Session 2: Industrial Location and Clusters

Question 1

What is the thesis of Industrial Location Theory?

Answer 1

Manufacturing plants tend to locate where total transportation costs were minimized, meaning close to energy and raw material sources and to transportation networks. The ton-mile had to be minimized.

Question 2

What are temporal clusters?

Answer 2

This refers to the varying timeframe of which clusters may exist. For example, professional gatherings like conferences or conventions, or project-based forms of working. These are often associated with being shorter in timeframe, but more intense in interaction

Question 3

What is tacit knowledge, and how is it different from codified knowledge?

Answer 3

Tacit knowledge is about know-how and know-who, it cannot be easily told and is based off personal experience. Codified knowledge is about know-what and know-why, and is easily communicable through instruction

Question 4

What are the 6 ways in which tacit knowledge/untraded interdependencies flow through a cluster?

Answer 4

1. Staff turnover – employees will work at many different firms in their career, and thereby circulate their knowledge through those firms
2. Shared suppliers – know-how will leak from suppliers who want to give the best service possible, even if it means breaking confidentiality agreements
3. Firm births/deaths – every new startup will bring together a new mix of employees
4. Informal collaboration – competition between firms, and collaboration in dealing with regulations
5. Gossip – interpersonal networking
6. Observation – new technology can be imitated and tested, leading to near simultaneous apperance of innovation

Question 5

What is a ‘learning region’?

Answer 5

A region where innovation is continous, there are high levels of trust between institutions and an effective circulation of knowledge

Question 6

What are the 8 types of clusters? Briefly explain their characteristics and provide examples

Answer 6

1. labor-intensive craft production – sweatshops, migrant labor, subcontracting. New York.
2. design-intensive craft production – high-quality disintegration production. ‘Third Italy’.
3. high-tech innovation – computers and tech, flexible high-skilled labor markets, not much industrialization or unionization. Silicon Valley.
4. flexible production hub-and-spoke – one or more large central firms surrounded by many suppliers (just-in-time production). Boeing in Seattle and Toyota in ‘Toyota City’
5. production satellite – externally owned production facilities, clustered as result of labor market/financial incentives. Global South.
6. business service – APS in global cities. London.
7. state anchored – clustered around gov’t facilities like universities, military research centers, or gov’t offices. Brussels/Washington D.C.
8. consumption – retail or tourism related, centered around amenities. Any tourist city, Paris, Crete etc…

Question 7

What are the 7 limitations of economic cluster studies?

Answer 7

1. spatial scales are not clear
2. romanticizing collaborative aspects of clusters but overlooking the associated profit-seeking and unequal power relations
3. little explanation of how clusters originate
4. overprioritizing the local, clusters are embedded in larger global geographies
5. underemphasizing entrepreneurship the evolution of clusters
6. overlooking of cluster interaction –> clusters can evolve based on relations with other clusters
7. use of buzzwords and fuzzy concepts with stretched meaning

Question 8

What are the factors that determine in which region a cluster might emerge?

Answer 8

“sociocultural fabric” – (i.e. business practices)

“Institutional thickness” – presence of other organizations that are part of the regional economy, such as educational, political or economic institutions

“pro-growth economic cultures” – the presence of many firms/institutions who cooperate and seek to promote regional growth, are able to collectively bargain for resources at supra-regional level, and all have a common sense for enterprise

Question 9

What does the term vertical (dis)integration refer to?

Answer 9

A firm that is vertically disintegrated keeps only the most important activities within the firm, but outsources any non-core activities

Question 10

What are untraded interdependencies?

Answer 10

This term refers to the sociocultural dimension of clusters, including things such as: gossip, information exchange, deal-making, trust, reputation. These tend to be non-contractual, and based on informality. Crucial for the transfer of tacit knowledge