Economic geography

Economic geography has been defined by the geographers as the study of human's economic activities under varying sets of conditions which is associated with production, location, distribution, consumption, exchange of resources, and spatial organization of economic activities across the world. It represents a traditional subfield of the discipline of geography. However, many economists have also approached the field in ways more typical of the discipline of economics.[1]

Economic geography has taken a variety of approaches to many different subject matters, including the location of industries, economies of agglomeration (also known as "linkages"), transportation, international trade, development, real estate, gentrification, ethnic economies, gendered economies, core-periphery theory, the economics of urban form, the relationship between the environment and the economy (tying into a long history of geographers studying culture-environment interaction), and globalization.

Theoretical background and influences

The subject matter investigated is strongly influenced by the researcher's methodological approach. Neoclassical location theorists, following in the tradition of Alfred Weber, tend to focus on industrial location and use quantitative methods. Since the 1970s, two broad reactions against neoclassical approaches have significantly changed the discipline: Marxist political economy, growing out of the work of David Harvey; and the new economic geography which takes into account social, cultural, and institutional factors in the spatial economy.

Economists such as Paul Krugman and Jeffrey Sachs have also analyzed many traits related to economic geography. Krugman called his application of spatial thinking to international trade theory the "new economic geography", which directly competes with an approach within the discipline of geography that is also called "new economic geography".[2] The name geographical economics has been suggested as an alternative.[3]

History

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The coffee trade is a worldwide industry

Some of the first traces of the study of spatial aspects of economic activities can be found in seven Chinese maps of the State of Qin dating to the 4th century BC. Ancient writings can be attributed to the Greek geographer Strabo's Geographika compiled almost 2000 years ago. As the science of cartography developed, geographers illuminated many aspects used today in the field; maps created by different European powers described the resources likely to be found in American, African, and Asian territories. The earliest travel journals included descriptions of the native peoples, the climate, the landscape, and the productivity of various locations. These early accounts encouraged the development of transcontinental trade patterns and ushered in the era of mercantilism.

World War II contributed to the popularization of geographical knowledge generally, and post-war economic recovery and development contributed to the growth of economic geography as a discipline. During environmental determinism's time of popularity, Ellsworth Huntington and his theory of climatic determinism, while later greatly criticized, notably influenced the field. Valuable contributions also came from location theorists such as Johann Heinrich von Thünen or Alfred Weber. Other influential theories include Walter Christaller's Central place theory, the theory of core and periphery.

Fred K. Schaefer's article "Exceptionalism in geography: A Methodological Examination", published in the American journal Annals of the Association of American Geographers, and his critique of regionalism, made a large impact on the field: the article became a rallying point for the younger generation of economic geographers who were intent on reinventing the discipline as a science, and quantitative methods began to prevail in research. Well-known economic geographers of this period include William Garrison, Brian Berry, Waldo Tobler, Peter Haggett and William Bunge.

Contemporary economic geographers tend to specialize in areas such as location theory and spatial analysis (with the help of geographic information systems), market research, geography of transportation, real estate price evaluation, regional and global development, planning, Internet geography, innovation, social networks.[4]

Approaches to study

As economic geography is a very broad discipline, with economic geographers using many different methodologies in the study of economic phenomena in the world some distinct approaches to study have evolved over time:

  • Theoretical economic geography focuses on building theories about spatial arrangement and distribution of economic activities.
  • Regional economic geography examines the economic conditions of particular regions or countries of the world. It deals with economic regionalization as well as local economic development.
  • Historical economic geography examines the history and development of spatial economic structure. Using historical data, it examines how centers of population and economic activity shift, what patterns of regional specialization and localization evolve over time and what factors explain these changes.
  • Evolutionary economic geography adopts an evolutionary approach to economic geography. More specifically, Evolutionary Economic Geography uses concepts and ideas from evolutionary economics to understand the evolution of cities, regions, and other economic systems.[5]
  • Critical economic geography is an approach taken from the point of view of contemporary critical geography and its philosophy.
  • Behavioral economic geography examines the cognitive processes underlying spatial reasoning, locational decision making, and behavior of firms[6] and individuals.

