Space and time

Improved means of communication and the liberalization of trade, resulting in globalization, has profoundly altered how regions link to each other. Such an empirical insight is of course trivial, but it is not as easy to understand how globalization has affected the ways that economic change in particular plays out in regional economies. So far, evolutionary economic geography has, with a few exceptions, refrained from integrating its ideas about novelty, retention and selection in regional economies with globalization.

In order to be relevant today and explain how regions change and grow in our time, the ideas of evolutionary economic geography need to be combined with a framework that allows us to explore and explain exactly how lower- cost and faster communications have transformed regional novelty, retention and selection processes in an era of globalization. In this chapter, we investigate whether “time geography” can provide such a framework (Hägerstrand 1991; Pred 1977). Although time geography has not frequently been used to answer research questions in economic geography, it has recently enjoyed something of a revived interest in transport geography (Neutens, Schwanen & Witlox 2011; Ellegård & Svedin 2012) and at the intersection between human geography and gender studies (Scholten, Friberg & Sandén 2012).

The Swedish geographer Torsten Hägerstrand published the first papers about time geography in the early 1970s. Time geography focuses on individuals, how they move in space and over time, how people meet to accomplish projects and how people's movements are constrained by different identifiable factors. Hägerstrand never developed his time geography into a theory about economic production by explaining how “fitting people together” in space and time is (was) a necessary condition for the production of goods and services (Hägerstrand 1970). However, Hägerstrand came close to accomplishing this before he left economic geography to venture into other fields of research.

The importance of regional economic change and long- term growth

Regional economic change and long- term regional growth are important processes, because they directly affect the livelihoods of people. How regions cope with economic change, and what the longer- term growth patterns of regions look like, affect people's income, their living conditions and probably their decisions to stay in a region or to move out of it. To talk about regional economies is to talk about people's welfare. This book explores an evolutionary perspective on the processes of regional economic change and long- term regional growth.

Economic change is a story about how the lives of our recent ancestors gradually improved. Most of us, except a fortunate few, know that only 150 or 200 years ago, our ancestors were poor, living under very sparse material conditions, probably working in or close to the agricultural sector, which demanded hard labour, and with potentially fatal diseases lurking around every corner. At times, our recent ancestors might also have had to emigrate to make a better life for themselves in another country, if conditions and regulations even allowed moving outside their region. In many parts of the world, this is still true.

By an amazing process of economic change and growth, especially following the second industrial revolution in the 1800s, working conditions and living standards have improved greatly, at least in the “industrialized” economies. This process of change and growth has not been purely economic though. It has been intertwined with extraordinary developments in technologies, as well as changes in institutions and social relationships, creating new opportunities for our recent ancestors and, in that way, for many of our generation also.

Better and more efficient markets for goods and services, and for labour too, have been important drivers of this change. However, markets do not work unless they are partially regulated and monitored. Governments have important roles to play here. Regional and national governments need to make sure that some valuable resources that markets are not that good at catering for, such as well- functioning educational systems, exist.

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.

Globalization fundamentally changed how the core processes of evolutionary economic geography – the introduction of novelty, retention and selection in regional economies – work. In fact, one could argue that decreased time geography constraints – lower capability, coupling and authority constraints – together with how regional actors react to and make use of them, are globalization. Therefore, economic change, and the way in which it is a spatial phenomenon, looks very different today than it did 100, 50 or even 30 years ago.

In essence and on average, this globalization has been a good thing. Increased portability of resource uses creates problems for some regions, where the closing down of pathways has led to lock- in and organizational routines have not been able to adapt, but it creates opportunities for others that skilfully create, use and curate their regional resources. It is the global division of labour and the thousands of resource specializations around the world that have allowed the world economy to produce such endless economic variety in our time.

So far, and for many reasons, evolutionary economic geographers have been overwhelmingly concerned with what goes on among actors and technologies within regions, and how regional processes affect the introduction of novelty, retention and selection. But in a globalized economy, one with decreasing time geography constraints, it becomes increasingly difficult to understand economic change in regions without explicitly taking into account what goes on between regions. How can you explain economic change in Gothenburg or Borås, or even relevant fractions of it, without taking globalization into account as well? It is not that evolutionary economic geographers never had such thoughts, but the traditional evolutionary view was more focused on explaining how regions were still important in a globalized world, rather than investigating how regional and global aspects meet to explain evolutionary economic change. In this book, time geography has provided some tools to make the global and the regional meet in a productionist evolutionary perspective on regional economic change.

