Do History and Geography Matter? Regional Unemployment Dynamics in a Resource-Dependent Economy: Evidence from Western Australia, 1984–2011

Abstract

Conceptual and methodological differences notwithstanding, both the ‘new’ economic geography and evolutionary economic geography insist that both history and geography matter when accounting for the changing spatial distribution of economic activities. To date, discourse has been conducted largely at a theoretical level, with few attempts to evaluate the empirical validity of either of these competing claims about the dynamics of the capitalist space economy. In this paper we contribute to this evolving discourse by utilizing a dynamic econometric perspective to empirically test the key notions of path dependence, place dependence, and equilibrium dependence in the context of a ‘peripheral’ resource dependent and export-oriented economy: Western Australia, 1984–2011. We find evidence of ‘weak’ path dependence in the evolution of local unemployment rates, with a small number of local labor markets exhibiting ‘strong’ equilibrium dependence. Furthermore, we find evidence of ‘place’ dependence, particularly between metropolitan and nonmetropolitan labor markets, suggesting the existence of a ‘patchwork economy’.