ECONOMIC GEOGRAPHY AND ITS APPLICATIONS - OUTLINE OF THE COURSE

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1 ECONOMIC GEOGRAPHY AND ITS APPLICATIONS - OUTLINE OF THE COURSE TONI AHLQVIST PROFESSOR REGIONAL DEVELOPMENT AND POLICY GEOGRAPHY RESEARCH UNIT Aims of the course ECTS Credits: 5 ECTS Learning outcomes: The course approaches economic geography as applied to the perspectives of regional development and policy. The aim of the course is to familiarize the student with current issues and related theoretical debates in economic geography. After the course, student is able to outline the main features of the central theories in economic geography, and to apply these theories in the context of regional development and policy. Contents: The literature examines economic geography from varied angles, with an emphasis on regional development and policy. In the essay, students will deepen the content of the lectures through the means of theory and practical case studies. Course mode: 10 hours of lectures, article package, study diary, lectures are obligatory An essay and a seminar (the task can be shared with two students) Target group: Obligatory for students of the regional development and regional policy, for others voluntary. Study materials: Lectures and article package, materials can be found from Noppa Assessment: Study diary, essay, seminar presentation Study diary: Study diary should be finalised and returned to Toni Ahlqvist via (preferably pdf) at 27 October Grade: 1 5 1

2 Study diary Study diary is a collection of written synopses, syntheses and reflections of a lecture series Collection of student s reflections Development of analytical skills The diary replaces the examination Preparing a solid study diary Listen the lectures, read the materials and articles, and make notes during the lectures Write a first version of the diary text quite briefly after each lecture Diary contains two types of material Lecture depictions and reflections: about two pages of text of each lecture (about words) A case study: About 500 words on a news topic, perhaps on a regional development or some economic issue The diary will be graded on the scale of 1 to 5 Return the diary latest on 27 October 2017 Essay and a seminar As practicals the students will prepare essays on topics related to economic geography Primarily done as pair work there should be some essays The practicals are run by Jonne Hytönen Two important dates: 4 October (IT138): detailed instructions for completing the essays; selection of topics 8 November (YB210): seminar when the essays are presented (presentation about minutes + 5 minutes of discussion) The instructions for completing the essays will also be put to Noppa 2

3 Lecturers and lecture themes 1. Toni Ahlqvist: Traditions in economic geography, 20 September , lecture room TS Kaj Zimmerbauer: On regional competitiveness, 21 September , lecture room IT Heikki Sirviö: Bioeconomy and the Finnish state, 26 September , lecture room TS Heikki Sirviö: State transformation and economic geography, 27 September , lecture room TS Tuomo Alhojärvi: Political economy: Alternative perspectives on economic geography, 28 September 2017, , lecture room IT106 Article package Lecture 1: Barnes, T. (2001). Retheorizing economic geography: from the quantitative revolution to the cultural turn. Annals of the Association of American Geographers 91(3), Lecture 2: Allmendinger, P., Chilla, T. and Sielker, F. (2014). Europeanizing territoriality - towards soft spaces? Environment and Planning A 46(11), Lecture 3: Walker, J. (2015). The creation to come: directing the evolution of the bioeconomy. In Marshall, J. & Connor, L. (eds.) (2015). Environmental Change and the World's Futures: Ecologies, ontologies and mythologies, Routledge, Sydney. Lecture 4: Ahlqvist, T. & Moisio, S. (2014). Neoliberalisation in a Nordic state: from cartel polity towards a corporate polity in Finland. New Political Economy 19:(1), Lecture 5: Gibson-Graham, J.K. (2008). Diverse economies: performative practices for 'other worlds'. Progress in Human Geography 32 (5),

4 LECTURE 1: TRADITIONS IN ECONOMIC GEOGRAPHY ECONOMIC GEOGRAPHY AND ITS APPLICATIONS 2017 (792301A) TONI AHLQVIST PROFESSOR REGIONAL DEVELOPMENT AND POLICY GEOGRAPHY RESEARCH UNIT Contents of the lecture Key traditions in economic geography Neoclassical economic geography Political economy Regionalisation Flexible accumulation Cultural economy and cultural economic geography Uneven development and economic geography On the notion of uneven development Spatial division of labour 4

