
figures based on the recently released 2006 Census
data indicates that this bifurcated structure has become
entrenched over time.9 At the same time, other qualitative and quantitative evidence provides further indications of a polarizing trend that has taken on both
social and spatial manifestations.
Two recent studies have documented this dynamic.
The first, sponsored by the UNITED WAY OF
GREATER TORONTO (2004), identified a phenomenon
it referred to as ‘poverty by postal code’ – the emergence of geographical concentrations of poverty
within certain city neighbourhoods. More recently,
HULCHANSKI (2008) has identified ‘three Torontos’: a
central core in which incomes and property values are
rising, a ring of inner-suburban neighbourhoods
where the opposite is occurring, and an intermediate
zone, which is home to a declining number of
middle-income households.
These polarizing trends are deeply worrying. But
encouraging evidence has also been found of some
countervailing developments. At the local level, the
City of Toronto has established the Mayor’s Strong
Neighbourhoods Task Force to focus attention and
resources on precisely those neighbourhoods that have
emerged as centres of social and economic deprivation.
The membership of this task force is broadly representative of business, labour, government, education, and
community-based organizations. Toronto has also generated an impressive legacy of policy innovation in
which, for example, successful initiatives have used
arts-based programming to provide opportunities for
teens and young adults in some of the city’s most
troubled neighbourhoods. At the same time, new
affordable spaces to incubate artistic and socially innovative enterprise have been created by both enlightened
private property developers as well as new, publicly
chartered but autonomous actors such as Artscape
(GERTLER et al., 2006). The emergence of new,
multi-stakeholder institutions of governance within
the region has provided a platform and focal point for
many other similar initiatives. Especially noteworthy
here is the Toronto City Summit Alliance and its
subsidiary organizations such as the Toronto Region
Immigrant Employment Council (TRIEC), which
have provided comprehensive and innovative solutions
to address systemic under- and unemployment of
recent immigrants living in the region.
At a more fundamental level, the institutional architecture that underlies these processes differs in significant ways from the situation in most American cities.
Two features deserve particular emphasis. First, the
region has a long-established tradition of a strong
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Rules of the Game: The Place of Institutions in Regional Economic Change
public school system. This has been developed and
maintained within a region-wide system of resource
pooling and spreading that serves to redistribute tax revenues from wealthy to less wealthy neighbourhoods,
minimizing (though certainly not eliminating) quality
differences between individual schools. As a result, the
‘market share’ of private schools in the region is remarkably low, especially in comparison with US cities of
similar size. Second, the region has been governed on
a metropolitan scale since the early 1950s, and this too
has helped offset the tendency for geographically
expressed income differences to become amplified and
entrenched.10
Both of these features also implicate another level of
institutional influence – namely, the provincial scale.
Key provincial legislation, implemented by ministries
of the Ontario government, defines the rules for property taxation, revenue pooling, and redistribution, as
well as the framework for local and metropolitan government. This means that the institutionally defined forces
that work against socio-spatial polarization in Toronto
are not necessarily present in all Canadian regions.
While the end result of these countervailing tendencies is far from decided, one thing seems clear.
There is no single pathway towards a future creative
economy. Social, economic and geographical outcomes
are contested and determined through the interplay
between inherited national, provincial and local institutional structures, political processes, and the agency
of individual actors such as municipal leaders, civic
entrepreneurs, and community activists.11 And there
remains a surprising degree of latitude at the local
scale to modify existing institutions, create new institutions, and enact policies promoting progressive
social change (GERTLER , 2008).
The larger point is that, despite similar economic
forces at work, there is no a priori reason why a city
like Toronto must necessarily follow the same path as a
San Francisco (California), New York (New York) or
Boston. Nor, for that matter, should one expect to
find outcomes similar to Toronto in other Canadian
cities. Indeed, the Toronto case study is but one part
of a larger comparative national study of sixteen cityregions in which the goal is to understand how local
and more senior institutions of governance, local politics, and the agency of key individuals and organizations
collectively shape developmental trajectories toward
more or less socially inclusive outcomes. Once this
national study is completed, the author expects to
have a rich body of empirical material from which to
draw larger insights for theory on the basis of systematic,
cross-case comparisons.
REFLECTIONS AND CONCLUSIONS
This paper began with the premise that institutions exert
an influence on the character and evolutionary
11
trajectory of national, regional, and local economies
that is often subtle, sometimes dominant, but undeniably
pervasive. Yet, despite widespread recognition of this
influence across the social sciences, curiously
this process remains poorly understood or underappreciated within economic geography.
