EPOS
Advanced Economic Geography
Course – 9 credits
2017
Roberta Gemmiti
Associate Professor in Economic Geography
Assessment
Final Exam:
attending students are requested to download and study the slides that will be upload week by week on the
teacher’s webpage.
In the final exam we will discuss about material presented in lectures and class discussion. Attendance and
participation are required as a very important part of the course and of the final exam.
www.memotef.uniroma1.it/users/gemmiti-roberta
Attending students may ask to have papers and text books to integrate the slides to do better in the course.
Mid-term exam: In the first week of april, students may choose to have a mid-term exam. In this exam students
(even in small group) will have to do a short presentation about one or more traditional models in geography
(topics of the first month of the course).
Non attending students’ program consists in 6 papers about different geographical and economic issues. These
papers are available in the Copisteria Sapienza.
Final exam
The 2017 summer exam dates will take be on the 7 june and 10 july
Other dates are available via website
https://stud.infostud.uniroma1.it
The exam will consist of the discussion of the subjects of the course; in exceptional
circumstances the exam could be written.
For attending students, a list of the main topics/themes of discussion will be available in
the last weeks of the course.
For attending students, the final exam should be held in the last week of the course.
Attending students are those students which attend at least the 80% of the course.
Teacher’s website:
www.memotef.uniroma1.it/users/gemmiti-roberta
Mail address: [email protected]
Address: Faculty of Economics, Via del C. Laurenziano 9, fifth floor,
section of geographers, room n. 526
General aim of the course
The general aim of the course is to show the spatial dimension of economic variables and
processes and the instruments to read them.
Students will learn the most significant theoretical frameworks in economic geography and
spatial economics for the matters of economic development and competitiveness.
Competition and market regulation….. Does geography matter?
Who is the actor of this competitiveness and which are the sources of his competitiveness?
Geography matters
“The world around us is powerfully shaped by economic forces.
The economy, as we experience it in everyday life is innately geographical.
There is no economy ‘out there’, floating in the atmosphere, detached from the lived
reality.
Rather the economy is a set of grounded, real-world processes, a set of complex
social relations that vary enormously across, and because of, geographical space.
… the set of approaches offered by the field of economic geography is best placed to
help us appreciate and understand the modern economic world in all its complexity.
To ignore geographical variation leads to a retreat into the unreal, hypothetical world
of mainstream economics, with all its many underlying assumptions and
simplifications”
Coe N. M., Kelly F. P., Yeung H.W.C., Economic Geography. A contemporary introduction, Blackwell, 2007 (preface)
What is economic geography?
It is a sub-discipline of geography that uses
a geographical approach to study the
economy.
According to the name, economic
geography should lie somewhere between
the disciplines of geography and
economics.
This is true somehow even if economic
geography and economics (spatial
economics, geographical economics) use
two very different approaches.
Geography matters!
Economics and economists have had a
different point of view for so long time…
(they) “treated an economy in which all factors and producers,
commodities and consumers are, in effect, congregated at one point.”
“ a one-point world, which somehow or other is conceived as divided
into n parts, representing n nations…”
“A wonderland of no dimensions”
Walter Isard, founder of the regional science, criticizing economists.
Different approaches
1) A world of no-dimensions vs a view of the world as something complex;
2) A world of spatial patterns of economy, locational patterns, spatial behavior
that must be explained in order to understand and promote economic
development; (vs) a world of contextualized economic processes that must be
explained by situating them in specific social, political and cultural relations;
3) The aim of economics is “understand the economic world”; (vs) in economic
geography the aim is understand the economic world taking care about “how
we understand economic world”.
Mainstream economics
(Sokol, 2011, pp. 23-24)
• Key components of economic orthodoxy:
• 1) All people are behaving in a matter that is: a) rational b)self-interested c)
economizing d) profit-maximizing;
• 2) these rational individuals (directly or through firms) are competing against each
other on the market.
• 3) Market is assumed to be the best mechanism to ensure economic efficiency since,
they believe, perfect competition on the market guarantees that supply will meet
demand at a particular rice and the economy will be in equilibrium.
• 4) The notion of equilibrium is one of the central assumptions of mainstream
economic thought and shapes the way in which economists see the world around
them;
• 5) The market economy operates according to certain laws and principles that could
be studied as a “science”. One of the main concerns of this economic science is to
predict the behavior of the economy using mathematical models and equations.
