Elsevier

Progress in Planning

Volume 130, May 2019, Pages 1-32
Progress in Planning

Path creation, global production networks and regional development: A comparative international analysis of the offshore wind sector

https://doi.org/10.1016/j.progress.2018.01.001Get rights and content

Highlights

  • Paper highlights the role of wider extra-regional factors in regional path creation.

  • Develops an analytical framework based on the interplay between four factors.

  • Adopts an international comparative approach, covering Germany, the UK and Norway.

  • Outlines the qualitative characteristics of the paths created.

  • Emphasises the role of national states in the strategic coupling process.

Abstract

The question of how regions and nations develop new sources of industrial growth is of recurring interest in economic geography and planning studies. From an evolutionary economic geography (EEG) perspective, new growth paths emerge out of existing economic activities and their associated assets and conditions. In response to the micro-economic and endogenous focus of much EEG research, this paper utilises a broader evolutionary perspective on path creation which stresses the dynamic interplay between four sets of factors: regional assets; key economic and organisational actors; mechanisms of path creation; and multi-scalar institutional environments and policy initiatives. Reflecting the importance of extra-regional networks and institutions, this framework is also informed by the Global Production Networks (GPN) approach, which highlights the process of strategic coupling between firms and regions and its political and institutional mediation by state institutions at different spatial scales. We deploy this framework to investigate regional path creation in the context of renewable energy technologies, focusing specifically on the offshore wind industry. We adopt a comparative cross-national approach, examining the evolution of offshore wind in Germany, the UK and Norway. Of the three cases, Germany has developed the most deep-rooted and holistic path to date, characterised by leading roles in both deployment and manufacturing. By contrast, path creation in the UK and Norway has evolved in more partial and selective ways. The UK’s growth path is developing in a relatively shallow manner, based largely upon deployment and ‘outside in’ investment, whilst Norway’s path is emerging in an exogenous, ‘inside-out’ fashion around a fairly confined set of actors and deployment and supply functions. In conclusion, the paper emphasises the important role of national states in orchestrating the strategic coupling of regional and national assets to particular mechanisms of path creation.

Introduction

The question of how regions and nations develop new sources of industrial growth is of recurring interest in economic geography and planning studies (Chapman & Walker, 1991; Storper & Walker, 1989). This has been often understood in terms of the emergence of new growth sectors and clusters driven by entrepreneurialism, spinoffs from established firms and new market opportunities (Dahl, Østergaard, & Dalum, 2010). Conventionally, new forms of industrial growth were assumed to largely take place in established industrial centres with dense business networks, pools of specialised labour and a range of research and development facilities (Chapman & Walker, 1991: 154-5). In the 1980s and 1990s, much of this research focused on high-technology industries such as advanced electronics, computer equipment and aerospace in ‘new industrial spaces’ in North America and Western Europe (see Scott, 1988). More recent work on the emergence of new industries and clusters has largely remained concerned with growth regions more broadly defined (Kenney & von Burg, 2001; Mayer, Libaers, & Park, 2011), although other studies are starting to focus attention on old industrial regions, where the challenges of industrial renewal and growth are rendered particularly acute by the legacies of deindustrialisation (Dawley, 2014; Isaksen 2014). As indicated by the recent revival of interest in industrial strategy, the identification of new sources of industrial growth is also an important policy question (Bailey et al., 2015; Chang, Andreoni, & Ming, 2013).

Research on industry growth has gained renewed momentum in recent years, partly through the development of evolutionary economic geography (EEG) as a distinct perspective (see Boschma & Martin, 2007). Accordingly, the question has been redefined as one of path creation, referring to how new growth trajectories and dynamics emerge and develop in cities and regions (Dawley, 2014; Simmie, 2012). The adoption of an EEG perspective places particular emphasis on how new growth paths emerge out of existing economic activities and their associated assets and conditions (Isaksen, 2014). The question of path creation has been opened up by a recasting of the ‘canonical’ model of path dependence in favour of a broader ‘path as process’ approach (Martin & Sunley, 2006) that incorporates path creation and path destruction in addition to a more open notion of path dependence.

