Dynamics in economic geography 2e druk - Ton van Rietbergen, Sierdjan Koster

1 | What is economic geography?

Silicon Valley is an example of Schumpeter’s concept of ‘creative destruction’. Com panies based in the area continued to develop. They switched from building hard ware to creating software and developing applications and search engines. The in novations that came out of Silicon Valley changed the world and led to dramatic changes in other sectors as well, including the entertainment industry (music, film), newspapers and the publishing world. Attempts to replicate Silicon Valley elsewhere in the world (Bangalore, Tel Aviv, Côte d’Azur) have so far been unsuccessful. According to Gordon Moore, one of the founders of Intel, a number of factors led to the success of Silicon Valley which can not easily be replicated:

◆ a continuous influx of highly trained engineers; ◆ an enterprise culture with no fear of failure; ◆ ample availability of venture capital; ◆ a government policy creating the right growth conditions. (Markoff, 2009)

1.3

Location, distance and networks

According to Crevoisier (1999), there are two main opposing views in economic geography: the homogenizing and the particularizing approach. These approaches are also known as nomothetic and idiosyncratic . The former, which includes clas sical and neoclassical theory, focuses entirely on finding regularity and patterning and ignores historical and spatial deviations from the theory. The latter focuses on finding explanations for the particular and unusual, embracing temporal and geo graphic deviations within the economy. As Crevoisier noted, economics is shaped by regions, not vice versa. He concluded that theories formulated by economists should ‘pass through the sieve’ of geographers and historians, since history and ge ography determine how economic theory should be applied in a specific context. Economic geography is effectively area-specific economics. In the previous section, we saw how geographic concepts such as location, distance, density and distribu tion are once again making inroads in economic science. As the World Develop ment Report 2009 ( Reshaping Economic Geography , p. 5) puts it, ‘Economic growth is seldom balanced, efforts to spread prematurely will jeopardize progress.’ In the view of economists, location is mostly a matter of physical location (costs) but also of size and agglomeration (benefits). According to the World Bank, location is of such crucial economic importance that efforts to distribute the economy geograph ically through policy are futile. This runs counter to the regional economic policy prevalent at the time of the welfare state, in which authorities actively attempted to distribute economic growth across their regions by means of growth centres, infra structure and subsidies. Clear examples are the relocation to the northern Dutch ‘periphery’ of a number of government institutions and state-run companies, such

16