Lost on the road to Wigan regeneration

The Spatial Economy
May 19, 2000

It is always a rewarding experience to review a book that takes up a subject with such strong antecedents in economic geography and also one that addresses such a fundamentally important subject. If we can understand the why, the how and the patterning of economic activity globally, regionally and locally then we can be far more confident about how we solve problems of global and regional inequality, such as problems of deprivation in American cities, rural India and Liverpool.

Sadly this book does not cast any light on the how and why of patterns of economic activity in space and time. This is a huge disappointment. It consists of 367 pages of formal economic analysis, a discourse on core and periphery, the size of cities, ports, transport costs and city location, industrial clustering and the spread of industry. Discussion is supported by the use of impressive analytical tools such as the Dixit-Stiglitz model of monopolistic competition. There is, however, a problem with all this, and it is the same problem that has afflicted economic geography for the past 100 years.

Economic geographers and their latest reincarnations as regional scientists or spatial economists are very good at formal, quantitative analysis, especially where good series of geographically disaggregated data exist. They are not very good at observing the reality around them and subjecting their modelling and analyses to the test of "ground truth".

Let me give some examples. The book starts off with a reference to the concentration of booksellers in the St Martin's Court area of central London. This is meant to illustrate the importance of agglomerative economies. Clearly there is an effect. Spatial propinquity, backward and forward linkages and threshold levels for sustained growth or dynamic equilibrium have been the stuff of undergraduate geography courses for 50 years. The book does no more than restate these well-documented observations. What we do not get is any sense of why these concentrations happen in Silicon Valley or the former jewellery quarter of Birmingham but not elsewhere. Even more important, we do not get any sense of what we have to do to repeat these successes if we want to create virtuous circles of economic success as part of, for example, an urban regeneration programme in Sunderland or Wigan.

The absence of convincing explanations of phenomena goes to the heart of scientific rigour and purpose. The authors do not begin to explain the subject matter covered by the book.

At the moment, large multinational companies are able to outsource their IT and software programing needs to places such as Bangalore in India. This is good news for Bangalore but clearly has a dampening effect on the existence and viability of IT/software agglomerations in the UK. How do agglomerative economies materialise in the UK at specific locations when global conditions (eg low wage rates for skilled jobs) are conferring benefits several thousand miles away that are not available in Wigan? At the very least we need to understand the circumstances that lead to global outsourcing of this kind and the implications this might have for encouraging similar activity in Wigan.

There is a large company in the furthest northeast corner of Scotland that makes large metal boxes full of fresh air. These fridges and freezers are then exported all over Europe. All we know from the voluminous theoretical work of Johann Heinrich von Thunen, Walter Isard, Auguste Losch and others that have provided the intellectual precedents for this book points to the impossibility of a manufacturing firm of this kind locating so far from all its raw materials and its markets. It should not be there, but it is. Quite clearly other factors are at work more important than the quantifiable concerns of economic geographers and spatial economists. We should be very wary of models and analyses that put all or most of their eggs in the transport costs, access to markets and agglomeration baskets.

We should be concerned that such an elegant and rigorous text falls so short of an adequate explanation of what is going on in the spatial economy. All this rigour and analysis should be able to explain what is going on and what we can expect next in this fast-changing world. The fact that it does not do this should lead us to question a great deal more than the nature of academic discourse and spatial economics. There is something wrong about an approach that is explanation-poor and analysis-rich.

John Whitelegg is professor of environmental studies, Liverpool John Moores University.

The Spatial Economy: Cities, Regions and International Trade

Author - Masahisa Fujita, Paul Krugman and Anthony J. Venables
ISBN - 0 262 06204 6
Publisher - MIT Press
Price - £24.50
Pages - 367

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