Much EEG work on path creation has taken a micro-economic approach that views firms and entrepreneurs as the main agents of path creation, informed by the experiences of dynamic growth regions such as Cambridge, England and Silicon Valley, California (Morgan 2013; Simmie, Martin, Carpenter, & Chadwick, 2008). Regional conditions in terms of innovation systems, knowledge networks and the legacies of previous industries have been the main focus of attention (Fornahl, Hassink, Klaerding, Mossig, & Schroder, 2012), although some accounts have highlighted the role of wider extra-regional factors, particularly national policy frameworks and institutional environments (Dawley, 2014; Simmie, 2012). Yet this dimension remains relatively underplayed, both in relation to national and supra-national political and institutional frameworks and transnational production networks.

This paper aims to contribute to the burgeoning path creation research agenda by developing a fuller understanding of the process of path creation in regions. It addresses the central research question of identifying and explaining the key actors, mechanisms and institutions behind the formation of new industrial growth paths at the regional and national scales of analysis. The paper utilises a broader evolutionary perspective on path creation in regions which stresses the dynamic interplay between four sets of factors: regional assets; key economic and organisational actors; mechanisms of path creation; and multi-scalar institutional environments and policy initiatives. Reflecting the importance of transplantation as a key mechanism of path creation in the offshore wind sector (see below) and the need to relate regional level influences to extra-regional firm networks, our analysis draws upon the Global Production Networks (GPN) approach (Coe, Hess, Yeung, Dicken, & Henderson, 2004; Yeung & Coe 2015). This provides a dynamic framework for grasping the multiple and bi-directional relations between firms and regions and their political and institutional mediation by state institutions at different spatial scales.

We deploy this framework to investigate regional path creation in the context of renewable energy technologies (RETs) which have expanded substantially in recent years in the face of concerns about climate change (Essletzbichler, 2012). For the most part, RETs have been price uncompetitive with established fossil fuel technologies, requiring state support. This has meant that regional path creation in RET sectors is crucially dependent on the alignment of regional, national and supra-national policy agendas.

More specifically, we focus on the offshore wind industry which has been identified as a key growth sector by policy-makers in several countries in recent years (Dawley, MacKinnon, Cumbers, & Pike, 2015; Fornahl et al., 2012). Compared to onshore wind, offshore wind development is more complex in nature, occurring in technologically and operationally challenging maritime environments and requiring large-scale, up-front investment before any returns are generated (Lema, Berger, Schmitz, & Song, 2011). As such, the sector is dominated by large corporations, particularly energy utilities and turbine manufacturers, underlining the utility of a GPN perspective for analysing how regional path creation is shaped by this firm-state nexus.

We adopt a comparative cross-national approach, examining path creation in offshore wind in three European countries: Germany, the UK and Norway. In particular, we explore the contrasting national and regional trajectories emerging through attempts to harness offshore wind resources to create new paths of industrial growth and support energy transition. In the case of the UK, whilst the scale and scope of its shallow territorial waters has helped create the world’s largest offshore wind market, the development of an allied path of industrial growth remains weaker. In contrast, Germany has developed into Europe’s second largest offshore wind market whilst also creating a world-leading industrial growth path. Finally, whilst the exploitation of Norway’s marine resources has been restricted by its abundance of hydropower resources and the technological challenge of negotiating its deep seas, niche growth paths are nonetheless emerging through industrial diversification for export markets (Steen & Hansen 2014).

Our approach offers an important and novel contribution to recent debates about ‘doing’ evolutionary research within the relatively youthful field of EEG (Pike, Mackinnon, Cumbers, Dawley, & McMaster, 2016). Our cross-national framework seeks to strengthen comparison within evolutionary studies and address the tendency of existing work to focus on particular spatial contexts (e.g. regions) in single-country settings (Boschma, 2017). We draw on McMichael’s (2000) notion of ‘incorporated comparison’ as part of a more relational understanding of how the varying processes of path creation in our cases studies are positioned within the international offshore wind industry. In so doing, our approach involved ‘deep contextualisation’ methods (Martin & Sunley, 2015) to handle both agency and context within, and across, the three cases. This was designed to uncover the “deep-seated as well as wider relations, positions and contexts” shaping each growth path (Pike et al., 2016 p.132).