In a globalized economy, a region does not need to possess all the regional resources and locally draw the uses needed to achieve a productive capability. This insight is not new, but by combining time geography with the evolutionary view on regional economies, we have tried to make it obvious how this actually happens and how it links to regional economic change. But it also links directly to regional specialization.

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.

Globalization, regional resource uses and time geography

So far, the evolutionary perspective has acquainted us with a rather peculiar version of the world and of economic production, where the most important resources are linked to space (they are localized), and where all uses are derived from resources located in the same region. In theoretical terms, we have created a regionally endogenous model, and one that is actually not too far from the evolutionary “self- reliant” or territorially isolationist models of growth that have been influential in geography and innovation studies over the last 20 years.

For example, we have taken for granted that the car producer in Gothenburg only made use of resources in the region and their regionally derived uses in order to achieve the regional capability of car production. Links to other regions were not needed, neither in production nor in product or process development. So, if our first simplification of how production happens within the car industry was not already a stretch, the assumption that regions are “self- sufficient” in terms of resources and uses to achieve their capabilities is maybe even more so. In fact, we have already concluded that some of the most important forces for economic change in regions originate from outside the region itself. Additionally, there is globalization.

Regional economies are today part of global chains of production and are not isolated production islands (Coe et al. 2004). Intuitively we know this: the transportation of goods, people and information have become faster, cheaper and safer since the second industrial revolution. The telephone and the internet have dramatically changed the way we interact across space. Very few economic activities, from the local garage to transnational corporations, from the local supermarket to the global suppliers of knowledge- intensive services, are left untouched by the global forces of change influencing where economic activities can be located and how firms go about their business.

There are at least two implications of this development for evolutionary economic geography that are far less intuitive. The first is a “regional paradox of globalization”.

Evolutionary economic geography: how and why regional economies change across time

Some of the main ideas that this book explores are: how regional resources condition the specialization and future direction of change in regional economies (some call them “paths”); and how, with globalization, resources readily imported from other regions fundamentally influence how economic change happens. As we know, the conditioning of economic change on space and time may have positive as well as negative outcomes. The economic histories of regions enable, as much as they restrict, change. History is a mixed blessing.

Evolutionary research into regional economies provides an intellectual backdrop, or theoretical basis, to such ideas. Recent research has uncovered a great deal about how long- term regional economic change and regional growth actually happens (Boschma & Frenken 2006; Boschma & Martin 2010). The evolutionary economic geography approach works in the tradition of the Austro- American economist Joseph Schumpeter, and it recognizes innovation, technological change and the diffusion of technologies as the most important drivers behind economic change and growth. In essence, evolutionary theories work from the basic assumption that firm competition takes place in free markets, and that the economy operates under the normal institutional structures that characterize liberal market economy modes of governance. However, there is plenty to be said about the relationships between the role of government and economic evolution, and we return to this throughout the book. Even if we assume that competition is something that concerns firms in liberal markets, this does not mean that markets can provide all regional resources, nor that markets will work without regulation.

It is important to note that the evolutionary focus is not without complications. There are many competing and complementing approaches to this particular view of economic change, or at least to where it places its emphasis. Yet, much recent regional research has found value in the “neo- Schumpeterian” view.

What goes on between regions and agglomerations in a globalized economy?

In earlier chapters, we developed an evolutionary perspective that discussed and took into account many of the resources, resource uses and actors involved in regional economic change, but where the relations within and between regions were kept constant. In short, what goes on within regions was seen as far more important than what goes on between them. Our approach reflected how evolutionary economic geography has developed so far, with a keen interest in how technologies in firms and industries change within regions, but with less consideration given to how links between regions change with globalization and why this is important.

This approach to regional change becomes more difficult to defend in the long run if the aim is to understand regional economic change in our time. The problem with the restricted view of regional economies – treating regional economies as “containers” little influenced of what actually happen around them – worsens with the sort of intense economic globalization that has developed since the 1980s.