Mainstream economics
(Sokol, 2011, pp. 23-24)
• 6) The fundamental aim of such modelling is the achievement of the
equilibrium.
• 7) Mainstream economists believe that these laws and principles work
everywhere and therefore economic models are applicable to them in
every context.
• 8) Economic orthodoxy believes in certain universalism.
1-Classical theory
Source: Martin R., A study of competitiveness factors, 2004, p. 2-5
2-Classical theory
Each country has convenience in producing goods in which it is more
efficient; in this way it gets the greatest benefits from international trade.
Greater investment in capital (machine) and greater level of trade facilitate
the specialization and increase productivity and output. Growth itself could
increase , since increasing output allows further division of labour and
further growth.
Smith demonstrated the gains from trade to be made when moving from a
situation of autarky to free trade when countries have an absolute
advantage in the production of different goods.
Ricardo (1817) demonstrated that two countries can gain if they specialize
their production in sectors in which they have a comparative advantage. In
the Ricardian perspective, differences in comparative labor productivity
depend on differences in production technologies between industries and
countries. Comparative advantages theory does not compare levels of
efficiency in the same sector across countries, but between sectors in the
same country.
1) Neo-classical Economic Theory
Source: Martin, 2005
2) Neo-Classical Theory
Core assumptions of neo-classical theory:
I. Perfect information and perfect competition : there are indefinitely many
traders; no one of them can control a considerable share of demand or
supply; they act independently in a perfect market; a perfect market is one
in which the traders have full knowledge of all offer and prices (see Stigler,
1957, The Journal of Political Economy, available on line);
II. Constant returns to scale (in the firm function of production, when inputs
grow output grows at the same rate);
III. Full divisibility of goods and factors and full substitutability of all factors.
3) Neo-classical theory
Heckscher-Ohlin models of resources endowment and international trade
Whereas the Ricardian model assumes that technological
differences exist across countries, the H-O model assumes that
technologies are the same across countries and that comparative
advantages are due to differences in the relative abundance of
factors of production (factor endowments).
Each country will export the good that uses its abundant factor
intensively.
1) Does Geography Matter?
Yes, but it matters in terms of environmental conditions, climate and
endowment of resources.
2) Does Geography enter in the process of economic development?
It is something fixed and the only geography is the geography that can
be express in economic term.
3) Are there any other geographical features (space, environment, scale,
place, territory ?
Differences
Most of the things that
economists usually erase
from the analysis are essential
for a geographical analysis.
Instead, differences call for an approach which
look at a geographical dimension of development
World is different across space in … money
“Developed economies’ share of global GDP (PPP) fell
from 54% in 2004 to 43% in 2014 (UNDP, 2016)”
“The world is dangerously dependent on China, which
continues to grow at a clip. Since the beginning of 2010
it alone has contributed over one-third of global GDP
growth, with another 40% coming from the rest of the
emerging world.
Weighed down by debt since the financial crisis, the rich
world’s growth has been sclerotic.
Excluding America, it has provided just 10% of global
growth since 2010; America has contributed another
12.5%.”
Source: www.economist.com
…gender
• Source: UNDP Human Development Report, 2015
… opportunities for people
Source: UNDP Human Development Report, 2015
… work
conditions
Source: UNDP Human
Development Report,
2015
Source: UNDP
Human
Development
Report, 2015
.. Human Development
Level
(Health, education, income,
security, participation; UNDP)
World is not the same if you live in a city or in a rural area
… and in a few years you will surely live
in a city in every country of the world….
• http://www.unicef.org/sowc2012/urbanmap/
…more probably in a megacity….
… but you can’t be sure to live in the kind of
city you have in mind….
So….
How is it possible to ignore the spatial/geographical dimension of human
life ?
How is it possible to intervene without a clear understanding of the forces
responsible of these differences?
How is it possible to use the same tools/policies/incentives/whatever in
places so different from each other?
We are not perfectly diffused on the earth …
We are not totally congregated at one singular point….
We are agglomerated in few points on the earth….
Population, economic activities, levels of economic development and quality of
life are unevenly distributed in the world surface….
Why? What do we know about the forces responsible of these differences?
We can answer in many ways….
The first answer talks about nature and environment…
most of the students answer this!
Geography as the sum of Natural factors and
development as the consequence of resources
endowments
(climate, soil quality, water bodies, mineral
resources)
This could be named «first nature» development ….
