these generate such complex outcomes over
space that Morgan (2004) proposed a focus
onterritorial innovation systemssensitive to the
multiplescalesat which effects are registered,
though most research continues to focus on
theregion(Asheim and Gertler, 2005; see
alsolearning regions). dg
input^output An analytical framework
developed by economist Wassily Leontieff to
describe and model the inter-industry linkages
within theeconomy, and to use this informa-
tion to examine economic and policy impacts.
It traces how the outputs of one sector become
the inputs for others: thus the machine-tools
industry uses energy, steel and other inputs,
and its outputs are in turn inputs to car and
aircraft industries. The model requires exten-
sive data and estimates from surveys, and the
input-output table can then be manipulated
to calculatemultipliersand so model the
impact of policy changes. These models were
originally calculated at the national scale, but
have been extended to regional and multi-
regional models. lwh
Suggested reading
Miller and Blair (1985).
institutional economics Institutionalist
thought has come to the fore ineconomic
geographysince the 1990s, following its re-
vival in economic theory during the late 1980s
around two very different strands. The first is
new institutional economics, most closely associ-
ated with the work of Oliver Williamson on the
theory of the firm and others such as Mancur
Olson and Douglass North on the role of
(public) institutions in economic regulation
and evolution. In this work, the focus falls on
how firms, networks and institutions arise as
organizing mechanisms in the market econ-
omy, complement market transactions and
generally provide stability, steer and judgment
in an otherwise multi-interest and multi-
directional economic space composed of
competing individuals. The economy is concep-
tualized as a constellation of firms, markets and
institutions, each working to a different logic
and with specialist properties. New institutional
economics does not break with mainstream
economics, since it shares its core assumptions
relating to individual motivation (e.g. maxi-
mization, hedonism, rational choice) and mar-
ket behaviour (e.g. price as a core allocation
mechanism, informational transparency).
New institutional economics has had lim-
ited impact in economic geography, having
lost momentum after an initial flurry of inter-
est sparked by extensions of Williamson’s
transaction cost model to explain agglomer-
ation. For example, Scott’s (1988c) work on
high technology and other types of industrial
agglomeration added an important spatial di-
mension to Williamson’s model by showing
how proximity in conditions of specialization
and inter-firm linkage served to reduce trans-
action costs and transactional uncertainty.
More recently, there has been a slight revival,
through the work of some economic geograph-
ers engaging with the work of Paul Krugman
to explain inter-regional disparities on the
basis of trade differentials and national or
regional institutional settings.
One reason why new institutional econom-
ics has faltered in economic geography is due
to the historical dominance within the sub-
discipline of heterodox economic traditions
critical of the methodological individualism,
rationalism, formalism and a-historicity of
mainstream economics. The second strand of
institutional economics – old institutionalism –
fits more easily into an influential lineage that
includes classical political economy accounts
in the 1950s and 1960s of urban and regional
growth and inequality (e.g. Nicholas Kaldor,
Albert O. Hirschman and Franc ̧ois Perroux on
cumulative causation); Marxist explanations
during the 1970s of uneven development and
unequal exchange, based on the imperatives of
capitalist accumulation and the consequences
of class/gender/race exploitation and struggle;
and regulation theory explanations in the
1980s of long-term economic stability, struc-
tural crisis and renewal, and capitalist
variety in terms of the match or mismatch
between historical regimes of accumulation
and regulation.
Old institutional economics, named so in rec-
ognition of influence of US pioneers such as
Thorstein Veblen, Wesley Mitchell, John
Commons, Clarence Ayres, John Dewey, and
later Karl Polanyi and John Galbraith, envis-
ages the economy itself as an instituted process
in all its manifestations. Thus, macroeco-
nomic rules and institutions, markets and
market practices, prices and values, produc-
tion conventions and exchange norms, finan-
cial rules and economic rationalities, and
corporate and regional or national standards
are all conceptualized as socially instituted ar-
rangements guiding individual action. Institu-
tions, however defined, are not seen as a
particular form of organization and distant
from markets, in the way that new institutional
economics does, but as the very life andGregory / The Dictionary of Human Geography 9781405132879_4_I Final Proof page 385 31.3.2009 7:05pmINSTITUTIONAL ECONOMICS