One reason for the rather restricted view of regional economies and how they develop is that evolutionary economic geography (and other “container-inclined” regional approaches) did not come up with the language to consider how relations between regions change across time and with globalization, and why and how this affects the core processes of the evolutionary dynamics of regional economies. In Chapter 9, we merged the evolutionary perspective with time geography, opening up to a world of decreasing time geography constraints, which becomes important to processes of economic change in regions. Globalization has turned regional economies into something they were not before. Economic actors operate in a world characterized by deep globalization (Dicken 2015).

At the core of globalization – as one of its indicators – are the vastly increased volumes and values of global trade in manufactured goods, and lately also in services. Between 1950 and 1999, global production volumes in merchandise increased sevenfold, but export volumes increased twentyfold and export values increased over eightyfold (based on data from World Trade Organization (WTO) n.d.a.; n.d.b.).

What resources are

In our evolutionary perspective, resources are something very fundamental. They form the basis on which regional economic change and growth are built. “Resources” also refers to a variety of different things. In this chapter, we explore some of these differences and what they mean for regional economic change.

Working with the idea of resources raises a couple of issues. It is, for instance, hard to find real examples in the business strategy literature of what resources actually are. In Chapter 4, we suggested the following definition: resources can be anything that provides the means on which organizations draw in order to achieve a capability. When trying to put this definition of resources to real use, the following problems become apparent:

• Aggregation: at what level of aggregation should a resource be defined? For example, is human capital in general a resource, or is a resource more precisely the specializations that the individuals of the labour force possess?

• Level: at what level should a resource be defined? Is a university a resource, or are the skilled engineers and the scientific knowledge it produces the resource?

The answer here is pragmatic: it depends on what aggregation and which level the resource is used in order to achieve a capability. If a specialized skill is required to develop a particular capability, that skill is the resource. If skilled engineers in general are required, they are the resource. If the university produces knowledge that is directly put into productive use, the knowledge becomes the resource.

This way of looking at resources provides considerable flexibility and at least some degree of theoretical rigour. This definition of resources is also productionist, in the sense that we are only concerned with resources that can be used in economic production.

What is happening within regions and agglomerations?

The first argument in Chapter 7 was that incremental change is common in regional economies. Such change varies in degree and can be studied on several different levels within regions: at the levels of resources, uses and capabilities. Second, incremental changes often take the shape of related regional diversification. In Jane Jacobs’ words, new work develops from parent work in regions because of learning processes and what the old work “suggests” (Jacobs 1969). This is also one of the main reasons why so much regional development is path dependent. The regional resource repertoire and the specificity of regional resources condition the direction in which new work develops.

Resource building, diversification (i.e. the expansion of regional capabilities) and change are strong processes in the capitalist economy. Nevertheless, they seem to work in very different ways in different places, and regional economies look very different to one another. A key reason for this is that the regional resources themselves that are built, used and curated across time are very different from place to place. For example, informal institutions, such as the entrepreneurial spirit or cooperative norms, differ across different regions. This affects how and where resources can be combined into bundles and achieve capacities.

However, in order to understand why economic change looks so different in different regions, we need to explore another important geographical aspect that so far has been untouched. In this chapter, we investigate what happens in agglomerations, and how this effects how regional economic change happens. Later, the issue of what goes on between agglomerations, and how that affects regional change, is explored.

The main issue that we explore in this chapter is why regional change is essentially regional in nature. Certainly, regions have different resource repertoires, and some regional resources are not portable whereas others are, but is that all that differentiates regions that build resources and diversify more productively from those that do not? In this chapter, we explore ideas about what agglomerations of economic activities do to economic change and learn what research has to teach us in this regard.

Change in regional resource repertoires

Regional resource repertoires are not static. They change, expand and contract over time. For firms, the resource- based view (Barney 1991) has a lot to say about how resources develop. Inspired by that discussion, in this chapter we investigate how regions create, use and curate their resources.

The right terminology is difficult to find here, because sometimes resources are created in a region (e.g. by a firm) and sometimes they are created by the collective effort of the region. Regions, of course, have no agency by themselves when it comes creating, using and curating resources. However, we follow the standard practice and language of economic geographers when we talk about regional resource creation, use and curation, meaning that resources are created, used and developed by actors, such as firms or public organizations, in a region.

