KNOWLEDGE OF ECONOMIC geography was first essentially descriptive, with a focus on the REGION and its economy, demography, and social characteristics. It represented the typical approach in research agenda in North America and Western Europe. The birth of economic geography dates from the age of European exploration, with an expansion in commercial geography from the 15th century to the 19th century. George Chisholm, author of the first book in economic geography, Handbook of Commercial Geography (1889), collected information on economic activity. In the late 19th century, economic geographers started to take into consideration the physical environment as influencing the economic activity.
The environmental determinist movement started with Ellen Churchill Semple’s book (The Influences of the Geographic Environment, 1911), in which she explained how the environment is considered as a major factor in the location of human settlements and economic activity. The turn to the study of geographic regions gave birth to the areal differentiation movement in the mid-1930s, with Richard Hartshorne (The Nature of Geography, 1939).
The movement supported a geography that provided accurate, orderly, and rational descriptions and interpretations of regions. Economics has occupied a central position within human geography for more than a century, and started its modern development in the 1950s. The post-1950s geography is characterized by the quantitative revolution.
The utilization of earlier location theoretic models by German spatial economists (Johann Heinrich Von Thunen, 1826; Alfred Weber, 1929; Walter CHRISTALLER, 1933; August Losch, 1939) has contributed to the development of geography as a spatial science. The French economists, on their side, were working on the theory of GROWTH POLEs and regional development problems.
Economic geography represents two areas very close to each other but with some nuances. It is referred first to as geographers working on spatial questions, with a synthetic approach from sociology, economics, political science, and history, reflecting the multidisciplinary character of the field of geography. Second, it is related to regional science with economists working on spatial mathematical models.
The work in the 1960s in quantitative geography was represented by William Alonso and Brian Berry. Alonso (Location and Land Use: Toward a General Theory of Land Rent, 1964), in the area of neoclassical economics associated with location theories was influential in urban land-use modeling. A William Alonso Memorial Prize was established in the United States by the council of the Regional Science International Association in 1999. Berry has worked, with his book Geography of Market Centers and Retail Distribution (1967), on market functions and spatial scale, focusing on settlement patterns and the hierarchy of places in national economies. Until the mid-1970s, with the main intellectual orientations of the neoclassical economics principles and of the German theorists, location has provided the new framework for the study of the spatial organization of the contemporary economy. Economic geography was, during the period, essentially an industrial geography dealing with the problems of industry and regional economic development.
The end of the postwar economic growth in major developed countries, the end of the golden age of capitalism, and the worldwide stagnation of regional and urban problems were all new questions for economic geographers. With the Marxist critique of capitalism, economics geographers switched their interests from neoclassical economics toward political economy, such as the Marxian political economy. David Harvey refocused his work toward a Marxist-based geographical political economy with his book The Limits to Capital (1982), which is still one of the best interpretations of Marx’s work. From the mid-1970s to the mid-1980s, geographers dealt with the questions of regional and urban problems, which included the logics and the dynamics of urban space, regional development and its crisis, the geographies of services, labor, and money, the restructuring of regional industries, and uneven development. Doreen Massey, with her book Spatial Divisions of Labor: Social Structure and the Geography of the Production (1984) on industrial restructuring, reacted to Harvey’s abstract ideas by bringing a more concrete perspective of the place to the study of spatial relations.
From the 1980s on, economic geography has evolved in several field categories. Economic geography has taken a step toward critiques of the Marxist social and economic theory. This has led to a new turn in the development of capitalism, with the emergence of poststructuralist and postmodernist theories. Feminist geographers Katherine Gibson and Julie Graham, in their work The End of Capitalism (as We Knew it): a Feminist Critique of Political Economy (1996) on Marxist political economy, bring the concept of class as a central topic in economic analysis. They focus on the relationship between gender, social class, and economics and according to them, the discourse on Fordism and post-Fordism is too economistic and male-centered.
