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

1 What is economic geography?

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Introduction

At its most succinct, economic geography asks the question: ‘What economic ac tivity happens where and why does it happen there?’ Economic activity is viewed from a broad perspective. Global and local imbalances in wealth distribution are typical topics of economic geography, but spatial differences in less obviously eco nomic indicators, such as well-being, happiness and voting outcomes, also fit under the umbrella of economic geography. Economic geographers explain spatial imbal ances by looking at the distribution of raw materials and factors of production such as labour, capital and land, and associated spatial differences in costs and benefits. Factors affecting the accessibility of regions, such as harbours and roads, are also important, as are the scale and composition of industrial activity. The productivity of a region, and therefore its ability to generate income, varies per industrial sector. In addition to these solidly economic factors, cultural, social, political and natural factors are also taken into account when trying to understand spatial disparities in economic activities. In this case. economic geography is about more than produc tion, income and jobs – it takes a broad view on development. How do these spatial disparities come about? To understand them, economic geography takes the decisions of three important economic agents as its starting point: people , firms and governments . Spatial differences in socio-economic devel opment are driven by the choices and decisions of people, firms and governments. Knowing this, there are two main ways in which spatial disparities can be under stood. Firstly, spatial disparities derive from the unequal distribution of people and firms across space as a result of decisions taken by people and firms. Since univer sities are typically located in cities, this is where you will find students. This process is known as spatial sorting . Secondly, spatial differences are driven by inherently regional characteristics including the demography of a place, its culture and also already existing industries and firms. To illustrate, people are more likely to start a business if there are already many other entrepreneurs. Prospective business own ers can learn from the entrepreneurs in the region, but it also shows that entre preneurship is an accepted labour market choice. If others do it, I might as well! Summarizing, the spatial context in which people, firms and governments find themselves, influences their decisions. Spatial sorting and the impact of the context on decisions tend to be mutually reinforcing.

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