Economic Evolution of Cities & Regions - GEO3-3206

Course description

There are important differences in terms of economic dynamics between cities and regions. Economic activities in general and industries in particular tend to concentrate only in a few areas. The question of why some areas tend to be wealthier than others, and how these differences in wealth change over time, is crucial, complex, and non trivial. Over the last few decades, extensive research has been conducted to understand the convergence process of cities and regions. In this course, we will analyze the economic success and failure of cities and regions according to the main economic theories of regional growth. We build on theories and concepts from previous courses (Economic Geography I & II) and we start with a general introduction to the course and concepts of evolutionary economics. Then we consider traditional growth theories of convergence and divergence, agglomeration theory, the evolution of clusters, the structure and geography of knowledge networks, the spatial dynamics of networks and the spatial dynamics of innovation industries and technologies. Special attention will be devoted to the spatial-economic and industrial and innovation policy in the Netherlands and the European Union. At the end of the course we will organize a seminar with a number of experts from the academic, policy, and business world. At the end of the course students will be able to:


What you will learn

- Evaluate how neoclassical economics and evolutionary economics can be used for the analysis of spatial economic phenomena;
- Apply abstracts theoretical concepts to current topics and real economic issues;
- From a theoretical perspectives, explain why there are differences in economic growth and development between countries/regions, and the role played by technological change;
- Indicate why wealth of countries/regions converge or diverge over time;
- Explain the concentration of economic activities and clustering effects from the concepts of agglomeration economies;
- Understand the spatial patterns of industry dynamics;
- Understand the uneven development of regions in evolutionary terms, from the concepts of path dependence, lock-in and adaptation;
- Understand and handle the spatial modelling of network dynamics;
- Evaluate what are the implications of the different theories that have been discussed for: spatial economic policy, industrial and innovation policy, both in terms of the principles and characteristics of policies, as well as for the goals of policy makers;
- Evaluate the literature with a critical eye and make informed statements, present them, lead a discussion on this basis and make a final report.


Meet the instructors 

Pierre-Alexandre Balland -

Ron Boschma - 

Teresa Farinha -

Diego Osorio - 



Structure of the class

The class is based on weekly lectures, followed by tutorials. During the lectures, key ideas, concepts, and methods are presented. During the tutorials (students will be divided into two groups), students will have the opportunity to discuss the topic presented in the lecture and organize a debate. 



50% of the final grade will be based on the final exam (individual), and 50% will be based on the final report (in teams). The final report (2000 words max) is an essay that should make scientific claims, backed-up by theoretical and empirical evidence. The deadline to send the report is April 12. You need to upload your report to this folder (please do not send the report by email) as a word document (.doc or .docx). 



There is no class reader. The slide decks and PDFs for the weekly readings are provided here. All articles listed should be considered mandatory reading. Additional online materials will be assigned throughout the quarter.



There is no mandatory textbook for this class, but Vicente (2018) makes an excellent companion textbook.

Vicente, J. (2018) Economics of Clusters: A Brief History of Cluster Theories and Policy. Palgrave Pivot. 



Course Schedule

Lecture 1: Agglomeration theory [pdf]


Topics covered
- Overview of class
- Why people and firms agglomerate?

- Micro-foundations of the economics of agglomeration


- Duranton, G., & Puga, D. (2004) Micro-foundations of urban agglomeration economies. In Handbook of regional and urban economics (Vol. 4, pp. 2063-2117). Elsevier.

- Bettencourt, L. M. (2013) The origins of scaling in cities. science, 340(6139), 1438-1441.



Lecture 2: The geography of complex knowledge [pdf]


Topics covered

- Why is knowledge so concentrated in space?

- Why knowledge does not travel well? 

- Why are cities the engines of the knowledge-based economy?



- Balland, P.A. and Rigby, D. (2017) The Geography of Complex Knowledge , Economic Geography, 93 (1): 1-23 

- Balland, P.A., Jara-Figueroa, C., Petralia, S., Steijn, M., Rigby, D., and Hidalgo, C. (2018) Complex Economic Activities Concentrate in Large Cities, Papers in Evolutionary Economic Geography, 18 (29): 1-10  


Lecture 3: Economic complexity and the wealth of cities 


Topics covered

- Why some countries and cities are rich and other poor?

- How to characterize the economic structure of countries/cities?

- What is economic complexity and how to measure it?



- Hidalgo, C. A., & Hausmann, R. (2009) The building blocks of economic complexity . Proceedings of the national academy of sciences, 106(26), 10570-10575 

- Hausmann, R., Hwang, J., & Rodrik, D (2007) What you export matters . Journal of economic growth, 12(1), 1-25 

- The Observatory of Economic Complexity []


Lecture 4: Geography of networks [pdf]


Topics covered

- Networks, graphs, and network thinking 

- Structural and geographical properties of real-world knowledge networks

- Channels of knowledge transfer



- Barabási, A. L. (2012) The network takeover , Nature Physics 8 (1), 14-16

- Ter Wal, A. L., and Boschma, R. A. (2009) Applying social network analysis in economic geography: framing some key analytic issues . The Annals of Regional Science 43 (3): 739-756 

- Owen-Smith, J., & Powell, W. W. (2004). Knowledge networks as channels and conduits: The effects of spillovers in the Boston biotechnology community . Organization science, 15(1), 5-21.


Lecture 5: The spatial dynamics of networks


Topics covered

- How do networks evolve over time?

- An evolutionary theory of network dynamics

- Endogeneity, proximity, and heterogeneity



- Balland, P. A., De Vaan, M., & Boschma, R. (2012). The dynamics of interfirm networks along the industry life cycle: The case of the global video game industry, 1987–2007. Journal of Economic Geography, 13(5), 741-765.

- Balland, P. A., Belso-Martínez, J. A., & Morrison, A. (2016). The dynamics of technical and business knowledge networks in industrial clusters: Embeddedness, status, or proximity?. Economic Geography, 92(1), 35-60.


Lecture 6: The principle of relatedness 



Topics covered

- How do cities evolve over time?

- How to move from making bananas to making computers?

- What is relatedness and how to measure it?




- Hidalgo, C., Balland, P.A., Boschma, R., Delgado, M., Feldman, M., Frenken, K., Glaeser, E., He, C., Kogler, D., Morrison, A.,  Neffke, F., Rigby, D., Stern, S., Zheng, S., and Zhu, S. (2018)  The Principle of Relatedness, Proceedings of the 20th International Conference on Complex Systems. 

- Hidalgo, C. A., Klinger, B., Barabási, A. L., & Hausmann, R. (2007). The product space conditions the development of nations . Science, 317(5837), 482-487 

Neffke, F., Henning, M., & Boschma, R. (2011). How do regions diversify over time? Industry relatedness and the development of new growth paths in regions. Economic Geography, 87(3), 237-265.


Lecture 7: The smart specialization strategy


Topics covered

- What is the smart specialization strategy (S3) if the EU?

- Operationalizing S3: relatedness and complexity

- AI, network science, and big data for public policy



- Balland, P.A., Boschma, R., Crespo, J. and Rigby, D. (2018)  Smart Specialization policy in the EU: Relatedness, Knowledge Complexity and Regional Diversification, Regional Studies, forthcoming.  

- Foray, D., David, P. A., & Hall, B. H. (2009). Smart specialization. The concept (Knowledge Economists Policy Brief No. 9, June). Brussels: European Commission.

What is Smart Specialisation?