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UU Introduction to Economics and Business Economics - Summary for Sachs and McCord Text 'Geography of Regional Development' (2008)
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Summary – Geography of Regional Development – Sachs and McCord:Geography of Regional Development (2008). Jeffrey D. Sachs and Gordon C. McCord.
Spatial concentration of industry → differences in development and activity between regions
→ this concentration occurs because of many factors.
Regional Development Policy → use of economic incentives to attract industry to certain
locations.
Regional Development Theory → agglomeration economies with physical geography and
public economies.
Standard trade theory → comparative advantages → how the location of activity is affected
by spatial distribution of resources.
Neoclassical growth models → accumulation of capital → factors of production.
Agglomeration → important economic benefit of agglomeration, because activity and
population are concentrated in dense areas → knowledge spill overs, specialised markets,
large local markets, low transport costs → why does this happen → specialised products,
efficiency, economies of scale, cheap production and transportation, learning regions.
Agglomeration increases returns to scale and clusters → using policies to trigger processes.
Von Thünen model → existence of a city → characteristics about land around the city → Von
Thünen cones.
IMPORTANT → highly dense (agglomerated) areas with a lot of economic activity benefit
through above named factors and therefore have advantage in development and activity over
other regions → more and more firms decide to locate within the dense, high activity area.
Geography and location have important implications on how firms can compete in the market.
New economic geography → monopolistic competition → increasing returns to scale → the
core-periphery model is the backbone of this new economic geography → 1) market-access
effect, 2) cost-of-living effect and 3) market-crowding effect → all these effects concern the
high density of activity in a region.
Cluster → group of interconnected companies in a particular location → improved
productivity and growth.
Intrinsic Geographical Advantages → the role of geographical variables which affect
economic performance → location (coast / internal) and climatic conditions → effects of
differences in regional development → some regions / areas (with benefits) have huge
advantages over other areas (with geographical penalties).
IMPORTANT → geographical advantages can cause agglomeration based on increasing
returns to scale.
Technological changes → changes in regional advantages → changes in global division of
labour and agglomeration economies → telecommunication, air transport, information
technology → newer competitive advantages.
Agglomeration, physical geography and public economies condition / benefit in development.
Economic activity clusters together to form comparative advantages over other regions.
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