5 KEY TRADITIONS IN ECONOMIC GEOGRAPHY What is economic geography? Economic geography grew less out of concerns by economists to generalize and theorize, than the concerns of geographers to describe and explain the individual economics of different places, and their connection to one another. (Barnes & Sheppard 2000: 2 3, italics added) Economy is not just a vacuum depicted by simplifying econometric models Economic transformations are always also spatial transformations These transformations are realised unevenly, and they manifest in different ways in different regions Economic geography (EG), as a research field, is methodologically pluralistic (Barnes & Sheppard 2010) Not just about generalising econometric models or statistical analyses, but also qualitative interpretation that are sensitive towards local contexts EG is driven by a pursuit to understand variations of economy in space and time 5

6 Organisation of a production system PRODUCTION REGULATION CIRCULATION DISTRIBUTION CONSUMPTION AND DEMAND Applied from Dicken & Lloyd (1990) The key traditions of economic geography and their relations Cultural economy Knowledge, network POSTFORDISM Regionalisation Flexible accumulation Endogenic models based on a notion of evolutionary region, New regionalism Structuration, evolution Political economy FORDISM Neoclassicism New economic geography Ahlqvist

7 Neoclassical economic geography: location theory Tradition is based on a rationalistic worldview Mathematical modelling; rules of geometry; doctrine of a perfect market information; homo economicus Concept of utility that applies the principles of physics and energetics; maximisation of attainable advantages Two presumptions concerning space and time 1. Presumption of equilibrium: It is presumed that the spatial functioning of the economy strives towards equilibrium, that is, levelling of the regional differences Partial equilibrium: Alfred Weber s model of minimisation of prices General equilibrium: Walter Christaller s central place theory 2. Logical temporal conception: Time is active only as a variable of the model; historical time does not affect the model; model is not evolutionary, that is, it does not change according to temporal steps; time is an expression of deep abstract forces (Storper 1988: 166) Key proponents of neoclassical tradition German scholars Johann Heinrich von Thünen (1826), Alfred Weber (1909), Walter Christaller (1933) and August Lösch (1940) American pioneers of regional science and spatial analysis Walter Isard (1956) and William Alonso (1964) Examples of location theory: central place theory Walter Christaller s central place theory based on hexagons Finnish application of central place theory Capital city Regional centre County centre Local centre Dicken & Lloyd 2010 Rikkinen (1994) and Viitala (1970) cit. Jauhiainen & Niemenmaa 2006: 108 7

8 Examples of location theory: geometric space economy Alfred Weber s location triangle Walter Isard s geometric space economies The impact of unevenly dispersed population of market regions The structure of land use in agriculture Barnes 2001 Isard (1956) Location and space economy Neoclassical EG: new economic geography Neoclassical theory experienced a renaissance in 1990s American economist Paul Krugman published his take on neoclassical theory; he called it new economic geography (Krugman 1991, 1995, 2000; Fujita et al. 2000) New economic geography is a variation of classical location theory Krugman perceives economy as a system based on multiple equilibria In the system regions represent spikes of equilibrium, yet dependent on particular development paths Krugman combines classic location theory with the theory of international trade Theory has raised criticism among geographers (e.g. Martin & Sunley 1996; Martin 1999; Sheppard 2000) Eric Sheppard s four critiques (2000) Conception of space: space is a background factor, a container (Taylor 2003); actors in the container are perceived as in even relationships with each other; theory does not consider the multi-layered centre-periphery structures of geographical reality Conception of time: theory presumes that regional system has an internal strive towards equilibrium in the long run; in geographical reality the equilibrium state is an anomaly and dynamic disequilibrium is the constant Interaction between economic sectors: mainstream economic theory is based on an idea of monopolistic competition in a single economic sector (every company represents a separate sector ); in geographical reality the situation is not this simplistic Economic actors: the motives of the actors are presumed to be universal and guided by perfect market information 8

