Showing papers in "Journal of Economic Geography in 2003"
TL;DR: In this article, the authors argue that the cluster concept should carry a public policy health warning: there is much about it that is problematic, and the rush to employ cluster ideas has run ahead of many fundamental conceptual, theoretical and empirical questions.
Abstract: Over the past decade, there has been growing interest in local industrial agglomeration and specialization, not only by economic geographers but also by economists and by policy-makers. Of the many ideas and concepts to have emerged from this new-found focus, Michael Porter's work on ‘clusters’ has proved by far the most influential. His ‘cluster theory’ has become the standard concept in the field, and policy-makers the world over have seized upon Porter's cluster model as a tool for promoting national, regional, and local competitiveness, innovation and growth. But the mere popularity of a construct is by no means a guarantee of its profundity. Seductive though the cluster concept is, there is much about it that is problematic, and the rush to employ ‘cluster ideas’ has run ahead of many fundamental conceptual, theoretical and empirical questions. Our aim is to deconstruct the cluster concept in order to reveal and highlight these issues. Our concerns relate to the definition of the cluster concept, its theorization, its empirics, the claims made for its benefits and advantages, and its use in policy-making. Whilst we do not wish to debunk the cluster idea outright, we do argue for a much more cautious and circumspect use of the notion, especially within a policy context: the cluster concept should carry a public policy health warning.
2,251 citations
TL;DR: In this paper, a critical analysis of the prevailing implicit and explicit economic geographies of tacit knowledge, focusing on the relationship between tacit knowledge and institutions, is presented, with a focus on the role and origins of social context.
Abstract: Within economic geography and industrial economics, interest in the concept of tacit knowledge has grown steadily in recent years. Nelson and Winter helped revive this interest in the work of Michael Polanyi by using the idea of tacit knowledge to inform their analysis of routines and evolutionary dynamics of technological change. More recently, the concept has received closer scrutiny. This paper offers a further contribution to this project by offering a critical analysis of the prevailing implicit and explicit economic geographies of tacit knowledge, focusing on the relationship between tacit knowledge and institutions. While much of the innovation literature focuses on a single question ^ can tacit knowledge be effectively shared over long distances ^ the paper argues that this issue cannot be properly addressed without considering a broader range of related questions. It highlights three tacit knowledge problems which, together, provide a more complete view of this issue. First, how is tacit knowledge produced? Second, how do firms find and appropriate tacit knowledge? Third, how is tacit knowledge reproduced or shared ^ that is, how does tacit knowledge promote social learning processes, and must the participants be geographically proximate in order for effective learning to occur? The paper revisits Michael Polanyi’s original conception of tacit knowledge, showing it to be limited by its experiential and cognitive emphasis, with insufficient attention devoted to the role and origins of social context. Alternatively, the paper argues that one cannot sort out the geography of tacit knowledge without inquiring into the foundations of context and culture, and the institutional underpinnings of economic activity, taking the work of another Polanyi ^ Karl ^ as the logical starting point.
1,803 citations
TL;DR: In this paper, the authors argue that a paradigmatic shift is occurring in economic geography toward a relational economic geography, based on three propositions: from a structural perspective economic actors are situated in contexts of social and institutional relations, in dynamic perspective economic processes are path-dependent, constrained by history.
Abstract: In this paper, we argue that a paradigmatic shift is occurring in economic geography toward a relational economic geography. This rests on three propositions. First, from a structural perspective economic actors are situated in contexts of social and institutional relations. Second, in dynamic perspective economic processes are path-dependent, constrained by history. Third, economic processes are contingent in that the agents’ strategies and actions are open-ended. Drawing on Storper’s holy trinity, we define four ions as the basis for analysis in economic geography: organization, evolution, innovation, and interaction. Therein, we employ a particular spatial perspective of economic processes using a geographical lens.
633 citations
TL;DR: In this article, an analytically solvable version of the central model of 'new economic geography', the so called core-periphery model by Krugman, is developed, which allows us to obtain additional analytical results that are out of reach in Krugman's set-up.
Abstract: We develop an analytically solvable version of the central model of 'new economic geography', the so called core-periphery model by Krugman. While the modified model reproduces all the appealing features of the original one, it also allows us to obtain additional analytical results that are out of reach in Krugman's set-up. First, we are able to assess the exact number of equilibria and their global stability properties. Second, we are able to investigate the implications of exogenous asymmetries between countries. This is achieved by introducing heterogeneity between high-skill mobile and low-skill immobile workers, which may also be an empirically attractive property. Copyright 2003, Oxford University Press.