For Edward Soja (Thirdspace: Journeys to Los Angeles and Other Real-and-Imagined Places, 1996), postmodern ideas lead to a different path. The social complexity is originated from the importance of space and time. Influenced by Henri Lefebvre, Soja developed the model of the “Trialectic” of history, space, and society. He showed that spatiality, like history, is culturally produced, and that space is also a space of domination that is a representation of power and ideology.
Starting in the late 1970s, a turn to the resurgence of regional economies took place by economic geographers switching their interest from the areas dominated by the Fordist manufacturing activities to the high level of spatial agglomeration, including networking, innovation, and economic growth. Different schools of thought involving geographers, economists, and social scientists have emerged in works related to post-Fordism.
The first is represented by the Italian school with Giacomo Becattini (1987) and his colleagues at the University of Florence, who analyzed the Marshallian industrial district dealing with the location of new productions spaces. Three types of industrial districts were found: the local-, small-, and medium-enterprise networks in northeastern and central Italy, known as the Third Italy; the high-technology regional clusters in Silicon Valley, Orange County, and the highway 128 complex around Boston; and the London-Bristol axis.
The other school, the Californian school of geography, represented by Allen J. Scott, Michael Storper, and Richard Walker, and characterized by the study of industrial geography in southern California and the Bay Area, has a focus on flexibility in the division of labor in production. It also has analyzed agglomeration, including transactions costs associated with inter-firm linkages.
They recognized in the megalopolis or in the agglomeration some patchwork of districts. Although they had knowledge of regulation theory, their analysis was essentially based on neo-Marxism and neo-classical theories of labor division and the effects of external agglomeration. A third group can be discussed, the Groupe de Recherche Europeen sur les Milieux Innovateurs (GREMI), created by Philippe Aydalot in 1986 and composed of geographers and economists studying new regionalism places such as Silicon Valley, Cite of Paris South, and Third Italy. The fourth is represented by Michael Piore and Charles Sabel, inventors of the concept of flexible specialization as a form of industrial organization in their book The Second Industrial Divide (1984).
According to the paradigm of Coase-Williamson-Scott that has emerged, industrial organization is always struggling between internal organizational costs in the firm and transactions costs between firms. Agglomeration of firms in a same location would minimize transactions costs, and thus be a factor in competitiveness. However, the flexibility of the production system has engaged new geographical dynamics, suggesting that networks of firms or smaller firms can respond more efficiently to changing consumer demands.
The Fordist spatial systems (vertical integration and spatial centralization) are less important and led the way to firms’ agglomeration in search of minimal transactions costs. Michael Storper and Richard Walker, in Capitalist Imperative: Territory, Technology, and Industrial Growth (1989), have proposed a model of growth pole that has emerged in California. Allan Scott (1988) did a precise analysis of contemporary production systems, taking in consideration the social division of labor, transactions between the actors in the space of production, the different type of relations between the economic actors, and the role of political agencies. From the Italian district to world megapolis, the new paradigm of flexibility explains the return of production location and offices near urban areas and the revival of the quantitative growth of metropolitan cities. Geographers have analyzed the location of production, location of offices, space of logistics and distribution, organization, and locational choices and realized that the urban forms have changed compared to the postindustrial Fordist period.
Besides the ideas developed on districts and the evolutionists’ approach to the diffusion of technological changes, another research idea has considered territory as an innovative milieu. The works on this topic have questioned the necessary external conditions that give rise to entrepreneurship and the adoption of innovation. Researchers do not consider that the firm is preexisting in the local milieus, but that the firm itself is created by them. Recent studies challenge the theories of industrial organization, industrial district analysis, and the evolutionist approach, which have been modified with the emergence and the diffusion of innovation. More emphasis has been put on the local milieu, the territory favorable to innovation.