«A pre-existing uneven geographical backcloth»…
A couple of authors took back recently this view about development :
J. Diamond, Guns, germs and still, New York, 1998;
J. D. Sachs, Tropical underdevelopment, NBER Wording Paper 8119, Cambridge.
Biophysical environment and the morphology of continents are the ultimate
explanation of agricultural productivity, tecnological dynamism and societal
change in general. Especially two factors are important: a) latitude, climate and
agricultural possibilities to produce surplus; b) shape and directional orientation
of continents (movements of people and innovations are more readily diffused
east-west than north-south). The prosperity of global North is due to historical
environmental inequalities because all the human have the same nature and
capacity to transform the environment…
Reference: Sheppard E., Geography, Nature and development…. 2011
Sachs et al., Tropical underdevelopment, 2002
http://www.nber.org/papers/w8119.pdf
Sachs J. et al. (Tropical Underdevelopment, 2002, ) tried
to estimate the correlation between the distance from
A quick summary…
Economics and Economic Geography in the analysis of features and factors of
development across countries and regions. Two different ways:
Economics
Economic geography
Economic variables (prices, costs,
productivities, taxes, rates…) are
the keys of measure and
evaluation of development levels
across countries and regions.
Economists
Several variables
(environmental/social/politicalinstitutional/economic) are used to
estimates the differences in
development. We have seen how diverse
our world could be if we look at the
differences with a little bit of interest.
So we normally try to take into account
the specificities of places and regions.
The aim should be not cancel the
difference but built on them.
Strenght and weakness
Economics
Strenght of economics is the scientific method.
Economists generate theory, laws, principles that
are proposed as universalistic explanation; for the
larger part, economists use a rigorous
mathematic and logic procedure (the rules of the
deductive process) aimed to generalize the
results of their work.
Weakness of economics is the
–inadequacy of the explanation in taking into
account the non-economic variables,
-the too much high level of abstraction from the
real world
- theory that are the result of a generalization of
topics that are specific of a very small number of
northern countries and regions.
Economic Geography
Strenght of economic geography is the very
complex approach to the topic of
development. Geographers normally use
several categories and geographical scales in
-the analysis of human organization and
development (space, natural environment,
landscape, built environment, territory and
places, regions, cities, countries…);
- the choice of the factors/sectors on which
to intervene.
Weakness of economic geography is the
excess of pluralism, of different ideas and
methods of analysis. Geography is made by
different branch of learning that have too
little in common….
Which are the forces of development? How can
we explain the differences across regions?
First nature is one of the most common approach in reading the
process of development.
It has been a traditional approach in geography for long time and it
regards the natural endowments of single regions considered as an
explanation of the organization and level of development of a certain
community.
… it is an outmoded approach for geography and not only…. But
recently, two publications have bring a new life to this perspective
(Sachs et al., Diamond)
First nature think to geography as something
external
According to scholars that explain global development through the
framework of first nature, geography is an exogenous backcloth, a set of
natural features that are completely external to society…
So geography dominate institutions?
Someone argued that instead institutions dominate geography, because
according to this point of view there are example of more tropical colonies
that have a high level of prosperity because of the domination of European
institutions… (European superiority is the key….)
It should be more fruitful to think to social or human environment as
something which co-evolves with its natural environment…
So the line of thinking natural environment as something out there must be
overcome… nature co-evolves with societal change and it is partially
constituted through societal change and it is inseparable from it…
(Sheppard, 2011).
This view opens up to a different concept of geography, quite far from
biophysical dimensions of environment because nature is not something
apart ….
This does not mean that biophysical processes are irrelevant:
temperate climates are better suited for producing grain-based annual
agricultural surpluses, and tropical conditions pose very specific
conditions that local agricultural knowledge and practices, and cultural
norms, have found ways to address… but
We mustn't miss all the information about the mutual causal effects
between nature and society considering nature as something primitive
and original….
How did economists find a solution to the topic of the relation between
nature and society? How did they mix the two dimensions of
development?
Economists and nature…
Second nature or how to explain the process of co-evolution of society and nature….looking at a
very small part of the factors and causes of development
Economists: for long time they neglected the spatial dimensions of economy (and many of them
still disregard space privileging the dimension of micro (individuals and their economic behavior)
and macro (single nations and global flows)
Economists and economic geographers managed to include geography and nature in a first long
phase using the metaphor of space… not natural environment or historical characters but an
abstraction of them.