430 citations
TL;DR: In this paper, the authors examined the size distribution of US cities over the period 1900-1990 and examined the degree and determinants of mobility of individual cities within this distribution, asking to what extent cities are moving up and down in the distribution and how this movement is influenced by cities' geographic characteristics.
Abstract: On a sustained basis, cities are of non-uniform relative sizes. This paper addresses three basic issues which arise from this simple observation by examining the size distribution of US cities over the period 1900‐1990. First, we explore the reasons why there is a wide distribution of city sizes. Second, we characterize the evolution of the size distribution of cities, documenting growth in sizes and numbers of cities. We ask whether the relative size distribution of cities has remained stable over time, or if it has displayed, instead, a tendency to collapse, flatten, or otherwise change its shape. We also examine evidence on whether the size distribution obeys Zipf’s Law. Third, we examine the degree and determinants of mobility of individual cities within this distribution, asking to what extent cities are moving up and down in the distribution and how this movement is influenced by cities’ geographic characteristics. We use a newly constructed data with consistent metropolitan area definitions over this century, discussing the issues and linking our results to the relevant literature.
416 citations
TL;DR: In this article, the authors propose a hierarchy of specialized knowledge stocks at both firm and cluster levels and suggest that the comparative advantage conferred by knowledge resources at each level is protected, in part, by asymmetries in knowledge flows from level to level.
Abstract: This paper integrates knowledge-based theories of the firm with geograph-ical studies of industrial agglomeration to produce a model that helps explain the competitive advantages enjoyed by proximate firms located in geographical clusters. We propose a hierarchy of specialized knowledge stocks at both firm and cluster levels and suggest that the comparative advantage conferred by knowledge resources at each level is protected, in part, by asymmetries in knowledge flows from level to level. The paper argues that codified component knowledge is more easily spread than firm-specific architectural knowledge. Nevertheless, over time, agglomerations may develop a cluster-specific form of architectural knowledge that facilitates the rapid dissemination of knowledge throughout the cluster by increasing the learning capacity of proximate firms and thereby conferring cluster-specific competitive advantages.
308 citations
305 citations
TL;DR: In this paper, the authors developed a relational, microspace framework to explain how social interaction affects decision making, behavior, and performance in collaborative work, and how the transfer of critical intangible resources such as trust across persons outside conventional loci of power in overlapping social networks entails an evolution of different types of trust.
Abstract: This paper develops a relational, microspace framework to explain how social interaction (in and outside of workplaces) affects decision making, behavior, and performance in collaborative work. The transfer of critical intangible resources such as trust, across persons outside conventional loci of power in overlapping social networks, entails an evolution of different types of trust. Bridging networks informally on a bottom-up basis depends on complementary social relations and the transformation of trusts based on different rationalities formed in different places and social networks. Understanding collaboration can help as much in constructing positive change as in thwarting destructive, discriminatory work practices.
304 citations
TL;DR: For example, the authors take stock of the key attributes that constitute the relational turn in economic geography, and the implications that such a turn has for three analytical tensions: the structure agency debate, the macroversus micro-unit of analysis and the geographic scale of the analysis.
Abstract: For almost two decades, economic geography has become increasingly populated with texts concerned with the ways in which social interactions between economic agents have shaped the geography of economic performance. This literature has ranged from identifying the cultural norms or conventions underpinning social relations (Storper, 1995, 1997; Asheim and Isaksen, 1997; Cooke and Morgan, 1998) to documenting the geographic extent of these relations (Scott, 1988; Dicken et al., 2001; MacKinnon et al., 2002) to analysing how different socio-economic processes can generate similar landscapes of restructuring (e.g. Massey, 1984, 1995; Glasmeier, 2000). Likewise, it has looked to disciplines outside of economic geography, most notably economic sociology with Granovetter’s (1985) notion of embeddedness and Coleman’s (1988) social capital but also the work of institutional economists (e.g. Hodgson, 1988; Lundvall, 1988), to integrate the ‘social’ into economic analysis. As a whole, this tendency represents a theoretical orientation where actors and the dynamic processes of change and development engendered by their relations are central units of analysis – an orientation we term here a ‘relational turn’ in economic geography. In this introductory article, we take stock of the key attributes that constitute this ‘turn’ by examining the context in which it has emerged, and the implications that such a turn has for three analytical tensions: the structure agency debate, the macroversus micro-unit of analysis and the geographic scale of the analysis. The four papers included in this special theme issue speak to those tensions, and by so doing, contribute to our understanding of the present limitations and potentials of a relational approach as well as suggest new directions for research. Some of the key contributions (though most certainly, not all) are reviewed here.
