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Economic Geography > Theorists > Flashcards

Theorists Flashcards

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1
Q

Friedman’s view on globalization

A

Because of globalization everyone can benefit. All around the world countries can embrace the global economy and enjoy the benefits of it.

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2
Q

Stiglitz’s view on globalization

A

Globalization leads to a more unequal society. It may be true that each region or country can now benefit from the global economy, it does not mean this will also happen.

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3
Q

Joseph Schumpeter

A

Creative destruction: new ideas often come at the expensive of existing ideas/situation (solutions)
“Neue Kombinationen”: innovation is about new combinations of production, resources, people, knowledge.
Inspirer for evolutionary economic geography

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4
Q

Also an element of Friedman’s theory

A

Triple Convergence:

  • Technological progress -> lower transportation costs
  • Tradability of products: there should be enough products that are affected by this (technological progress)
  • Organization of the system: system should be organized accordingly in order for this to develop positively
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5
Q

David Ricardo

A

Trade theory - Comparative advantage:
Builds on the Absolute Advantage theory by Adam Smith. Ricardo’s is a more realistic theory, assuming that one country can be overall better at producing than another. Still specialization is beneficial, but the extra output is (somewhat) lower.

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6
Q

Adam Smith

A

Absolute Advantage:
Through specialization overall output becomes higher. BUT, only if transaction costs are sufficiently low since countries should be able to trade with each other.

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7
Q

Hakanson

A

Action space of a company: describes different phases of companies going international

  1. location: production plant + head office
  2. penetration of national market: production plant, head office, and sales offices nationally
  3. export through trade agent: trading agents are started abroad
  4. foreign trading sites: establishment of sales offices abroad
  5. multinational (industrial) company: production sites abroad (FDI)
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8
Q

Raymond Vernon

A

Firms will separate activities by location, according to the stage of the product life cycle:

  1. Production domestic, exports to many countries
  2. Production starts abroad, exports to LDCs
  3. Abroad exports to LDCs, domestic exports to LDCs stops
  4. Abroad exports to domestic market
  5. LDCs export to domestic market
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9
Q

Gao and Tisdell

A

Expanded on Vernon’s theory:

  1. Emergence of MNCs in top NICs (newly industrialized countries): initially NIC depends on FDI from developed countries, but later develops own MNCs who perform FDI abroad.
  2. Large LDCs develop technological industries: proactively through selective industrial approach, rather than receiving passive product transfer from developing countries (Mazzucato: state pre-investing strategically)
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10
Q

Mazzucato

A

State pre-investing strategically to boost development of domestic industries instead of relying on FDI from other (developed) countries.

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11
Q

Dunning

A

OLI paradigm:

  • Owner specific advantages (company): intangible assets which give advantage over other firms (property rights, expretise, technology, management, etc.)
  • Location specific advantages (country): advantage over other firms throught the location of the company
  • Internalisation of ownership specific advantages (strategy): advantage of keeping the production/development of a product inhouse rather than outsourcing or partnering
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12
Q

Also Dunning

A

Two of three characterizing features of the world economy:

  1. Intellectual capital is the new key wealth creating asset
  2. Alliance/stakeholder capitalism (hierarchical capitalism) is on the rise: a system in which corporations are oriented to serve the interests of all their stakeholders
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13
Q

Freeman

A

Stakeholder capitalism: a system in which corporations are oriented to serve the interests of all their stakeholders

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14
Q

Gereffi

A

Identified five types of MNC supply chains:
1. Market: Low, High, High, Lowest
2. Modular: High, High, High, Lower
3. Relational: High, High, High, Medium
4. Captive: High, High, Low, Higher
5. Hierarchy: High, Low, Low, Highest
Complexity of transactions, ability to codify, capabilities, degree of explicit coordination and power asymmetry

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15
Q

WTO (World Trade Organization)

A

Follow the concept of Comparative Advantage (Ricardo): spur specialization through decreasing transaction costs

  • change non-tariff barriers into tarif barriers
  • lower tariff barriers
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16
Q

Hoover

A

There are three types of benefits for agglomerating (clustering):

  1. Internal returns to scale: for a firm. It may benefit from reduced production costs from agglomerating its activities on a larger scale in one location
  2. Urbanization economies: for all actors/firms in an agglomeration. Benefits enjoyed in an agglomeration like business services (marketing, legal, etc.) or better infrastructure (subway system)
  3. Localization economies: for specific firms. Specialized firms or firms operating in similar markets benefit from the proximity of skilled labour and specialized services + easy exchange of specialized know-how
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17
Q

Marshall-Arrow-Romer (MAR)

A

Localization benefits (as part of Hoover’s theory) can result from:
- Skilled labour market (Matching): if companies (of the same kind) agglomerate, it attracts more people with diverse skills. It becomes easier to match the right person with the right company.
- Input-output relations (Sharing): companies with a value-chain connection benefit from clustering since they will have easier access to each other (lower transaction costs).
- Knowledge spill-overs (Learning)/externalities: companies in the same/related industries benefit from clustering since they can tap into each other’s knowledge (ex. employees lunching together).
Externalities in general: side-effects of economic activity that are not factored into the price.