Economic geography is sometimes approached as a branch of anthropogeography that focuses on regional systems of human economic activity. An alternative description of different approaches to the study of human economic activity can be organized around spatiotemporal analysis, analysis of production/consumption of economic items, and analysis of economic flow. Spatiotemporal systems of analysis include economic activities of region, mixed social spaces, and development.

Alternatively, analysis may focus on production, exchange, distribution, and consumption of items of economic activity. Allowing parameters of space-time and item to vary, a geographer may also examine material flow, commodity flow, population flow and information flow from different parts of the economic activity system. Through analysis of flow and production, industrial areas, rural and urban residential areas, transportation site, commercial service facilities and finance and other economic centers are linked together in an economic activity system.

Branches

Thematically, economic geography can be divided into these subdisciplines:

It is traditionally considered the branch of economic geography that investigates those parts of the Earth's surface that are transformed by humans through primary sector activities. It thus focuses on structures of agricultural landscapes and asks for the processes that lead to these spatial patterns. While most research in this area concentrates rather on production than on consumption,[1] a distinction can be made between nomothetic (e.g. distribution of spatial agricultural patterns and processes) and idiographic research (e.g. human-environment interaction and the shaping of agricultural landscapes). The latter approach of agricultural geography is often applied within regional geography.

These areas of study may overlap with other geographical sciences.

Economists and economic geographers

Generally, spatially interested economists study the effects of space on the economy. Geographers, on the other hand, are interested in the economic processes' impact on spatial structures.

Moreover, economists and economic geographers differ in their methods in approaching spatial-economic problems in several ways. An economic geographer will often take a more holistic approach to the analysis of economic phenomena, which is to conceptualize a problem in terms of space, place, and scale as well as the overt economic problem that is being examined. The economist approach, according to some economic geographers, has the main drawback of homogenizing the economic world in ways economic geographers try to avoid.[7]

New economic geography

With the rise of the New Economy, economic inequalities are increasing spatially. The New Economy, generally characterized by globalization, increasing use of information and communications technology, the growth of knowledge goods, and feminization, has enabled economic geographers to study social and spatial divisions caused by the rising New Economy, including the emerging digital divide.

The new economic geographies consist of primarily service-based sectors of the economy that use innovative technology, such as industries where people rely on computers and the internet. Within these is a switch from manufacturing-based economies to the digital economy. In these sectors, competition makes technological changes robust. These high technology sectors rely heavily on interpersonal relationships and trust, as developing things like software is very different from other kinds of industrial manufacturing—it requires intense levels of cooperation between many different people, as well as the use of tacit knowledge. As a result of cooperation becoming a necessity, there is a clustering in the high-tech new economy of many firms.

Social and spatial divisions

As characterized through the work of Diane Perrons,[8] in Anglo-American literature, the New Economy consists of two distinct types. New Economic Geography 1 (NEG1) is characterized by sophisticated spatial modelling. It seeks to explain uneven development and the emergence of industrial clusters. It does so through the exploration of linkages between centripetal and centrifugal forces, especially those of economies of scale.

New Economic Geography 2 (NEG2) also seeks to explain the apparently paradoxical emergence of industrial clusters in a contemporary context, however, it emphasizes relational, social, and contextual aspects of economic behaviour, particularly the importance of tacit knowledge. The main difference between these two types is NEG2's emphasis on aspects of economic behaviour that NEG1 considers intangible.

Both New Economic Geographies acknowledge transport costs, the importance of knowledge in a new economy, possible effects of externalities, and endogenous processes that generate increases in productivity. The two also share a focus on the firm as the most important unit and on growth rather than development of regions. As a result, the actual impact of clusters on a region is given far less attention, relative to the focus on clustering of related activities in a region.

However, the focus on the firm as the main entity of significance hinders the discussion of New Economic Geography. It limits the discussion in a national and global context and confines it to a smaller scale context. It also places limits on the nature of activities carried out in the firm and their position within the global value chain. Further work done by Bjorn Asheim (2001) and Gernot Grabher (2002) challenges the idea of the firm through action-research approaches and mapping organizational forms and their linkages. In short, the focus on the firm in new economic geographies is undertheorized in NEG1 and undercontextualized in NEG2, which limits the discussion of its impact on spatial economic development.