293 citations
TL;DR: The concept of 'modular production networks' is developed to show that spatial clustering and dispersal can be compatible, mutually reinforcing trends.
Abstract: Is the geographic trajectory of capitalism toward spatial clustering or dispersal? Recent theoretical work in the stream of ‘relational’ economic geography includes several dynamic elements that increase the importance of spatial clustering over time. This paper develops the concept of ‘modular production networks’ to show that spatial clustering and dispersal can be compatible, mutually reinforcing trends. Modular production networks encompass nodes of tacit activity linked through the exchange of codified information to create global-scale production systems. In places like Silicon Valley, industry participants rely on the benefits of proximity to help build and manage global-scale production networks.
247 citations
TL;DR: In this article, distance-based methods, such as Besag's L function (derived from Ripley's K function) and Diggle and Chetwynd's D function, were proposed to describe simultaneously spatial distribution at different geographical scales.
Abstract: We propose new methods for evaluating the spatial distribution of firms. To assess whether firms are concentrated or dispersed, economists have tradi-tionally used indices that analyse the heterogeneity of a spatial structure at a single geographic level. We introduce distance-based methods, Besag's L function (derived from Ripley's K function) and Diggle and Chetwynd's D function to describe simultaneously spatial distribution at different geographical scales. Our empirical applications consider the distribution of French manufacturing firms in the Paris area and in France generally. For some geographic levels, results show significant concentration or dispersion of firms according to their sector of activity.
TL;DR: The authors argue that firm finance is something of a "black-box" in economic geography, a largely take-for-granted aspect of production and argue that it warrants analysis, not simply to add knowledge and to form another sub-discipline of economic geography but in order to further develop and refine our understanding of uneven development.
Abstract: This paper argues that firm finance is something of a 'black-box' in economic geography, a largely take-for-granted aspect of production. Focusing on small firms, the paper argues that firm finance warrants analysis, not simply to 'add' to knowledge and to form another sub-discipline of economic geography, but in order to further develop and refine our understanding of uneven development. The paper explores the neglect of firm finance in economic geography and highlights some of the contributions of literatures in eco-nomics and business. Finally, the paper outlines three points of intersection between these disparate, usually disciplinary-bound, literatures in business, economics, and economic geographyc the place-bound nature of firms, the social character of economic relations, and third, the power relations and asymmetries inherent in financial relationships. These intersections are used to critique existing small firm finance literatures and to outline the contours of an emerging research agenda in economic geography. Copyright 2003, Oxford University Press.
TL;DR: In this paper, the authors make connections between disparate literatures to identify potential lines of enquiry and attempt to situate them within current research agendas in economic geography, by linking these issues to aspects of employment and territorial development.
Abstract: Cross-border mergerssacquisitions account for the bulk of contemporary foreign direct investment. Their significance, which is reinforcing the position of transnational corporations as the dominant institutional force in the global economy, is related to the nexus of processes implicated in international economic restructuring. Cross-border mergerssacquisitions are, therefore, important influences upon the evolution of the space economy, but this perspective on mergersacquisition activity has been neglected in academic research. This review makes connections between disparate literatures to identify potential lines of enquiry and attempts to situate these lines of enquiry within current research agendas in economic geography. On a basic level, mergerssacquisitions create new corporate geographies which represent valid objects of research in the geography of enterprise tradition. However, these corporate geographies are set within the institutional context of social, economic, and political relations. Many of the most interesting research questions derive from these contextual relations which are addressed with reference to issues of embeddedness at various geographical scales and also by linking these issues to aspects of employment and territorial development. Copyright 2003, Oxford University Press.
TL;DR: In this article, the authors analyze the processes through which business networks are constructed and maintained by manufacturers in the rapidly growing city of Mwanza, Tanzania, and highlight the importance of trust and power in shaping interfirm relations, and provide support for more agency-centered approaches to studies of industrialization in East Africa.
Abstract: This study analyses the processes through which business networks are constructed and maintained by manufacturers in the rapidly growing city of Mwanza, Tanzania. Emphasis is placed on identifying and describing the key conventions, norms, routines, understandings, identities, trust mechanisms, and sources of power managers and entrepreneurs use in pursuit of financing, a better reputation, and novel information. The findings demonstrate some of the limitations on transaction-cost based explanations for the development of industry networks, highlight the importance of trust and power in shaping interfirm relations, and provide support for more agency-centered approaches to studies of industrialization in East Africa. Copyright 2003, Oxford University Press.