18
Q

Christaller

A

Central Place Theory:
Range: distance consumers are willing to travel to obtain a product
Threshold: number of people a firm needs to be able to access for it to make a profit or at least break even
Hexagonal shape

19
Q

Von Thunen

A

Understanding agricultural land-use
Marginal productivity
Bid Rent Curve (most important): describes the (decreasing) price development for real estate along with the distance from a central, more accessible, area (usually CBD), based on the demand of different actors.

20
Q

McCann

A

Expanded on the Bid Rent Theory:
Globalization has only further increased the effect of the bid rent concept, having implications for smaller settlements in the periphery

21
Q

Von Thunen’s formula

A 
L (land rent) = Y(p-c) - YDF
Y: yield
p: price
c: costs
D: distance from market
F: transport costs per distance per ton

Y(p-c): profit
YDF: transport costs

22
Q

Burgess

A

Extended the Bid rent curve theory to urban areas, also using concentric rings

23
Q

Hoyt

A

Extended the Bid rent curve theory with the sectoral model taking account disrupting factors like roads, channels, lakes, seas, etc. Divided city in sectors

24
Q

Harris & Ulman

A

Extended the Bid rent curve theory with the polycentrical model including endogenous and exogenous factors

25
Q

William Alonso

A

Provided a crucial extension to the bid rent curve model. Focusing on urban areas and using land use, rent, intensity of land use, population and employment as a function of distance to the CBD of the city as a solution of an economic equilibrium for the market for space

26
Q

Brueckner, Thisse, Zenou

A

Added to the bid rent curve theory by explaining why in some cities the centers were flocked by rich, but in others by poor people. They introduced “amenities”.
Two types:
- Exogenous: natural (topographical features like rivers, hills, etc.) and historical (monuments, parks, buildings, etc.)
- Endogenous: modern (restaurants, theaters, etc.) these depend on economic conditions.
People are attracted most to exogenous amenities and rich people can pay the bid rents for them (endogenous amenities will then automatically follow).

27
Q

Marshall

A

Principles of economics
Humans naturally want to optimize.
Specialization leads to optimization, but also to standardization.

28
Q

Alfred Weber

A

Location theory:
Focused on the transport costs of resources and finished products (isotims and isodapanes).
Recognized two types of resources:
- ubiquities (are available everywhere): production is located at or near the market
- localized resources (available at certain locations): production typically happens near the resources. (two types: those that lose weight, and those that don’t)

29
Q

D.M. Smith

A

Location theory:

Made diagrams/graphs based on cost and profit curves to show which locations are most profitable

30
Q

Losch

A

Central Place Theory: deeper and sharper form of Christaller’s theory.
(Triangle and square shapes more profitable than hexagonal)
Loschian landscape adjusted to topographical factors and to specialization.

31
Q

Hotelling

A

Showing (through icecream vendors) spatial competition can also lead to clustering. Duopolistic market form.
Implications:
- Some customers will have to travel further.
- Aggressive sellers enjoy first-mover advantage.
*Seems to contrast with Christaller and Losch, but in the end they are complementary. C/L larger scale, Hotelling smaller scale.

32
Q

Krugman

A

New Economic Geography (NEG): makes clustering part of the model (endogenous) by explaining attractiveness of city to workers:
- more choice in jobs
- more variety in general (introducing love-of-variety)
Assumption: people love variety so much, they are willing to accept (slightly) lesser wage to achieve it

33
Q

Bosworth & Venhorst

A

What’s in it for the rural? Addressing (un)balanced growth between urban and rural regions.
2 regions nearby and thus connected, not homogeneous. Important element is commuting.

34
Q

Porter

A

Porter’s Diamond: adds Rivalry to the three agglomerated benefits (increasing returns to scale, urbanization economies, localization economies)
Rivalry: competition, being able to see what your competition is up to will also help you gain advantages/more productivity.

35
Q

Myrdal

A

Cumulative causation: describes the process of self-reinforcing growth.
Important elements:
- Spread effects: growth in one region leads to growth in nearby regions (trickle down effect)
- Backwash effects: growth in one region pulls capital and resources away from other regions

36
Q

Perroux

A

Growth pole theory: proposes cumulative causation (or growth pole) may happen following the developments of a/more key company/companies. Special economic zones, tax breaks, try to trigger this

37
Q

Herbert Simon

A

Models of Man:
people do not have all information and otherwise, people can’t process all information (bounded rationality)
Entrepreneurs are satisficers instead of optimizers. We work with the information we have which is limited bec. geography. We then settle with what we find.

38
Q

Allan Pred

A

Behavioural Matrix

39
Q

Pellenbarg, Meester, Koster

A

The entrepreneurs’ mental maps:

Confirmed neighborhood effect

40
Q

Boschma

A

Related diversity: it’s not about being (too) diverse or (too) specialized, but about being able to develop based on the routines that you have, into diverse related activities for economic growth.

41
Q

Steven Keppler

A

Spinoff model of clustering: clustering without agglomeration benefits.
Company with better routines has more spinoffs that survive longer. Spinoffs will remain in the same geographical area and therefore in that region there will be more clustering as opposed to a region with a company with less spinoffs.

42
Q

Richard Florida

A

Jobs follow people, people from the creative class:
Creative class spurs economic growth
Urban growth should therefore be fostered by talent, technology, tolerance (3 T’s)
Attractive places outperform other places (Gerard Marlet 2009)

Economic Geography (2 decks)

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