Spatial divisions within these arising New Economic geographies are apparent in the form of the digital divide, as a result of regions attracting talented workers instead of developing skills at a local level (see Creative Class for further reading). Despite increasing inter-connectivity through developing information communication technologies, the contemporary world is still defined through its widening social and spatial divisions, most of which are increasingly gendered. Danny Quah explains these spatial divisions through the characteristics of knowledge goods in the New Economy: goods defined by their infinite expansibility, weightlessness, and nonrivalry. Social divisions are expressed through new spatial segregation that illustrates spatial sorting by income, ethnicity, abilities, needs, and lifestyle preferences. Employment segregation can be seen through the overrepresentation of women and ethnic minorities in lower-paid service sector jobs. These divisions in the new economy are much more difficult to overcome as a result of few clear pathways of progression to higher-skilled work.

See also

References

  1. ^ Gordon L. Clark; Maryann P. Feldman; Meric S. Gertler (eds.). The Oxford Handbook of Economic Geography. Oxford University Press. ISBN 978-0-19-823410-4. Scroll to chapter-preview links.
  2. ^ From S.N. Durlauf and L.E. Blume, ed. (2008). The New Palgrave Dictionary of Economics, 2nd Edition:
    "new economic geography" by Anthony J. Venables. Abstract.
    "regional development, geography of" by Jeffrey D. Sachs and Gordon McCord. Abstract.
    "gravity models" by Pierre-Philippe Combes. Abstract.
    "location theory" by Jacques-François Thisse. Abstract.
    "spatial economics" by Gilles Duranton. Abstract.
    "urban agglomeration" by William C. Strange. Abstract.
    "systems of cities" by J. Vernon Henderson. Abstract.
    "urban growth" by Yannis M. Ioannides and Esteban Rossi-Hansberg. Abstract.
  3. ^ Steven Brakman; Harry Garretsen; Charles van Marrewijk. An Introduction to Geographical Economics.
  4. ^ Braha, Dan; Stacey, Blake; Bar-Yam, Yaneer (2011). "Corporate competition: A self-organized network" (PDF). Social Networks. 33 (3): 219–230. arXiv:1107.0539. doi:10.1016/j.socnet.2011.05.004.
  5. ^ Boschma, Ron; Frenken, Koen (2006). "Why is economic geography not an evolutionary science? Towards an evolutionary economic geography". Journal of Economic Geography. 6 (3): 273–302. doi:10.1093/jeg/lbi022.
  6. ^ Schoenberger, E (2001). "Corporate autobiographies: the narrative strategies of corporate strategists". Journal of Economic Geography. 1: 277–98. doi:10.1093/jeg/1.3.277.
  7. ^ Yeung, Henry W. C.; Kelly, Phillip (2007). Economic Geography: A Contemporary Introduction. John Wiley & Sons.
  8. ^ Perrons, Diane (2004). "Understanding Social and Spatial Divisions in the New Economy: New Media Clusters and the Digital Divide". Economic Geography. 80 (1): 45–61. doi:10.1111/j.1944-8287.2004.tb00228.x.
  9. ^ Journal of Economic Geography

Further reading

  • Barnes, T. J., Peck, J., Sheppard, E., and Adam Tickell (eds). (2003). Reading Economic Geography. Oxford: Blackwell.
  • Combes, P. P., Mayer, T., Thisse, J.T. (2008). Economic Geography: The Integration of Regions and Nations. Princeton: Princeton University Press. Description. Scroll down to chapter-preview links.
  • Dicken, P. (2003). Global Shift: Reshaping the Global Economic Map in the 21st Century. New York: Guilford.
  • Lee, R. and Wills, J. (1997). Geographies of Economies. London: Arnold.
  • Massey, D. (1984). Spatial Divisions of Labour, Social Structures and the Structure of Production, MacMillan, London.
  • Peck, J. (1996). Work-place: The Social Regulation of Labor Markets. New York: Guilford.
  • Peck, J. (2001). Workfare States. New York: Guilford.
  • Tóth, G., Kincses, Á., Nagy, Z. (2014). European Spatial Structure. LAP LAMBERT Academic Publishing, ISBN 978-3-659-64559-4, doi:10.13140/2.1.1560.2247

External links

Scientific journals
Other
Agricultural geography

Agricultural geography is a subdiscipline of human geography concerned with the spatial relationships found between agriculture and humans.