TL;DR: This article used a Fourier repeat sales estimator to estimate house price indexes for 851 census tracts in the City of Chicago using a locally weighted regression, which allows price indexes to be estimated for submarkets with small numbers of sales.
Abstract: House price indexes are estimated for 851 census tracts in the City of Chicago using a Fourier repeat sales estimator. Locally weighted regression allows price indexes to be estimated for submarkets with small numbers of sales. Annual appreciation rates are higher between 1990 and 1996 in neighborhoods close to the city center with large minority populations, high concentrations of poverty, and many vacant homes in 1990. Copyright 2003, Oxford University Press.
TL;DR: In this paper, the case of foreign-owned subsidiaries attracting investment into Sweden is investigated, and the case is shown to have a negative impact on the host country economy and the Swedish economy.
Abstract: Subsidiary impact on host-country economies : The case of foreign-owned subsidiaries attracting investment into Sweden
TL;DR: The authors developed an empirical approach for generating measures of wage over or under compensation (incomplete compensation) for location attributes and devised a method to test whether migration is influenced by incomplete compensation in wages for location characteristics.
Abstract: We first develop an empirical approach for generating measures of wage over or under compensation (incomplete compensation) for location attributes. We then devise a method to test whether migration is influenced by incomplete compensation in wages for location characteristics. An intercity wage regression is estimated where fixed effects capture the impact of site characteristics on wages. We then regress the fixed effects on a comprehensive vector of site attributes, where the residuals from this stage capture incomplete compensation in wages. The derived measures of incomplete compensation are included in a standard microdata-based discrete choice model of migration. The results suggest that incomplete wage compensation for site characteristics matters in migration decisions, and the findings are consistent with tendencies toward spatial equilibrium in the distribution of population. Copyright 2003, Oxford University Press.
TL;DR: In this paper, the authors examined the changing roles of human capital in the process of the formation of industrial clusters, changes in marketing channels, and the relocation of the industrial base to less developed areas and abroad, based on a case study of a garment cluster in postwar Japan.
Abstract: This article examines the changing roles of human capital in the process of the formation of industrial clusters, changes in marketing channels, and the relocation of the industrial base to less developed areas and abroad, based on a case study of a garment cluster in postwar Japan. We found, among other things, that experience as local traders played a major role in the cluster formation. However, formal schooling assumes greater importance in later stages, when direct transactions with large customers replaced transactions with local merchants, and the international relocation of the production base became a major management issue. Copyright 2003, Oxford University Press.
TL;DR: This paper examined the question of whether foreign direct investment (FDI) creates or replaces international trade, and found that FDI creates and complements trade in 29 and 32 countries respectively for the period 1996 to 1999.
Abstract: This paper examines the question of whether foreign direct investment (FDI) creates or replaces international trade. Theoretical and empirical studies in the past have shown that FDI tends to replace trade, but more recent evidence suggests the opposite, that is, FDI creates and complements trade. We analyse the outward investment of Japan and the United States to 29 and 32 countries respectively for the period 1996 to 1999. Our analysis indicates that trade creating effect dominates on the whole, and that this effect also varies significantly across countries. Copyright 2003, Oxford University Press.
Journal Article•
TL;DR: In this article, the authors proposed that monitoring costs increase with physical distance, and hence, direct investments located further from the foreign investor's home base should be more likely formed as joint ventures.
Abstract: Our central proposition is that monitoring costs increase with physical distance, and hence, direct investments located further from the foreign investor’s home base should be more likely formed as joint ventures. Tests on a data set of Taiwanese direct investments in Mainland China provide robust support to the hypothesis. A project that was located 1000 kilometers further away was 13-17% more likely to be formed as a joint venture.
TL;DR: In this paper, the authors analyzed tax competition between two neighboring countries whose governments are tax-revenue maximizers in a two-dimensional market and found that a small country sets a lower tax than does a big country, and per capita revenue of the small country is larger than that of the big country.
Abstract: This paper analyses commodity tax competition between two neighboring countries whose governments are tax-revenue maximizers in a two-dimensional market. The results suggest three conclusions in a geographical sense. First, a small country sets a lower tax than does a big country, and per capita revenue of the small country is larger than that of the big country. Second, these two countries are subject to severer competitive pressure in the case of a more curved national border. Finally, the impact of border curvature on tax and revenue differences are always opposite in sign with the impact on tax and revenue ratios. Copyright 2003, Oxford University Press.