In this abstracted element they are able to isolate the economic forces and their works in space
and under the effects of space.
They call this space “geography”
The concept of “second nature” in recent economic
literature (P. Krugman, 1991)
“In his justly acclaimed recent book “Nature's Metropolis: Chicago and the
Great West”, the historian William Cronon documents the extraordinary
19th century rise of Chicago as the central city of the American heartland.
As Cronon points out, what made this rise particularly remarkable was the
absence of any distinctive natural advantages of Chicago's site.
The city stood on a flat plain; the river that ran through the city was barely
navigable; the city's lakeside harbor was inadequate and tended to silt up.
Whatever natural advantages the site did have proved transitory.
Initially Chicago seemed the natural terminus of a canal linking the
watershed of the Mississippi with the Great Lakes, but when a canal was
finally built it had only a few years of economic importance before being
overshadowed by the railroads”.
The concept of “second nature” in recent economic
literature (P. Krugman, 1991)
“Chicago's harbor on the Great Lakes was not unique, and in any case lake
transportation became relatively unimportant by the 1870s as compared
with rail links. Yet once Chicago had become established as a central market,
as a focal point for transportation and commerce, its strength fed on itself.
As Cronon puts it, the advantages that "first nature" failed to provide the city
were more than made up for by the self—reinforcing advantages of "second
nature": the concentration of population and production in Chicago, and the
city's role as a transportation hub, provided the incentive for still more
concentration of production there, and caused all roads to lead to Chicago. In
Cronon's interpretation, then, the rise of Chicago was a striking example of
what David (1985) has called "path dependence": historical accident, which
led people to expect a central role for Chicago, led them into decisions that
justified that expectation”.
Space
Space refers fundamentally to physical distance and area. It is a flat plane
because only erasing all the specific characters of a place/region/country is
possible to find out theories, principles, laws, regularities (all the things
that make science in the positivist approach).
…. The simplest definition of space: this definition of space belongs to the
economic geography and regional economics in their framework of
“location theory” in the 1950s and 1960s.
Region
…an area or zone of indeterminate size on the surface of the Earth,
whose diverse elements form a functional association.
…regions are based on socially constructed generalizations about the
world, that their delimitation and representation are artefacts but not
purely fictions.
Examples: a) formal or uniform region (one ore more formal criteria
according to which space is divided in different regions); this was the
conventional idea of region in traditional geography.;
b) nodal or functional region (is a geographically delimited spatial
system defined by the linkages binding particular phenomena in that
area)
Typical questions in economics and economic geography. Region is the
favorite scales in geography
I.
Why do regions growth?
II.
Why do some decline?
III.
What differentiates regions that are able to sustain growth from those that
are not?
IV. What are the forces that cause per capita income to converge or diverge ,
and under what conditions do they operate?
V.
What are the principal regularities in urban and regional growth and what
are the events and processes that are not temporally or geographicallyregular but that affect pathways of development in a durable ways?
Source: Storper M., Why do regions develop and change? The challenge for geography and economics, Journal of
Economic Geography, 11, 2011, p. 333-346.
Absolute space
Space (www.dictionaryreference.com)
“the unlimited or incalculably great three-dimensional
realm or expanse in which
all material objects are located and all events occur.”
It’s the Newton‘s space which is absolute because:
- It exists independently of the existence of material bodies ( it exists in itself , is not a
system of relations between bodies ) ;
- It has properties that are independent from the interaction with the different bodies
(it is not dynamic) ;
- It is defined regardless of the measures and observations that can be made on the
objects.
- Something that exists before human being and its action.
Absolute and relative space
«…. Space (like time) was a universal of human existence, an external coordinate, an empty grid of
mutually exclusive points, ‘an unchanging box’ within which objects exist and events occur….».
«Absolute space exist independent of any matter; it is a ‘container’; it is associated primarily with
inventory and mapping; it is the space by Euclide»
The job of geography should consist mainly of filling the ‘container’ with information: climate,
morphology, geology, resources. It is assumed to be like a plain ground where every geographical
body has one and only one spatial location (latitude and longitude help in defining such position).
The location of elements within the grid of the region under consideration is critical.
This is the point of view of conventional cartography, remote sensing, and the mapping sciences; it is
the appropriate approach in inventory, planning and most mapping and descriptive studies.
