Download Economic Geography - Department of Geography, HKU

Economic Geography
I. Introduction
II. Objectives
III. Major Topics
IV. Format
V. Reading
VI. Requirements
VII. Office hours
VIII.Important deadlines
Paul Krugman’s Discovery of
New Economic Geography (NEG)
NEG explains agglomeration "as the outcome of
the interaction of increasing returns, trade costs
and factor price differences.” If trade is largely
shaped by economies of scale, as Krugman argues,
then those economic regions with most production
will be more profitable and will therefore attract
even more production. Instead of spreading out
evenly around the world, production will tend to
concentrate in a few countries, regions, or cities,
which will become densely populated but also have
higher levels of income.
World Development Report 2009



“The best predictor of income in the world today is
not what or whom you know, but where you work”
(p. 1);
“Location remains important at all stages of
development, but it matters less for living
standards in a rich country than in a poor one” (p.
2);
“This Report advances the influence of geography
on economic opportunity by elevating space and
place from mere undercurrents in policy to a major
focus” (p. 3).
Office Hours
Monday
2:00 ~ 3:00 pm
Thursday 2:00 ~3:00 pm
Important Deadline
8 April –Essay on due
Web: http://geog.hku.hk/undergrad/geog2094
User ID:
GEOG2094
Password:
EH102
(Both ID and password are case-sensitive)
Teaching Assistant
To Be Announced
E-mail:
Mail box: , 3/F Hui Oi Chow Science bldg
Office: G-01B, Hui Oi Chow Science bldg
Office hours: TBA
I.
Nature of Economic Geography
*
*
- Location/Spatial Variation of
Economic Activities
- Patterns and Processes
Important questions asked
- Where and what
- Why and How
- What-to-do
Stages of enquiry
- Identification/Description
- Analysis/Explanation
- Prediction/ Prescription
* Approach
- Inductive: Observation  Sorting out facts
 Theory
- Deductive: Hypothesis  Testing  Modification
 Theory
Fundamental Concepts
Economics
Primary
Secondary
Economy Tertiary
Quaternary
Quinary
Economic
System
Geography
Place
Location
Distribution
Spatial Association
Interaction
Market/Capitalist
Command/Socialist Planned
Subsistence/Traditional
Mixed
- Primary: extraction/ manipulation of natural
resources to provide food, energy, etc.
- Secondary: processing of materials into saleable
products, increasing the value by
changing form.
- Tertiary: perform services, produce no tangible
goods
- Quaternary: acquiring (e.g. research)
processing (e.g. office)
transmitting (e.g. media)
knowledge
- Quinary: control/ decision making
The categories of economic activity
I.
Location
* Position
* Site
* Situation
II. Spatial Relation
* Distribution: Pattern - Description
* Association
Explanation
* Interaction
 Laissez-faire capitalism: free market forces as invisible
hands.
 Adam Smith (1776) The Wealth of Nations.
 Keynesianism: government intervention—monetary and
fiscal policy is necessary to stabilize the economy and
maintain employment.
 John Maynard Keynes (1936) The General Theory of
Employment, Interest, and Money.
 Neoliberalism: economies automatically self-adjust to full
employment; use of monetary and fiscal policy to raise
employment merely generate inflation.
 Milton Friedman (1962) Capitalism and Freedom. Chicago:
University of Chicago Press.
Neoliberalism
 An economic and moral philosophy, idea, or belief that all
governments should liberalize, deregulate, and privatize;
 A theory of political economic practices to enhance human
well-beings by liberating individual entrepreneurial
freedoms and creating an institutional framework to facilitate
free markets, free trade, and secured private property rights;
 The state is to guarantee the functioning of markets and to
create markets if they do not exist, but the state should not
intervene in markets and should not venture;
 Deregulation, privatization, and withdrawal of the state from
many areas of social provision;
 The “hollowing out” of the state.
Neoliberalism: A historical coincidence?
UK: Margaret Thatcher (May 1979);
US: Ronald Reagan (1980);
China: Deng Xiaoping (1979):
Readings for the Lectures
Introduction
- Stutz & Warf (2007) Chpt. 1
- Healey & Ilbery (1990) Chpt. 1 & 2
Primary sector
- Stutz & Warf (2007) Chpts 4 & 6
- Huke (1985) “ The Green Revolution”
Secondary Sector
- Stutz & Warf (2007) Chpts 5 & 7
- Articles by Scott (1988), Eng (1997), Sit (1998)
Tertiary & Quaternary
- Healey & Ilbery (1990) Chpt. 7 & 13
- Articles by Allen (1988), Yeh (1997), Semple (1985)
Global Economic Development
- Stutz & Warf (2007) Chpt.14
- Articles by Seers (1972) and chapters in de Souza & Foust (1979)
II. Ideology & Explanation in Economic Geography
 Ideology: systematic body of

concepts, assertions, beliefs
An Example
Problem: A town in recession
Consultant A:
Tax
Union ×
Conservative
Tax
Interventionist
Consultant B:
Consultant C:
Change political economy
Radical
- Neo-classic economic perspective
* Individual freedom
* Free market operation
demand – supply
* Maximize profit for individual
* Efficiency rather than equity
- Liberal (Interventionist)
* role of the government to coordinate
individuals
* planning / intervention in market
* maximize well being for society
* compromise efficiency with equity
- Radical (Marxist)
* class analysis
* fundamental change of the entire social
system
* maximize well being for the poor
* equity, social justice rather than efficiency
II. Ideology & Explanation in Economic Geography


Scholars in different perspective may offer
different explanation/ suggestion on the
same issue.
Students must be alert and critical of any
explanation in Economic Geography.
III. Changing Perspectives in Economic Geography
I. Infancy
II. Before 1950
idiographic, descriptive
III. 1950~1970
nomothetic, model-building
* Neo-classic economic theory
* Location analysis
* Common assumptions
* Criticism
Models in Economic Geography
A simplification of the reality of the world into cause-effect relationships
Could be a theory, law, hypothesis, relation, or an equation
Type of Models:
Descriptive: stylistic description of reality
Normative/Deterministic: what might be expected to occur under certain
stated conditions (what if)
Common assumptions usually made:
There exists an identifiable order in the real world
People are rational decision-makers reacting in the same way
People have complete knowledge and seek to maximize profits
Free market competition/a uniform landscape
Problems:
People do not have perfect knowledge and are not rational
Firms, shops, producers/consumers are treated as passive beings independent
of cultural and political situations
Static, mechanic, do not take changes over regions and through time into
account
III. Changing Perspectives in Economic Geography
After the 1970s
Behaviouralism
Humanism
Political Economy – Institution
Social Capital –Embeddedness/Culture
Neo-Marshallianism/New Regionalism
Marshallianism: skilled labour, interfirm relations, technological
infrastructure
Traded Interdependence: supply chains, interfirm transactions,
agglomeration economies
Untraded Interdependence: local customs, trust and cooperation, social
and cultural convention, political/institutional environment
Washington Consensus: John Williamson (1989)
ten policy recommendations:
1.Fiscal policy discipline;
2.Redirection of public spending from subsidies toward broadbased provision of key pro-growth infrastructure investment;
3.Adopting moderate marginal tax rates;
4.Interest rates determined by the market;
5.Competitive exchange rates;
6.Trade liberalization;
7.Liberalization of inward foreign direct investment;
8.Privatization of state enterprises;
9.Deregulation: abolition of regulations that impede market
entry or restrict competition, and
10.Legal protection of private property rights.