All the approaches described above, even if they do have common questions, do not converge on post-Fordism and the effects of milieu. For example, Danielle Leborgne and Alain Lipietz (1992), in their works on the institutions of social regulation and the forms of relations among firms, found the model of Marshallian district is not so important and is regulated by a combination of commercial relations and a reciprocal atmosphere. The French “regulation” school of Michel Aglietta and Alain Lipietz worked on the regulation theory to provide an understanding of the capitalist mode of production and its instability. It attempted to theorize the social and economic relations that support economic growth (accumulation). The functioning of the accumulation regime is deeply affected by the state and financial institutions that have an impact on the markets forces.
The French regulation theory has been very influential in explaining the transition in capitalism from a Fordist regime of accumulation and regulation to a new post-Fordist regime. Ash Amin (1994) applied the regulationist ideas to geography and proposed that the mass-production Fordist regime of accumulation has led to a post-Fordist regime. Piero Sraffa also contributed to economic structure and a linear production model has been influential in economic geography with Sraffa’s book Production of Commodities by Means of Commodities: Prelude to a Critique of Economic Theory (1960).
Sraffa’s model is a formalization of Marxian ideas of value/price and wage/profits relationships, and his model is identical to the input-output model of Wassilly Leontief. The Leontief model influenced research on regional growth and the study of impact analysis developed by Walter Isard and Richard Stone. The neo- Marxian geographers integrated the Sraffa models in their model of capitalist crisis. Eric Sheppard and Trevor J. Barnes (The Capitalist Space Economy: Geographical Analysis after Ricardo, Marx, and Sraffa, 1996) studied the capital-labor conflict and showed that, when it is combined with the spatial interpretation of industrial cost and residential location, it explained the patterns of urban settlements, technological change, industrial organization, restructuring, and monopoly power. Michael Webber and David Rigby, in The Golden Age Illusion: Rethinking Postwar Capitalism (1996), mentioned that since the Sraffa-based spatial model already contains the possibility of an endogenous crisis because of the technological competition and the decline of the productivity, the regulationist ideas of decline of capitalism were not useful.
The rise of new technologies and new forms of economic organization lead toward profits and productivity growth. The new rise of competition in a global economy and the breakdown of the Bretton Woods system have been the driving force in this post-Fordist change of economy and geography. Network and governance are two key economic concepts that appeared in the 1990s.
Economic and geographical works have focused on the organization of the relation between unit production and its spatial development. In this area, a network is called the spatial dimension of regulation between productive units; moreover governance is the regulation mode of those relations which are in different forms: hierarchical, sub-contracted, or partnerships. Michael Storper and Bennett Harrison showed the great diversity of the governance mode that they take into consideration only if it organizes the interfirms relations. It is a complex theory that comes from the domain of industrial organization, labor division, institutions and conventions, and the possible locations resulting from the modality of governance.
Spatial economists have elaborated on a new economic geography, which is a reflection of their increasing interest in the concept of space. This represents a recent tendency to add “new” to the term economic geography, particularly since the work of the MIT economist Paul Krugman (1991) entitled Geography and Trade. He took into consideration, for example, the role played by distance and place in international trade. Krugman tried to show how exchanges in a country are affected by the process of geographic industrial specialization and, in return, how the process can influence further exchanges.
In a slightly different perspective, for the business economist Michael Porter (1990), the geographic concentration of industry in a national economy plays an important role in the determination of sectors that have a competitive advantage within the international economy. The new economic geography adds to regional economics with specific modeling approaches.
Krugman has contributed to several topics relating to the problems of regional development, exchange, externality, industrial location, strategic industrial policy, and the consequences of the economic integration and monetary policy on regional growth. He has used several economic and geographic theories, taking into consideration the locational economics of Alfred Marshall, cumulative causality, and traditional theories of location. The geographical emphasis by Krugman and others has been criticized because of their modeling of space that is too narrow; their interest is in the description of abstract space and not in a specific place.
