Institutions, power and space: assessing the limits to institutionalism in economic geography

Economic geographers have drawn upon concepts from institutional economics and economic sociology in recent years to understand processes of regional development within an increasingly globalized economy (Amin and Thrift, 1994; Cooke and Morgan, 1998; Storper, 1997). Institutional economics emphasizes the social context of economic life and the dynamic evolutionary nature of economic growth, providing important insights for geographers interested in how social and institutional conditions shape regional development prospects (see Martin, 2000). It is particularly valuable in departing from the atomistic and rationalistic view of neoclassical economics, on the one hand, in which economic decision making is reduced to the responses of utility-maximizing individuals; and the deterministic and reductionist tenor of much Marxist thought, on the other hand, in which there is little sense of agency. Institutionalist perspectives emphasize the importance of social and cultural conditions within regions in shaping economic development trajectories, and treat localities and regions as active participants in economic development rather than as passive arenas for capital accumulation. In terms of regional development policy, institutionalism has been used by various geographers to open up a ‘third way ’ between neoclassical market determinism, where it is assumed that market forces will in the longer term reduce regional inequalities as utility-maximizing firms move from high-cost to low-cost regions, and ‘top down ’ Keynesian approaches in which state intervention is required to redistribute income and employment betwee