Brandt Report

The Brandt Report is the report written by the Independent Commission, first chaired by Willy Brandt (the former German Chancellor) in 1980, to review international development issues. The result of this report provided an understanding of drastic differences in the economic development for both the North and South hemispheres of the world.

Business cluster

A business cluster is a geographic concentration of interconnected businesses, suppliers, and associated institutions in a particular field. Clusters are considered to increase the productivity with which companies can compete, nationally and globally. In urban studies, the term agglomeration is used. Clusters are also important aspects of strategic management.

Carrying capacity

The carrying capacity of a biological species in an environment is the maximum population size of the species that the environment can sustain indefinitely, given the food, habitat, water, and other necessities available in the environment.

In population biology, carrying capacity is defined as the environment's maximal load, which is different from the concept of population equilibrium. Its effect on population dynamics may be approximated in a logistic model, although this simplification ignores the possibility of overshoot which real systems may exhibit.

Carrying capacity was originally used to determine the number of animals that could graze on a segment of land without destroying it. Later, the idea was expanded to more complex populations, like humans. For the human population, more complex variables such as sanitation and medical care are sometimes considered as part of the necessary establishment. As population density increases, birth rate often increases and death rate typically decreases. The difference between the birth rate and the death rate is the "natural increase". The carrying capacity could support a positive natural increase or could require a negative natural increase. Thus, the carrying capacity is the number of individuals an environment can support without significant negative impacts to the given organism and its environment. Below carrying capacity, populations typically increase, while above, they typically decrease. A factor that keeps population size at equilibrium is known as a regulating factor. Population size decreases above carrying capacity due to a range of factors depending on the species concerned, but can include insufficient space, food supply, or sunlight. The carrying capacity of an environment may vary for different species and may change over time due to a variety of factors including: food availability, water supply, environmental conditions and living space.

The origins of the term "carrying capacity" are uncertain, with researchers variously stating that it was used "in the context of international shipping" or that it was first used during 19th-century laboratory experiments with micro-organisms. A recent review finds the first use of the term in an 1845 report by the US Secretary of State to the US Senate.

Catchment area

In human geography, a catchment area is the area from which a city, service or institution attracts a population that uses its services. For example, a school catchment area is the geographic area from which students are eligible to attend a local school.

Governments and community service organizations often define catchment areas for planning purposes and public safety such as ensuring universal access to services like fire departments, police departments, ambulance bases and hospitals.

Cluster development

Cluster development (or cluster initiative or economic clustering) is the economic development of business clusters. The cluster concept has rapidly attracted attention from governments, consultants, and academics since it was first proposed in 1990 by Michael Porter.

Developed country

A developed country, industrialized country, more developed country, or more economically developed country (MEDC), is a sovereign state that has a developed economy and advanced technological infrastructure relative to other less industrialized nations. Most commonly, the criteria for evaluating the degree of economic development are gross domestic product (GDP), gross national product (GNP), the per capita income, level of industrialization, amount of widespread infrastructure and general standard of living. Which criteria are to be used and which countries can be classified as being developed are subjects of debate.

Developed countries have generally post-industrial economies, meaning the service sector provides more wealth than the industrial sector. They are contrasted with developing countries, which are in the process of industrialisation or are pre-industrial and almost entirely agrarian, some of which might fall into the category of Least Developed Countries. As of 2015, advanced economies comprise 60.8% of global GDP based on nominal values and 42.9% of global GDP based on purchasing-power parity (PPP) according to the International Monetary Fund. In 2017, the ten largest advanced economies by GDP in both nominal and PPP terms were Australia, Canada, France, Germany, Italy, Japan, South Korea, Spain, the United Kingdom, and the United States.