9 The key traditions of economic geography and their relations Cultural economy POSTFORDISM Regionalisation Flexible accumulation Knowledge, network Endogenic models based on a notion of evolutionary region, New regionalism Structuration, evolution Political economy FORDISM Neoclassicism New economic geography Ahlqvist 2008 Political economy Rooted in the 1970s The growth period started after the WWII stumbled into crisis because of negative externalities: rapidly accelerated urbanisation and pollution Oil crisis in 1970s Samir Amin (1976): core capitalism/peripheral capitalism Because of the politico-economic structure of global capitalism, the agglomeration benefits of core regions are more sustainable than temporary benefits of peripheral regions Observation 1: Economic system in geographic space is not based on long term drive towards equilibrium but on recursive chronic disequilibrium According to Edward Soja (1980: 107) the disequilibirium is an outcome of a systemic tension between differentiation and equalization Some regions are production centres and main market regions, some regions have the function of competence reserves and supplement markets Observation 2: Economy is not about formal logic but socio-spatial activity Marx s model of capital circulation Towards research approaches that analyse variations of capitalist system in space and time Relevant geographical applications David Harvey (1982): geographical limits of capital, spatial fixes Michel Aglietta (1979): regime of accumulation, a social division of labour in the regional economy Walker & Storper (1981): model of industrial evolution; new logic of industrial location; constructed production factors 9

10 Examples of political economy: models of circulation of capital Production factors (P) Circulation of capital M P C M Production of commodities (C) Sphere of production Money (M) (surplus, profit M ) Turnover of commodities (C) Sphere of circulation Dicken & Lloyd 1990, 356 Adapted from Walker & Storper 1981 and Dicken & Lloyd 1990, 356 The key traditions of economic geography and their relations Cultural economy Flexible accumulation Knowledge, network POSTFORDISM Regionalisation Endogenic models based on a notion of evolutionary region, New regionalism Structuration, evolution Political economy FORDISM Neoclassicism New economic geography Ahlqvist

11 Regionalisation Deepening of the regional aspect in 1980s Several rising and declining industrial regions did not seem to fit in the narrow view of neoclassical theory Research on localities in 1980s and 1990s Locality is a space in which most of the citizens live their daily working and consuming lives (Cooke 1989: 12) CURS (Changing Urban and Regional Systems) initiative by British government in order to study regional changes in the British industry Debate on socio-spatial structuration in 1980s Between Anglo-Saxon human geographers and sociologists Geographers: David Harvey, Nigel Thrift, Doreen Massey & Derek Gregory Sociologists: Anthony Giddens, John Urry & Scott Lash Debate was crystallised in a book Social Relations and Spatial Structures (Gregory & Urry 1985) Michael Storper (1988): analysis of small events in big structures Regional paths, meso-level analytics Economic geography should analyse historically-specific and geographically-specific systems of agency (Storper 1988) The key traditions of economic geography and their relations Cultural economy Knowledge, network POSTFORDISM Regionalisation Flexible accumulation Endogenic models based on a notion of evolutionary region, New regionalism Structuration, evolution Political economy FORDISM Neoclassicism New economic geography Ahlqvist