The 1980s and the 1990s have been marked by works on the metropolis. The city has been studied from the angle of the production system, with the apparition of the post-Fordist city concept. Globalization has certainly transformed the structure of urban societies. John Friedmann has established a world urban hierarchy using the location of headquarters and decision centers of corporations and international organizations. It is an extension of the theory of urban hierarchy that affirms that the geographical deployment of multinational companies is a function of the transactions done by the companies. The problem of globalization is an important topic for economic geographers, particularly since the increase in multinational corporations operating at a global level but also because of a new movement in capital. In effect, capital becoming more mobile.
GLOBAL INFORMATIONAL CAPITALISM
Manuel Castells, in his three volumes, provides an interesting and complete analysis of global informational capitalism (1996, 1997, and 1998). Castells emphasized the role of information and telecommunication, leading to the territorialization of the economy and society, and he developed a new spatial logic called the space of flows. The flows are structured in networks dominated by big companies and by managerial elites. Information is the key input of the world economy for the formation of capitalist agglomeration. Information, new technologies, and restructuring in the capitallabor relation induce the emergence of new urban forms. Thus, the informational city is on the rise.
Saskia Sassen (The Global City: New York, London, Tokyo, 1991) developed the concept of the global city. She showed that globalization can be seen only in some cities, such as NEW YORK, LONDON, and TOKYO, where banks, corporate headquarters, and high-level functions are strategically concentrated. Decisions made in these global cities can affect jobs and wages, but also the conditions of the economy in more remote location such as in MALAYSIA, CHILE, or other places. The three cities are global because of the structure of their activities (industries and international services), the qualifications of the labor force, and relative productivity.
Globalization as an economic and geographical phenomenon that has gained interest from geographers. The origin of this interest comes from the older geographic research on the international division of labor and the activities of multinational corporations. Moreover, the region as a source of competitive advantage in the globalization process of the economy, has received special study (Porter, 1990, 1998; Saxenian 1994; Scott, 1998). Another characteristic of globalization is the dual structure of society, in which there are elite with high incomes living side by side with poor workers. Global cities have accumulated wealth, decision centers, research laboratories, and financial centers. But such growth is accompanied by a decline in some economic sectors, degradation of vast urban areas, structural poverty, and chronic insecurity. At the international level, there is a consolidation of socioeconomic geography, which involves economics and the social components of space. Studies of post-Fordism, innovative milieus, industrial districts, governance, local production systems, and the economy of proximity are increasing.
Globalization, with its creation of borderless markets, mobility of finance, transnational firms, and an information economy has signaled the “end of geography” (Richard O’Brien, 1992) and the “death of distance” (Cairncross, 1997). According to some these theorists, globalization is rendering the location of economic activities less relevant.
For others, globalization is increasing the importance of location and that is promoting regional economic distinctiveness. Spatial clustering, a concept at the core of economic geography, has been developed to explain the advantages of being in the same place as others to generate economic processes.
Recently, economic geographers became interested in telecommunication technologies and the changes brought on by the internet. These studies are represented by Stephen Graham and Simon Marvin in Telecommunication and the City (1996), Rob Kitchin in Cyberspace (1998), Manuel Castells in Internet Galaxy (2001), and Graham and Marvin in Splintering Urbanism (2001).
The boom of the new economy based on the information technology and the internet came to end with the economic downturn in 2001. But geographers, such as Thomas Leinbach and Stanley Brunn (Worlds of E-Commerce: Economic, Geographical and Social Dimensions, 2001), have just begun to analyze the relationships of virtual spaces of telecommunication networks and conventional geographic spaces.
The end of the 1990s brought a change in internet distribution methods, with e-commerce heralding a new digital economy. However, commercial transactions, even on a global basis, still depend on the management of the logistic side of geographic space and time. Into the 21st century, a new era of profound economic change emerged with strong implications for economic geography. Economic geography will continue to focus on aspects relating to change in the human economic system.