Economic geography of the United Kingdom

The economic geography of the United Kingdom reflects its high position in the current economic league tables, as well as reflecting its long history as a trading nation and as an imperial power. This in turn was built on exploitation of natural resources such as coal and iron ore.

Much has changed since Bevan's speech (below) in 1945, with the coalfields largely deserted and the Empire relinquished. With its dominant position gone, the UK economic geography is increasingly shaped by the one constant: it is a trading nation.

Emerging market

An emerging market is a country that has some characteristics of a developed market, but does not satisfy standards to be termed a developed market. This includes countries that may become developed markets in the future or were in the past. The term "frontier market" is used for developing countries with smaller, riskier, or more illiquid capital markets than "emerging". The economies of China and India are considered to be the largest emerging markets. According to The Economist, many people find the term outdated, but no new term has gained traction. Emerging market hedge fund capital reached a record new level in the first quarter of 2011 of $121 billion. The four largest emerging and developing economies by either nominal or PPP-adjusted GDP are the BRIC countries (Brazil, Russia, India and China).

Europe, the Middle East and Africa

EMEA (EMEIA if India is included) is a shorthand designation meaning Europe, the Middle East and Africa. It is used by institutions and governments, as well as in marketing and business. It is particularly common among North American companies.

The region is generally accepted to include all European nations, all African nations, and extends east to Iran, including Russia. Typically this does not include independent overseas territories of mainland countries in the region, such as French Guiana.

The related term "EMEAA" refers to "Europe, Middle East, Africa, and Asia".

Foreign direct investment

A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct control.

The origin of the investment does not impact the definition, as an FDI: the investment may be made either "inorganically" by buying a company in the target country or "organically" by expanding the operations of an existing business in that country.

Geographical indication

A geographical indication (GI) is a name or sign used on products which corresponds to a specific geographical location or origin (e.g. a town, region, or country). The use of a geographical indication, as a type of indication of source, may act as a certification that the product possesses certain qualities, is made according to traditional methods, or enjoys a certain reputation, due to its geographical origin.

Appellation of origin is a subtype of geographical indication where quality, method and reputation of a product strictly originate from the delineated area defined under its intellectual property right registration.

Global city

A global city, also called world city or sometimes alpha city or world center, is a city which is a primary node in the global economic network. The concept comes from geography and urban studies, and the idea that globalization is created, facilitated, and enacted in strategic geographic locales according to a hierarchy of importance to the operation of the global system of finance and trade.

The most complex node is the "global city", with links binding it to other cities having a direct and tangible effect on global socio-economic affairs. The term "megacity" entered common use in the late 19th or early 20th centuries; one of the earliest documented uses of the term was by the University of Texas in 1904. Initially, the United Nations used the term to describe cities of 8 million or more inhabitants, but now uses the threshold of 10 million.The term "global city", rather than "megacity", was popularized by sociologist Saskia Sassen in her 1991 work, The Global City: New York, London, Tokyo. "World city", meaning a city heavily involved in global trade, appeared in the May 1886 description of Liverpool, by The Illustrated London News. Patrick Geddes later used the term "world city" in 1915. More recently, the term has focused on a city's financial power and high technology infrastructure, with other factors becoming less relevant.

Market (economics)

A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labor) in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and resource allocation in a society. Markets allow any trade-able item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale (local produce or stock registration).

Markets can differ by products (goods, services) or factors (labour and capital) sold, product differentiation, place in which exchanges are carried, buyers targeted, duration, selling process, government regulation, taxes, subsidies, minimum wages, price ceilings, legality of exchange, liquidity, intensity of speculation, size, concentration, exchange asymmetry, relative prices, volatility and geographic extension. The geographic boundaries of a market may vary considerably, for example the food market in a single building, the real estate market in a local city, the consumer market in an entire country, or the economy of an international trade bloc where the same rules apply throughout. Markets can also be worldwide, see for example the global diamond trade. National economies can also be classified as developed markets or developing markets.

