More evolution!

Because regional economic change is so important for how workers make a living and is fundamental for people's welfare, one of the main goals for an economic science must be to understand how regional economic change works. So far, we have dealt with a very basic evolutionary regional perspective, trying to establish: the most important the actors of a regional economy; how these actors create, use and curate resources to derive uses from them; important aspects of regional resources; and the various way in which firms can combine resource uses to achieve regional capabilities.

However, so far we have not discussed regional economic change itself. It is time to become a bit more evolutionary in our investigation. This chapter looks at different approaches to thinking about regional economic change and how it is likely to happen.

A basic tenet of evolutionary economic geography is that the structure of regional economies condition (but do not determine) the qualitative future of the economies. To put it another way: if we know enough about a regional economy, we can estimate the probability of it changing in a particular direction in the future. In evolutionary economic geography, it is how resources are created, used and curated that provide clues to the future of regional economic change.

Regional economic change happens by degree, lying somewhere between incremental and radical change. This terminology is commonplace in the innovation literature, but it is often used in regional contexts too.

Most of the changes that take place in regional market economies are relatively undramatic and incremental. The introduction of new products or production methods, for example, builds on existing and established use of resources, such as skills and the presence of technologies and institutions (Freeman & Louça 2001; Perez 2010). During such change, established firms have many advantages over new ones. They are already familiar with production processes and the appropriate organizational modes (Tushman & Anderson 1986). In the market economy, such incremental change is part of everyday business.

However, incremental change takes many forms and occurs to different degrees. An example of regional incremental economic change is the development of a new product variety, for example a new variation on an existing car.