Contributing to an evolutionary perspective, we adopted a longitudinal research design to integrate several related research projects conducted as part of an ongoing programme of research between our three national research teams (see Dawley, 2014; Steen & Hansen, 2014). Practically, this involved a coordinated mixed methods approach across the three cases, comprising over 170 semi-structured interviews with policy-makers and industry personnel, covering regional agencies, national and supra-national government bodies, representatives of industry associations and firm managers and directors, alongside the analysis of policy documents, particularly policy statements, strategies, initiatives and reports. In addition, our collective immersion over a sustained period, in excess of 10 years for each research team, in the case study contexts provided a rich set of contact networks, allowing the informed selection of key informants alongside forms of nonparticipant observation (e.g. policy events; trade fairs etc.) (Karlsen, 2018). Within, and across, each case our mixed methods were used to identify and explore key historical episodes of path activity, ranging from pre-formation (the historical antecedents) to path development trajectories, as analytical lenses within which to uncover the sets of actors involved, their internal and external relations, and the range of mediating factors and influences.

The remainder of the paper is structured in seven main sections. The next section elaborates our analytical framework based on the development of a broader evolutionary perspective on path creation. This is followed by a review of the growth and organisation of the offshore wind industry in global terms. The paper then turns to the three national case studies, dealing with Germany, the UK and Norway in turn. A subsequent discussion section draws out the key commonalities and differences across these case studies. Finally, a brief conclusion draws out the broader implications of the analysis.

Section snippets

Understanding path creation: an analytical framework

The evolutionary concept of path creation is based on the notion that regional growth paths “do not start from scratch but are strongly rooted with the historical economic structure of a region” (Neffke, Henning, & Boschma, 2011: 261). More broadly, Isaksen (2014) defines path creation as one of four possible development paths of regional economies. First, path extension involves the reproduction of existing economic trajectories, based on incremental innovation within pre-existing

Growth and organisation of the offshore wind industry

The growth of offshore wind has occurred as part of the expansion of renewable energy technologies in recent years, driven by a range of interrelated factors including technological innovation, climate change targets and energy security (Essletzbichler, 2012; Kern, Smith, Shaw, Raven, & Verhees, 2014). In particular, in an increasingly carbon constrained world, renewable energy is viewed as integral in achieving the so-called ‘energy transition’ to green energy (Bridge, Bouzarovski, Bradshaw, &

Origins and development path

Relative to the UK and Norway, Germany’s current position builds upon activity in wind energy from the late 1970s. Onshore wind technologies have so far dominated this growth trajectory, producing 98.5% of wind generating capacity and employing 119,000 (GWEC, 2014; O'Sullivan et al., 2014). More recently, however, attention has increasingly shifted to offshore wind as a scalable solution to Germany’s ambitious energy transition targets (the so called Energiewende) (Bundesregierung, 2002).

Origins and development path

The historical origins of electricity generated from wind energy can be traced back to the work of Professor James Blyth in Scotland in the late 1800s, yet it would be over a century later before the UK’s first commercial onshore wind farm was built in 1991 (Fisher, 2015; Renewable UK, 2014). The UK’s electricity supply system was nationalised in 1947 before returning to private ownership in 1990, an episode in which fossil fuels dominated within a system lacking the same scope for variety and

Origins and development path

Norwegian firms, such as Nexans (offshore cable supply and installation services) and DNV GL3 (certification services), have been involved in the offshore wind sector since the first farms were developed in Denmark in the early 1990s. Although the Norwegian offshore wind industry is still in an embryonic phase, the industry is a target area in the national strategy for development of

Conclusions

The aim of this paper has been to contribute to path creation research in EEG and beyond by developing a fuller understanding of the actors, processes and contexts behind the creation of new industrial paths. This was informed by the development of a multi-actor and multi-scalar conceptual framework which stresses the interaction between regional assets, key actors, mechanisms of path creation and multi-scalar institutional environments. Our framework brings together insights from EEG research

Acknowledgements

This paper has been informed by research supported by Research Council of Norway under: Grant 209697 CenSES - Centre for Sustaintable Energy Studies; and, Grant 255400 InNOWiC – Internationalisation of Norwegian Offshore Wind Capabilities.

We would like to acknowledge the very helpful input of Andy Pike, Robert Hassink and the late Susan Christopherson at various points in the development of this programme of research.

