Economic geography

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Economic geography is the subfield of geography which studies the influence of geography on economic activity. It can also be considered a subfield or method in economics. [1]

Geography The science that studies the terrestrial surface, the societies that inhabit it and the territories, landscapes, places or regions that form it

Geography is a field of science devoted to the study of the lands, features, inhabitants, and phenomena of the Earth and planets. The first person to use the word γεωγραφία was Eratosthenes. Geography is an all-encompassing discipline that seeks an understanding of Earth and its human and natural complexities—not merely where objects are, but also how they have changed and come to be.

Economics is the social science that studies the production, distribution, and consumption of goods and services.

Contents

Economic geography takes a variety of approaches to many different topics, 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.

Economies of agglomeration or agglomeration effects are cost savings arising from urban agglomeration, a major topic of urban economics. One aspect of agglomeration is that firms are often located near to each other. This concept relates to the idea of economies of scale and network effects.

International trade Exchanges across international borders

International trade is the exchange of capital, goods, and services across international borders or territories.

Real estate is "property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, buildings or housing in general. Also: the business of real estate; the profession of buying, selling, or renting land, buildings, or housing." It is a legal term used in jurisdictions whose legal system is derived from English common law, such as India, England, Wales, Northern Ireland, United States, Canada, Pakistan, Australia, and New Zealand.

Theoretical background and influences

There are varied methodological approaches. 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.

Location theory has become an integral part of economic geography, regional science, and spatial economics. Location theory addresses questions of what economic activities are located where and why. Location theory or microeconomic theory generally assumes that agents act in their own self-interest. Firms thus choose locations that maximize their profits and individuals choose locations that maximize their utility.

Alfred Weber German economist and sociologist

Alfred Weber was a German economist, geographer, sociologist and theoretician of culture whose work was influential in the development of modern economic geography.

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]

Paul Krugman American economist

Paul Robin Krugman is an American economist who is the 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.

Jeffrey Sachs American economist

Jeffrey David Sachs is an American economist, academic, public policy analyst and former director of The Earth Institute at Columbia University, where he holds the title of University Professor. He is known as one of the world's leading experts on economic development and the fight against poverty.

International trade theory is a sub-field of economics which analyzes the patterns of international trade, its origins, and its welfare implications. International trade policy has been highly controversial since the 18th century up to our days. International trade theory and economics itself have developed as means to evaluate the effects of trade policies.

History

The coffee trade is a worldwide industry. ElSalvadorfairtradecoffee.jpg
The coffee trade is a worldwide industry.

Early approaches to economic geography are found in the seven Chinese maps of the State of Qin, which date to the 4th century BC and in the Greek geographer Strabo's Geographika, compiled almost 2000 years ago. As 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.

Qin (state) Chinese feudal state

Qin was an ancient Chinese state during the Zhou dynasty. Traditionally dated to 897 B.C., it took its origin in a reconquest of western lands previously lost to the Rong; its position at the western edge of Chinese civilization permitted expansion and development that was unavailable to its rivals in the North China Plain. Following extensive "Legalist" reform in the 3rd century BC, Qin emerged as one of the dominant powers of the Seven Warring States and unified China in 221 BC under Qin Shi Huang. The empire it established was short-lived but greatly influential on later Chinese history.

Strabo Greek geographer, philosopher and historian

Strabo was a Greek geographer, philosopher, and historian who lived in Asia Minor during the transitional period of the Roman Republic into the Roman Empire.

Cartography The study and practice of making maps

Cartography is the study and practice of making maps. Combining science, aesthetics, and technique, cartography builds on the premise that reality can be modeled in ways that communicate spatial information effectively.

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. [ citation needed ]

Environmental determinism study of how the physical environment predisposes societies and states towards particular development trajectories

Environmental determinism is the study of how the physical environment predisposes societies and states towards particular development trajectories. Many scholars underscore that this approach supported colonialism and eurocentrism, and devalued human agency in non-Western societies. Jared Diamond, Jeffrey Herbst, Ian Morris, and other social scientists sparked a revival of the theory during the late twentieth and early twenty-first centuries. This "neo-environmental determinism" school of thought examines how geographic and ecological forces influence state-building, economic development, and institutions.

Ellsworth Huntington American geographer

Ellsworth Huntington was a professor of geography at Yale University during the early 20th century, known for his studies on environmental determinism/climatic determinism, economic growth and economic geography. He served as President of the Ecological Society of America in 1917, the Association of American Geographers in 1923 and President of the Board of Directors of the Society for Biodemography and Social Biology from 1934 to 1938.

Johann Heinrich von Thünen German economist

Johann Heinrich von Thünen, sometimes spelled Thuenen, was a prominent nineteenth century economist and a native of Mecklenburg-Strelitz in northern Germany.

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:

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 the firm's activities 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 is evidence by 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

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References

  1. Gordon L. Clark; Maryann P. Feldman; Meric S. Gertler, eds. (2000). 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 . Bibcode:2011arXiv1107.0539B. 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 (3): 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

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