12 Flexible accumulation In the mid-1980s there was an intensive discussion on reorganisation of industrial production A source of this debate was a book Second Industrial Divide by Piore and Sabel (1984) that characterised a theory of flexible specialisation through an analysis of textile industry in so-called Third Italy. Allen J. Scott (1988) and David Harvey (1989) coined the thesis of flexible accumulation Automation leads to reorganisation of productions; smaller, tailored production batches; decentralisation Allen J. Scott (1988): new industrial spaces Examples: the third Italy, Silicon Valley, and Science City in Paris New industrial space are transaction-intensive centres of human labour and social activities (Scott 1988: 109) Subcontracting, networking, integrated coordination of production Granovetter (1992): embeddedness Social networks based on personal relations Economic activity is part of society Notion of bounded rationality Regional advantage (Saxenian 1994) Comparison of Route 128 in Massachusetts and Silicon Valley in California Flexible regionalisation Agglomeration economies, industrial districts, cluster theory New regionalism Innovative milieu, learning region Ideal models of regional value chains and networks Services Services Marketing Marketing Actor providing products and services to a central actor Production Development Production Development Actor network Central actor Research Research Vertical integration Control of several phases in value chain, for example value chain of central actor Vertical disintegration Specialisation in certain phase in value chain, for example development for central actor Horizontal integration Network of regional actors that focus on specific regional products Horizontal disintegration Specialisation in production supporting production for e.g. central actor or other actor (subcontracting) Ahlqvist

13 The key traditions of economic geography and their relations Cultural economy POSTFORDISM Regionalisation Flexible accumulation Knowledge, network Endogenic models based on a notion of evolutionary region, New regionalism Structuration, evolution Political economy FORDISM Neoclassicism New economic geography Ahlqvist 2008 Culture, economy, capitalism Capitalism is a cultural practice, or at least it has cultural sides, and... these vary between places.... Capitalism too is carried into places by bodies. Indeed, politically it is important that this is recognized, in order to avoid that imagination of the economy (or the market) as a machine, a figuring which renders it unavailable to political debate. Doreen Massey

14 Cultural economy and cultural economic geography A heir of cultural turn in 1990s human geography Two focal points Practices, that is, activities of humans, collectives, organisations, companies and institutions perceived in societal settings and conditioned by differing knowledge perspectives Understanding economic phenomena as cultural phenomena Research objects were simultaneously spatial, economic and cultural Cultural economy (Amin & Thrift 2004) Cultural economy perceives economy as an outcome of social and cultural processes (Amin & Thrift 2004) Dimension: passions, moral sentiments, knowledge, evolution, power, symptoms Narration of economy and economic subjects Cultural economic geography (esim. Gertler 2003) Rediscovery of the social meanings of production Primacy of sociality in construction of actor networks and regional culture (e.g. Silicon Valley) Regional culture based on learning Conventions, routines, habits Evolution of production structures Path dependency, path creation UNEVEN DEVELOPMENT AND ECONOMIC GEOGRAPHY 14

15 Uneven development and capitalism Geographical difference is not simply an expression of the discrete qualities of particular places, of inherited differences among territories (Brenner 2009: 29) Capitalism in a chronically uneven system which connects regions in a see-saw movement The movement is an outcome of uneven development: Deep structures that have been moulded in the long evolution of capitalism, e.g. centre-periphery, urban-rural Dynamic dialectical processes: centralisation/decentralisation, equalization/differentiation, inclusion/exclusion Creative destruction (Schumpeter) Spatial fixes (Harvey) Uneven development is an outcome of multiple actors, such as state, enterprises, and different organisations Applied from Brenner 2009 Center-periphery structure in capitalism Dicken & Lloyd

16 Globalisation and uneven geography Florida 2005 Spatial division of labour Classic argument: Doreen Massey (1978). In what sense a regional problem? Regional Studies 13, Geographical development is uneven in dual sense Uneven according to different levels of attractiveness of certain locales and differing economic system Uneven according to welfare indicators, such as unemployment or GDP Geographical unevenness is historically relational It is an outcome of differing geographic distribution of production factors: population, raw materials, transportation costs It is an outcome of changes in the production process: technological innovations, social innovations Geographical unevenness varies according to industrial sector or ownership structure Spatial division of labour: the variation in the way in which different forms of economic activity incorporate or use the facts of spatial inequality in order to maximise the profits. (Massey 1978) Massey

17 Spatial division of labour and rounds of investment Gregory 1989 Summary Key traditions in economic geography Neoclassical economic geography Political economy Regionalisation Flexible accumulation Cultural economy and cultural economic geography Uneven development and economic geography The notion of uneven development Regional differentiation Spatial division of labour 17