We are also grateful to Nick Gallent and three anonymous reviewers for their

Professor Danny MacKinnon is Professor of Regional Development & Governance in the Centre for Urban and Regional Development Studies (CURDS), Newcastle University, the UK. He is an economic and political geographer whose research is centrally concerned with the institutions and politics of local and regional development. His recent work has contributed to debates in evolutionary economic geography and to questions of urban and regional adaptation and change in particular. He has published

References (157)

  • Department for Business, Energy and Industrial Strategy (BEIS)

    Energy trends September 2017

    (2017)
  • Department for Business, Energy and Industrial Strategy (BEIS)

    Energy trends December 2017

    (2017)
  • BIS

    Offshore_wind_report_Bremerhaven_2012

    (2015)
  • BVG Associates

    Building an industry: Updated scenarios for industrial development report for renewable UK and The Crown Estate

    (2013)
  • BVG Associates

    UK offshore wind supply chain: Capabilities and opportunities

    (2014)
  • BVG Associates

    Renewable energy policy workshops. Presentation given to greenport hull workshop 23–24 February

    (2017)
  • A. Bergek et al.

    Fremmer grønne sertifikater ny teknologi?

  • C. Binz et al.

    Path creation as a process of resource alignment: Industry formation for on-site water recycling in Beijing

    Economic Geography

    (2016)
  • Bmwi

    Offshore-Windenergie. Ein Überblick über die Aktivitäten in Deutschland

    (2015)
  • T.C. Boas

    Conceptualizing continuity and change: The composite-standard model of path dependence

    Journal of Theoretical Politics

    (2007)
  • E.L. Boasson

    Multi-sphere climate policy: conceptualising national policy-making in Europe. PHD thesis

    (2011)
  • R. Boschma et al.

    Why is economic geography not an evolutionary science? Towards an evolutionary economic geography

    Journal of Economic Geography

    (2006)
  • R. Boschma et al.

    Technological relatedness and industry branching

  • R. Boschma et al.

    Related variety, trade linkages and regional growth in Italy

    Economic Geography

    (2009)
  • R. Boschma et al.

    Constructing an evolutionary economic geography

    Journal of Economic Geography

    (2007)
  • R. Boschma

    Relatedness as a driver of regional diversification: a research agenda

    Regional Studies

    (2017)
  • G. Bridge et al.

    Geographies of energy transition Space, place and the low-carbon economy

    Energy Policy

    (2013)
  • G. Bridge

    Global production networks and the extractive sector: Governing resource-based development

    Journal of Economic Geography

    (2008)
  • E. Bruns et al.

    Wind power generation in Germany: Transdisciplinary view on the innovation biography

    Journal of Transdisciplinary Environmental Studies

    (2011)
  • Bundesnetzagentur

    Offshore network development plan 2025 confirmed

    (2016)
  • Bundesregierung

    Strategie der Bundesregierung zur Windnutzung auf See

    (2002)
  • P. Campos Silva et al.

    The evolution of the wind industry and the rise of Chinese firms: From industrial policies to global innovation networks

    European Planning Studies

    (2013)
  • Carbon Trust

    Detailed appraisal of the offshore wind industry in China

    (2014)
  • S. Cetkovic et al.

    Varieties of energy transition in Europe: Political-economic foundations of onshore and offshore wind development. WIDER Working Paper 2016/18

    (2016)
  • H.-J. Chang et al.

    International industrial policy experiences and the lessons for the UK, future of manufacturing project: Evidence paper 4

    (2013)
  • K. Chapman et al.

    Industrial location. Principles and policies

    (1991)
  • P. Clark et al.

    Elation and puzzlement over Yorkshire wind plant

    Financial Times

    (2014)
  • P. Clark

    Germany threatens UK dominance in wind power

    Financial Times

    (2015)
  • N. Coe et al.

    Global production networks: Theorising economic development in an interconnected world

    (2015)
  • N. Coe et al.

    Globalizing regional development: A global production networks perspective

    Transactions of the Institute of British Geographers

    (2004)
  • N.M. Coe et al.

    Global production networks: Realizing the potential

    Journal of Economic Geography

    (2008)
  • P. Cooke

    Transversality and transition: Green innovation and new regional path creation

    European Planning Studies

    (2012)
  • R. Cowell et al.