We have already seen how deriving uses from resources requires entrepreneurs and firms to make conscious decisions to do so. The creation and curation of resources require active decisions by regional actors too. Usually, regional resources do not appear out of the blue, and keeping them up to date requires a great deal of effort. Therefore, we will devote special attention to the role that firms and the public sector have in creation and curation. This is an important issue, because previous research in evolutionary economic geography has been criticized for being imprecise when it comes to who actually promotes path- dependent change in regional economies (Hassink, Isaksen & Trippl 2019). In the following we develop one answer to that question.

Figure 6.1 gives the roadmap for the chapter. First, regional resource creation and its varieties (endogenous and imported) are considered together with the intention involved. Thereafter, we look at the consequences of the use or non- use of regional resources: resource idleness, learning- by- using and resource depletion. We end the chapter by considering resource curation: the ways in which regions have to be looked after and cared for in order to remain as attractive components in bundles that achieve regional capabilities.

Live music market functions

Apart from the artists, the main players in the live music business are (1) music promoters and festival organizers; (2) concert venue operators; (3) music agents and bookers; (4) support service providers; and (5) ticketing companies. Thus, the live music business is based on a division of labour with many different occupational roles.

Music promoters and festival organizers

Promoters

Music promoters organize concerts, tours and festivals at their own risk and expense by selling tickets. The promoter conceptualizes a musical event or a concert tour and, to this end, contracts the artists. A tour manager and crew attend to and support the artists while travelling and performing. Before staging the music event, the promoter is in charge of event publicity and public relations and seeks to support the sales of tickets in order to cover the costs already incurred. The promoter will inform the public about the event with an advertising campaign comprising posters, flyers, mailings, radio and television ads, social media networking, as well as arranging interviews of the artists with journalists and even with press conferences. However, if the presales of tickets indicate an insufficient demand for the event, the promoter will cancel it and has to bear the costs already incurred.

We can roughly distinguish between (1) small local promoters who organize concerts in small venues such as bars and music clubs; (2) regional promoters organizing concerts in medium-sized venues; and (3) national promoters who collect several concert dates to put together national and international tours. Concert promotion involves a high level of risk. The promoters have to spend money upfront and cannot guarantee that a sufficient number of tickets will be sold to cover the costs. The larger the capacity of venue and the higher the number of shows, the higher the risk for the promoter. Therefore, national promoters spread the risk by coupling concert dates of an artist for a tour to cross-collateralize possible losses from one concert by possible gains from others (for the history of the new live music business model see Chapter 1).

The invention of the phonograph by Thomas Alva Edison (1847– 1931) in 1877 marked the outset of the modern music industry with mass production of phonograms and the emergence of a global distribution network for music cylinders and records. Music, however, was an economic good before the advent of the recorded music industry. Antique sources prove that musical products were already traded in the centuries BCE. It is reported that the Greek poet Pindar sent 470 lyrics from his hometown Theben to tyrant Hieron in Sicily in the fifth century BCE (Baierle 2009: 51). Pindar himself was not just a writer but also a kind of early music entrepreneur. Since lyric verses were usually accompanied by music performances and dance, Pindar also choreographed the dances for his odes. He was commissioned to stage performances in all parts of ancient Greece and was an ancient “impresario” in high demand (Carey 2007: 199– 210). Pindar was an early example of an artist who was commissioned by wealthy and powerful patrons.

We can usefully divide the economic history of music into five periods:

• 1. The era of music patronage from the ancient times until the late-eighteenth century;

• 2. The era of music publishing from the late eighteenth century until the 1920s;

• 3. The era of broadcasting from the 1920s to the 1950s;

• 4. The era of the recorded music industry from the 1950s until c.2000;

• 5. The era of the digital music economy since 2000.

The era of music patronage

From the Middle Ages to the Renaissance

The era of early music patronage covers the ancient period until the medieval age when the Catholic Church became the main patron for the arts, especially for music. Music was an integral part of liturgy and the term cappella still refers to practising music in chapels and churches. Music schools in monasteries (e.g. the Abbey in St. Gall, Switzerland) and at the medieval cathedrals (e.g. Notre Dame in Paris) were centres of music education and almost all famous medieval composers of sacred music received their musical training there.