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

1.3 | Location, distance and networks

as PTT-NL, the forerunner of KPN and PostNL, or to the southernmost region of South Limburg, such as part of Statistics Netherlands and the largest pension fund in the Netherlands (ABP). This policy was directed from the central government in The Hague. Nowadays, spatial geographic economic policy is delegated to local and regional authorities, such as provinces and municipalities. The national authorities concentrate entirely on stimulating the top industries in order to reinforce or main tain the international competitiveness of the Dutch economy. In his 2001 article ‘Distance Still Matters: The Hard Reality of Global Expansion’ and his 2011 book World 3.0. Global Prosperity and how to Achieve It , Professor of Global Strategy Pankaj Ghemawat drew attention to the role of distance, a factor much underrated by economists. Contrary to O’Brien and Friedman, Ghemawat did not believe the rise of the internet had drastically changed the importance of dis tance. Rather than restricting the scope of the concept to physical distance, he dis tinguished four dimensions: geographic, cultural, administrative and economic dis tance. According to his calculations, a 2400-km increase in the geographic distance between two countries will bring trade to an almost complete standstill. Essentially the same point was made by Leamer and Storper (2001), who pointed out that inter net hardly affected the geographic clustering of economic activities. Ghemawat stat ed that cultural and administrative distance had a stronger effect on international trade than geographic distance. For example, companies in countries with a colonial past are ten times more likely to have trading partners in former colonies than in countries without such ties. Having a common currency boosts trade by 340% and a regional trade block leads to 330% growth in trade. Ghemawat’s conclusion was that if the problems caused by these four types of distance are taken into account, indus trial globalization suddenly becomes far less attractive than is generally thought. Summarizing the strength of economic geography, prominent economic geog rapher Ron Martin said it applies insights from economics, political science, soci ology and psychology to what actually takes place in physical space (Martin, 1999). In contrast to economists and ‘geographic economists’, economic geographers view this physical space as a living space: the actual locations of economic activities and the interaction between them. However, this does not mean current economic ge ography is restricted to describing the concrete economic reality, as it used to be. Like economic science, it focuses on giving explanations, and in doing so it does not refrain from utilizing abstract concepts and theories. An example of this can be found in the article ‘Proximity and Innovation’ by economic geographer Ron Boschma (2005). He argued that geographic distance is neither a necessary nor a sufficient condition for economic renewal (i.e. innovation), and that this is mainly determined by cognitive and organizational proximity. While such forms of prox imity can potentially replace the effect of geographic proximity, they often go hand in hand. However, Boschma also cautions against too much proximity, whether geographic, cognitive, organizational, social or institutional, which can be equal ly harmful to innovation. In this kind of scenario, people are too close to be able


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