    Rescaling the governance of renewable energy: Lessons from the UK devolution experience

    Journal of Environmental Policy & Planning

    (2017)
  • Crown Estate

    A guide to UK offshore wind operations and maintenance, a report by Crown Estate, Scottish Enterprise and GL Garrad Hassan

    (2013)
  • Department for Energy and Climate Change (DECC)

    Electricity market reform delivery plan

    (2013)
  • DECC

    Contracts for difference (CFD) allocation round one outcome

    (2015)
  • DN

    Statoil bygger Hywind pilotpark

    (2015)
  • M.S. Dahl et al.

    Emergence of regional clusters: The role of spinoffs in the early growth process

  • S. Dawley et al.

    Policy activism and regional path creation: The promotion of offshore wind in North East England and Scotland

    Cambridge Journal of Regions, Economy and Society

    (2015)
  • Cited by (88)

    View all citing articles on Scopus

    Professor Danny MacKinnon is Professor of Regional Development & Governance in the Centre for Urban and Regional Development Studies (CURDS), Newcastle University, the UK. He is an economic and political geographer whose research is centrally concerned with the institutions and politics of local and regional development. His recent work has contributed to debates in evolutionary economic geography and to questions of urban and regional adaptation and change in particular. He has published widely in a range of international journals in economic geography and urban and regional studies.

    Dr Stuart Dawley is Senior Lecturer in Economic Geography in the Centre for Urban and Regional Development Studies (CURDS), Newcastle University, the UK. He is an economic geographer with thematic interests around industrial development, labour market geographies, geographies of transnational investment, multi-scalar regulation of economic development, knowledge and innovation and processes of uneven economic and social development. Recent work has explored evolutionary approaches to local and regional development. He has published widely in a range of international journals in economic geography and urban and regional studies.

    Dr Markus Steen is a research scientist in the Department of Industrial Management, SINTEF and a part-time lecturer and supervisor in the Department of Geography, Norwegian University of Science and Technology, Trondheim, Norway. His research interests are in regional and industrial development, focusing particularly around energy systems/industries and transformation/transition processes. He has published several articles in economic geography and planning journals in recent years.

    Professor Dr Max-Peter Menzel is Chain of Economic Geography in the Faculty of Biology, Chemistry and Geosciences, University of Bayreuth., Germany. His research interests are in regional and industrial development, focusing particularly upon question of cluster evolution and industrial change. In recent years, he has conducted extensive research on the spatial transformation of the wind energy industry in Northern Germany. He has published widely in economic geography and planning journals.

    Professor Asbjorn Karlsen is Professor in the Department of Geography, Norwegian University of Science and Technology, Trondheim, Norway. His research interests are in regional and industrial development, focusing particularly on questions of innovation and knowledge development. Recent work has investigated processes of path creation and regional renewal in Norway. He has published widely in economic geography and planning journals.

    Dr Pascal Sommer is a Senior Consultant at 8.2 Consulting AG, Burchardstraße 17, 20095 Hamburg, Germany. He obtained his PhD from the Institute of Geography at the University of Hamburg in 2015 for a thesis that compared the evolution and innovation characteristics of the onshore and offshore wind industries in Germany.

    Dr Gard Hopsdal Hansen is a researcher in the Centre for Sustainable Energy Studies, Norwegian University of Science and Technology, Trondheim, Norway. His research interests are in renewable energy, international business and regional development. His PhD research was on the internationalisation of Norwegian maritime businesses in China. He has published several articles in economic geography and planning journals in recent years.

    Dr Håkon Endresen Normann is a Postdoctoral Fellow in the Centre for Technology, Innovation and Culture, University of Oslo, Norway. His research interests are in innovation, sustainability transitions, and policy. More specifically, he is interested in the role of politics in analyses of innovation in socio-technical systems, and how policy is shaped. His PhD studied how the presence of an established oil and gas industry conditioned the development of an offshore wind industry in Norway.

    1

    Present address: University of Bayreuth, Institute of Geography, Universitätsstraße 30, 95447 Bayreuth, Germany.

    2

    Present address: 8.2 Consulting AG, Burchardstraße 17, 20095 Hamburg, Germany.

    View full text