In mainstream economics, the concept of a market is any structure that allows buyers and sellers to exchange any type of goods, services and information. The exchange of goods or services, with or without money, is a transaction. Market participants consist of all the buyers and sellers of a good who influence its price, which is a major topic of study of economics and has given rise to several theories and models concerning the basic market forces of supply and demand. A major topic of debate is how much a given market can be considered to be a "free market", that is free from government intervention. Microeconomics traditionally focuses on the study of market structure and the efficiency of market equilibrium; when the latter (if it exists) is not efficient, then economists say that a market failure has occurred. However, it is not always clear how the allocation of resources can be improved since there is always the possibility of government failure.

Paul Krugman

Paul Robin Krugman ( (listen) KRUUG-mən; born February 28, 1953) is an American economist who is Distinguished Professor of Economics at the Graduate Center of the City University of New York, and a columnist for The New York Times. In 2008, Krugman was awarded the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography. The Prize Committee cited Krugman's work explaining the patterns of international trade and the geographic distribution of economic activity, by examining the effects of economies of scale and of consumer preferences for diverse goods and services.Krugman was previously a professor of economics at MIT, and later at Princeton University. He retired from Princeton in June 2015, and holds the title of professor emeritus there. He also holds the title of Centenary Professor at the London School of Economics. Krugman was President of the Eastern Economic Association in 2010, and is among the most influential economists in the world. He is known in academia for his work on international economics (including trade theory and international finance), economic geography, liquidity traps, and currency crises.

Krugman is the author or editor of 27 books, including scholarly works, textbooks, and books for a more general audience, and has published over 200 scholarly articles in professional journals and edited volumes. He has also written several hundred columns on economic and political issues for The New York Times, Fortune and Slate. A 2011 survey of economics professors named him their favorite living economist under the age of 60. As a commentator, Krugman has written on a wide range of economic issues including income distribution, taxation, macroeconomics, and international economics. Krugman considers himself a modern liberal, referring to his books, his blog on The New York Times, and his 2007 book The Conscience of a Liberal. His popular commentary has attracted widespread attention and comments, both positive and negative.

Poland A and B

Poland A and B (Polish: Polska "A" i "B") refers to the historical, political and cultural distinction between the western and the eastern part of the country, with Poland "A", west of the Vistula, being much more developed (GDP per capita 3:1) and having faster growth than Poland "B", east of the river. The General Secretary of Krajowa Izba Gospodarcza Marek Kłoczko, said in his 2007 interview that the divisions are more spread out and forming three separate categories, Poland "A" is the metropolitan cities, Poland "B" is the rest of the country, and Poland "C" is the plains and the landscape parks east of the Vistula (Poland "Z", according to Kłoczko), which require a different treatment.Reportedly, Poland's well-off cities are Warsaw, Kraków, Wrocław, and Poznań, and the ones struggling with less investment are in the northeast: Rzeszów, Lublin, Olsztyn and Białystok. However, current unemployment statistics for Poland in general fail to show that distinction but indicate an opposite trend in recent years, with the northwest reporting rates of unemployment higher than east-central Poland. In 2014, among the highest in the nation were the Kujawsko-Pomorskie and Zachodniopomorskie (compare the historic railroad map and the administrative map, right, with the 2014 unemployment map, from business portal eGospodarka.pl); while among the lowest in the country was the east-central Mazowieckie.

Regional economics

Regional economics is a sub-discipline of economics and is often regarded as one of the fields of the social sciences. It addresses the economic aspect of the regional problems that are spatially analyzable so that theoretical or policy implications can be derived with respect to regions whose geographical scope ranges from local to global areas.

Regional science

Regional science is a field of the social sciences concerned with analytical approaches to problems that are specifically urban, rural, or regional. Topics in regional science include, but are not limited to location theory or spatial economics, location modeling, transportation, migration analysis, land use and urban development, interindustry analysis, environmental and ecological analysis, resource management, urban and regional policy analysis, geographical information systems, and spatial data analysis. In the broadest sense, any social science analysis that has a spatial dimension is embraced by regional scientists.

Retail geography

Retail geography is the study of where to place retail stores based on where their customers are. The use of retail geography has grown significantly in the past decade as a result of the use of geographic information systems (GIS).

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