After advancing some possible explanations for this
lack of attention, the paper proceeded to describe the
broad contours of a reconstituted institutional economic geography. Four desirable features were outlined:
first, it should provide sufficient analytical room for the
agency of individuals and organizations; second, it needs
to incorporate processes of institutional evolution and
change over time; third, it must account for the interaction between institutional architectures at different
scales; and finally, it would profit from adopting comparative methodologies.
In both of the empirical examples included in the
preceding section of this paper, the author has tried to
show how locally distinctive and evolving institutional
architectures, interacting with national and provincial
institutions, local political dynamics, and the agency of
individuals and organizations, help create particular
evolutionary trajectories over time, leading to differentiated social and economic outcomes in urban regions.
In reflecting on these two studies and their methodological underpinnings, several clear principles emerge
that underlie the institutional approach advocated
here, and which link method to synthesis and theorybuilding. First, the work has been structured by a clear
set of research questions arising from the contemporary
literature on clusters, regional innovation systems, university–industry interaction, and creative cities. While
the case studies have yielded a wealth of rich empirical
material, their true value is realized only through a
process of rigorous a posteriori analysis in which those
institutions and actors at a range of different spatial
scales that have played an important role in producing
local economic outcomes are identified. While it was
specified at the outset, based on a close reading of the
literature, which rules and actors ought to matter
most and in what ways, one should not ignore the
capacity for surprise. In other words, it is highly likely
that the process of engaging in detailed empirical case
study will yield unexpected insights about those institutions and agents that have in fact figured significantly
in shaping local development paths, and how they have
asserted their influence.12
Second, as noted above, a comparative framework is
key: the discussion of empirical findings demonstrates
the kinds of insights that can arise from the use of a
comparative methodological framework. In both projects, explicit comparisons have been made between
different Canadian cities, and the discussion of the findings has also been placed in a comparative perspective
with US cities. In making comparisons between Canadian cities, the influence of local institutions and actors
(both individuals and organizations) in shaping
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12
Meric S. Gertler
economic outcomes was also highlighted. And in so
doing, the author has been able to demonstrate the
inherent dangers of ‘methodological nationalism’ –
that is, of assuming that national-level rules override
all else. At the same time, in comparing the distinctive
evolutionary paths charted by Canadian and US cityregions, the undeniable importance of national-scale
institutional influences on local outcomes has also
been illuminated. The more general methodological
point, as BARNES et al. (2007) have pointed out, is
that a comparative approach provides a useful foundation on which to build theory when a qualitative
case-study approach is followed.13
Third, and building further on the last point, the
approach to method, synthesizing across cases, and
theory-building employed in this work is for the most
part qualitative and embedded very much within particular geographical and historical contexts. It stands
in sharp contrast to some recent methodological
approaches emerging from geographical and institutional economics, in which national economic performance is modelled econometrically as a function of
the presence or absence of key institutional features
(for a review of this literature and an empirical test,
see BOSKER and GARRETSEN, 2009). While this
recent literature demonstrates the insights that can
arise from highly structured econometric hypothesistesting, it has to this point tended to focus on a very
narrow range of institutions – typically, those that
define political stability and the strength of the ‘rule of
law’. It has also focused exclusively on the role of
these institutions, without including a role for individual agency. Clearly, in comparing these two methodological approaches, there is a marked trade-off
between breadth and depth. While it makes sense to
view these approaches as complementary rather than
competitive, the author has clearly staked out his own
position in favouring depth over breadth, both in this
paper and elsewhere.14
To conclude, it has been argued in this paper that
much contemporary work within economic geography
could benefit from a stronger recognition of the role
that institutions play in helping shape local and regional
economic change. In the author’s view, the choice for
economic geographers is clear. They can continue
with business as usual, standing on the sidelines of the
social sciences while important debates about the
future of capitalist economies rage on, or they can
jump in with both feet. The author has no doubt that
they have an important contribution to make if they
are willing to engage in some of the ‘hard work’
described in this paper. It is hoped that more of us
take the plunge, and soon.
