What is produced?

Recent research in complexity economics teaches us that what is produced in countries links closely to wealth in those countries but also to the future of growth (Hidalgo et al. 2007; Hidalgo & Hausmann 2009). This thinking has not been without consequences for adjacent disciplines. During the last few years, evolutionary economic geographers have been clearly inspired in thinking along such “qualitative” lines in their work around regional economic change and growth (Hidalgo et al. 2018). What a region is able to produce tells us a lot about the resources that regions are able to draw on in order to produce a specific thing, how advanced these resources are and how successful that makes the regional economy.

From Chapters 1– 3, we already know that regions tend to specialize in producing certain goods and services, and that they need to adjust this sooner or later in order to keep up with developments (selection). Classic accounts in economic geography have done well in terms of identifying regional specialization patterns but not quite as well at explaining their development from an evolutionary point of view.

In order to think more precisely about this, a general framework around regional specialization and economic change – an evolutionary perspective to regional economic production – is required. Some would call it an evolutionary regional “ontology”. We are looking for a framework that constructs a view of looking at the world; in this case, how production in regions actually happens, whom it involves and how it changes.

With inspiration from complexity economics on the one hand (Hidalgo et al. 2007; Hidalgo & Hausmann 2009), and the resource- based view in management on the other (Penrose 1959; Barney 1991), geographers have recently tried to refine theories to explain better the exact logics of regional economic change (Lawson 1999; Maskell & Malmberg 1999b; Boschma 2004; Neffke et al. 2018). This chapter draws on these advancements and aims to develop them further in order to achieve a comprehensive evolutionary perspective on production: a meaningful theoretical way to describe how economic production takes place in regions, and how it changes over time.