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

1 | What is economic geography?

policies. In the sixth edition of his monumental book Global Shift , British geogra pher Peter Dicken (2011) demonstrated how the ratio between daily financial trans actions and actual trade rose from 2:1 in 1973 to 100:1 in 2007. While partly linked to trade and investment, these transactions are increasingly aimed at short-term profit and speculation. The figures above indicate a shift from regional to global competition. The once emblematic Dutch bicycle brands like Gazelle, Fongers, Sparta and Batavus are now all owned by foreign firms, and the Taiwanese bicycle manufacturer Giant has started manufacturing bicycles in the Netherlands. Another example is the flower and plant sector. Dutch flower growers have set up shop in Kenya and are now competing with their colleagues in the Netherlands at the Aalsmeer flower auction. Yet, this has not destroyed the Dutch floral sector. Although Dutch flower produc tion has shrunk, the Aalsmeer auction continues to be the main hub in the distribu tion of cut flowers and pot plants. The Dutch auctions have evolved from national sales hubs to international market places. This trend, with the direction of opera tional processes and the enhancement of the trade function playing an ever more important role, is also evident with respect to other agricultural products. Here too, the Dutch have successfully specialized in buying and selling and mediating in trade transactions. Globalization has driven down transaction costs, leading to in creased specialization and fragmentation of production. Naturally, this also applies to other countries and regions. In India, for example, software is being developed for Western companies on a large scale, firmly putting places like Bangalore on the map. Such international competition has led to a situation where many activities are simply no longer profitable within countries like the Netherlands. The term ‘environment’ has a broader definition in the discipline of business management than in economic geography. In business management, the environ ment comprises everything that happens outside the business and has to be taken into account in its management. It can involve developments in the foreign market, or political or legal decisions made at the European Union level. In economic ge ography, the semantic scope of the concepts ‘functional’ and ‘spatial’ is restricted to factors that influence why an economic activity is located in a particular place. In this context, Dutch economic geographer Marc de Smidt (1941-1992) defined the production environment as ‘all the external conditions that influence both the decision to locate a business in a particular place and how it subsequently func tions’ (1975, p. 48). In this definition, we recognize the two aspects that character ize economic geography, i.e. location choice and regional development. In business management, where a business decides to settle is seen as a direct consequence of its internal organization. In economics, this type of decision is viewed as resulting from a cost-benefit perspective. The economic geographer, however, views it from a territorial perspective, with the external conditions examined at different levels − local, regional, national and international (see Figure 1.4). This distinction will be discussed in more detail in Chapter 2.

20