Acknowledgements – This paper was originally delivered as the Regional Studies Lecture at the Annual Meeting
of the Association of American Geographers, Boston,
Massachusetts, USA, on 17 April 2008. The author would
like to acknowledge the Social Sciences and Humanities
Research Council of Canada; the Goldring Chair in Canadian
Studies; and the Faculty of Arts & Science at the University
of Toronto for financial support of the research on which
this paper is based. Thanks also to David Wolfe, Andy Pike,
Jim Murphy, and two anonymous reviewers for helpful comments, suggestions, and a discussion of the themes addressed
in this paper.
NOTES
1. For one recent example that takes this good advice to
heart, see HACKWORTH (2007).
2. Peck and Theodore quote approvingly the observation
by Colin Hay that ‘one can defend the notion that capitalism comes in varieties without having to defend the
[varieties of capitalism] perspective’ (HAY, 2005, p. 107).
3. The original study, ‘Innovation Systems and Economic
Development: The Role of Local and Regional
Clusters in Canada’, ran from 2000 to 2005. Its successor
study (2006 – 2010) is titled ‘The Social Foundations of
Local Economic Development: Innovation and
Creativity in City-Regions’. The author’s colleague,
David Wolfe, is Co-Director of both studies, which
have been generously funded by the Social Sciences
and Humanities Research Council (SSHRC) through
its Major Collaborative Research Initiatives (MCRI)
programme. For full details, see http://www.utoronto.
ca/isrn/.
4. Newbridge was acquired by France’s Alcatel in 2000.
5. Given this, there is some irony in the fact that Lazaridis
himself did not complete his engineering degree before
leaving the university.
6. It should be pointed out here that the agency of individual actors has also been significant in the Ottawa case,
where a number of serial entrepreneurs have served as
critical catalysts in the establishment of many of Ottawa’s
leading technology-based firms. Terry Matthews (Mitel,
Newbridge Networks, March Networks, Celtic House)
and Rod Bryden (SHL Systemhouse, World Heart,
Plasco, PharmaGap) are two of the more noteworthy
examples.
7. This statement applies to a somewhat narrower, more
conservative definition of creative occupations more in
line with MARKUSEN et al. (2008), which includes architects and landscape architects; industrial, graphic and
interior designers; writers and editors; producers, directors and choreographers; conductors, composers and
arrangers; musicians, singers, and dancers; actors
and other performers; painters, sculptors, illustrators
and other visual artists; photographers; announcers and
other broadcasters; theatre, fashion, exhibit and other
creative designers; and artisans, craft-persons and patternmakers.
8. These include architects, landscape architects, industrial
designers, graphic designers, interior designers, and
‘other’ design disciplines (theatre, fashion, exhibit, and
other creative designers).
9. In 2000, the ratio of the highest (male architects) to
lowest (female other designers) incomes amongst design
disciplines was 2.4. By 2005, this same ratio had increased
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Rules of the Game: The Place of Institutions in Regional Economic Change
slightly to 2.5 (based on the author’s calculations of
Census of Canada 2001 and 2006 data).
10. There is a third institutional difference worth mentioning
here, although its direct impact on workers in the
majority of creative occupations may be limited –
namely, the generally higher densities of union membership in Canadian versus US cities, a trend that is especially
evident within public-sector service occupations.
11. A prime example of the key role played by agency is
the Toronto City Summit Alliance (TCSA) referred to
above, whose formation for progressive social change
can be attributed to the initiative and vision of David
Pecaut, a classic civic entrepreneur who spearheaded
TCSA’s ambitious agenda and catalysed the participation
of other actors representing a wide range of business,
government, labour, immigrant, and other communitybased interests. For further details, see http://www.
torontoalliance.ca/.
12. As a case point, when the author’s colleagues began their
work on the Waterloo case, the expectation was that the
university’s influence was exerted primarily through its
rules governing intellectual property ownership by
13
inventors. In hindsight, this institution seems to have
been far less significant than the system of co-op education that created strong flows of knowledge (both
embodied and other) between the university and
private-sector employers nearby.
13. In the view of BARNES et al. (2007), the relative scarcity
of this approach within economic geography has been
problematic:
Sustained theoretical development by way of case-study
research is hampered by an apparent disinclination
across the field to invest in corroboration, triangulation,
and interrogation across comparative sites.
(p. 22)
14.
I would argue that, from a methodological standpoint,
there is considerable value in taking the time to
immerse oneself in the different local contexts that
ground business relationships in today’s global
economy. There is also real value in following the
evolution of relationships and practices over time.
(GERTLER , 2004, p. x)
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