Savitri Era of those who adore, Om Sri Aurobindo and The Mother.

Tuesday, October 14, 2008

Geography of Difference vs. Geography in Development

I am most fond of Krugman's pieces on economic geography, in particular on cities and the economic rationales for clustering. He almost single-handedly resurrected the importance of "location theory," an all-important but previously neglected branch of economics. Here is the best summary piece of Krugman's work in this area. I believe this work will continue to rise in influence.
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The Role of Geography in Development
Paul Krugman
The New Economic Geography: Theoretical Principles ......... 2
Geographical Theories of the World Economy ......... 12
Regional Inequality within Developing Countries ........ 17
Policy and Primacy ........ 21
Chance and Necessity ....... 23
Geography and Policy......... 27
References..... 33
Abstract
The recent surge of interest in the role of economic geography in economic development has divided into two seemingly contradictory approaches. One approach emphasizes the role of inherent features of the landscape in shaping development patterns. This paper, however, mainly surveys the alternative approach, which stresses how the tension between "centripetal" forces, such as forward and backward linkages in production and increasing returns in transportation, and "centrifugal" forces, such as factor immobility and land rents, can produce a process of selforganization, in which more or less symmetric locations can end up playing very different economic roles.
Such processes can occur at several different levels. The paper discusses "geographical" models of the division of the world into industrial and nonindustrial countries, of the emergence of regional inequality within developing countries, and of the emergence of giant urban centers. The paper also argues that the conflict between "self-organizing" and "predestination" approaches to economic geography may be more apparent than real: natural features matter so much largely because they act as seeds around which cumulative processes crystallize, so that while geography may have been destiny in the past, it need not be in the future.
Finally, the paper discusses policy briefly, mainly in terms of why it is so hard to draw policy conclusions from these models.
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