Gregory et al., Dictionary of Human Geography, p. 708
V. Meentemeyer, Geographical perspectives of space, time and scale, Landscape ecology, 1989.
Space, absolute and relative
Space is absolute and relative…
Different concept of distance:
- Physical distance (meter, kilometer… or other measure);
- Economic distance (cost/kilometer…): relative distance
- Distance of time (hours/kilometer…): relative distance
Space is not necessarily absolute: it depends on the measure we select and
the aims of our analysis;
Space doesn’t exist per se; it is made by spatial relations and processes
- Distance in metaphorical sense (cultural distance, linguistic distance…):
relational distance
Relative space
Such space has different characteristics and attributes that are relevant with
the aims of the analysis.
It is founded by :
1) different object which are selected through characters (e. g. functions) and
2) relationships with other objects (e. g. flows of consumers between cities;
commuting between urban and rural areas).
Space takes different feature according with the different measures of the
relationships (and so according with the selected objects).
Key concepts are the following: position (relative position, depending on the
position of the other objects); accessibility (position + ways and transport);
distance (and cost to overtake it).
Tobler W., On line
Anas, Arnott, Small, 1997
http://econpapers.repec.org/paper/cdl
uctcwp/qt835049q3.htm)
Different methods, different kinds of space
European bunch of grapes (Kunzmann
and Wegener, 1991)
Banana blu (R. Brunet, 1989)
The
octopus
(Van der
Meer,
1998)
The seven
apartments
(Lutzky;
Nijkamp
1993)
Socioeconomic space. The traditional scene for spatial
economics and economic geography
Source: Couclelis, 1992, pp. 222-223
“Imagine a completely flat and featureless landscape with a town or two and
a few copper and iron mines here and there. Workers live in the towns or
perhaps in a few villages also in the area.
The towns, the villages, and the mines are so compact that they are virtually
points in the landscape.
The transportation network is so homogeneous and dense that travel is
equally easy in all directions and you can always take a straight line between
two points.
An industrialist examines the area, trying to decide where to locate a steel
factory. Being an economically rational person, the industrialist knows that
the less money spent on transportation, the greater the profits will be. The
best location will thus be the one where the combined transportation costs of
raw materials from their sources to the factory and of the finished products
from the factory to the markets are the lowest possible. If the workers have
no means of transportation, the factory may have to be at one or the other of
the towns where they live. In this case, cheaper labor in one village may offset
a slightly lower total transportation cost at another”
Socioeconomic space
Source: Couclelis, 1992, pp. 222-223
“That unlikely landscape could be anywhere, or rather, nowhere at all.
It is an instance of an abstract economic space, defined by the spatial
relation between consumers, producers, labor and raw materials. It is a
relative space, the property of which ( for example the existence of
points where total transport costs are minimized) arise through two
features: the location of other critical points relative to each other, and
certain economic conditions and principles assumed to hold in that
space”.
Socioeconomic space
Source: Couclelis, 1992, pp. 222-223
“The value of thinking about the world as an economic space is that
such a view allows us to develop general theoretical statements about
the effect of geographic factors such as distance on economic
activity”…
“the insights collected from an analysis of socioeconomic space are
usually consistent with intuition”…
Socioeconomic space
Source: Couclelis, 1992, pp. 222-223
“for example, all other things being equal, there will be more exchanges
among places that are near each other than among places that are far
apart, and more among large cities than among small villages, and the
farther a commodity has to be transported, the higher its cost will be to the
producer or the consumer”.
Socioeconomic space is the traditional context for spatial analysis.
“Spatial analysis is the general approach that uses mathematics and
statistics to derive the quantitative properties of spaces of interest to
geographers…”
Regional science and urban economics have both developed spatial
analytic methods similar to the spatial analysis in economic geography.
An example of urban economics model and
socioeconomic space (slideshare, online)
http://www.macrobusiness.com.au
Location theory. Analysis of substitution of the units of distance (and costs of transport) between two different points (M1
the source of raw materials; C the market).
Location theory. Two producers; two market areas
according to the line of medium costs of production
(and prices)
References
• Couclelis H., Location, Place, Region and Space, Geography’s inner
worlds, 1992.
• Coe N. M., Kelly F. P., Yeung H.W.C., Economic Geography. A
contemporary introduction, Blackwell, 2007.
• Jones M., Phase space: geography, relational thinking and beyond,
Progress in Human Geography, 33, 4, 2009, pp. 487-506.
• SOKOL M., Economic Geographies of globalization. A short
introduction, Elgar, 2011.