MGG-006

Indira Gandhi National Open University

ECONOMIC GEOGRAPHY
School of Sciences

BLOCK

1
FUNDAMENTALS OF ECONOMIC GEOGRAPHY

UNIT 1
INTRODUCTION

UNIT 2
KEY CONCEPTS AND DEBATES

UNIT 3
LINKAGES BETWEEN GEOGRAPHY AND ECONOMICS

UNIT 4
KEY ISSUES

GLOSSARY
MGG- 006 ECONOMIC GEOGRAPHY

BLOCK 1 FUNDAMENTALS OF ECONOMIC GEOGRAPHY

Unit 1 Introduction
Unit 2 Key Concepts and Debates
Unit 3 Linkages between Geography and Economics
Unit 4 Key Issues

BLOCK 2 STAGES OF GROWTH AND EVOLUTION OF

ECONOMIC SYSTEMS AND SECTORS
Unit 5 Review of Locational Theories and Schemes of Economic
Regionalization
Unit 6 Stages of Growth
Unit 7 Sectors and Systems

BLOCK 3 SPACE ECONOMY OF RURAL AND URBAN

SYSTEMS WITH REFERENCE TO INDIA
Unit 8 Rural Economic Systems
Unit 9 Urban Economic Systems
Unit 10 Economic Activities and its impact on Society and Culture
Unit 11 Economic Activities and its impact on Environment

BLOCK 4 SPACE ECONOMY OF INTERNATIONAL SYSTEMS

Unit 12 Economic Groupings
Unit 13 Economic Cooperation and Integration

BLOCK 5 CONTEMPORARY DEVELOPMENTS IN ECONOMIC

GEOGRAPHY
Unit 14 Information and Knowledge Economy
Unit 15 Consumption Pattern and Financial Management
Unit 16 Climate Change and Economics of Carbon Trading
BLOCK 1: FUNDAMENTALS OF ECONOMIC
GEOGRAPHY
Economic geography is one of the most dynamic branches of human geography. In this
first Block, we are dealing with fundamentals of economic geography. The way physical
distances are shrinking on account of advancement in transport sector along with the
advent of ICT and digitalization of market may surely herald a new chapter in economic
geography.

This Block will include the study of key themes like introduction, key concepts and
debates, linkages between geography and economics along with key issues as dealt in
four units.

Unit 1: First Unit is devoted to the study of introduction. It includes the study of
definition, scope and recent approaches, geography of economic activities and spatial
organization of economies along with evolution of economic geography as a sub-
discipline.

Unit 2: Second Unit is devoted to the study of key concepts and debates. It includes
the study of space, place and scale, agglomeration economies, isotropic space,
rational man, circular causation, multiplier and vicious circles, economic landscape and
economic systems, redistribution and historical accident, and debate of specialisation
versus diversification along with debate of localisation versus decentralisation etc.

Unit 3: Third Unit is devoted to the study of linkages between geography and
economics. It includes the study of significance of geography in economy, recent
trends in economic geography along with alternative economic geographies.

Unit 4: Fourth Unit is devoted to the study of key issues. It includes the study of
economic reasons for variations in distribution of population and wealth, mystery of
economic growth, and declining role of distance and proximity along with flat world.

We hope that after studying Block 1, you will be able to comprehend the fundamentals
of economic geography in intriguing manner.

Our best wishes are always with you in this endeavour.

 UNIT 1

INTRODUCTION
Structure
1.1 Introduction 1.4 Evolution of Economic
Expected Learning Outcomes Geography as a Sub-
1.2 Definition, Scope, and Recent Discipline
Approaches 1.5 Summary
1.3 Geography of Economic 1.6 Terminal Questions
Activities and Spatial 1.7 Answers
Organization of Economies 1.8 References

1.1 INTRODUCTION
In first unit of this course, we will mainly focus on the definition and scope of
Economic Geography. This unit will help you to further study the recent
developments in economic geography. It will also discuss the geography of
economic activities, the spatial organization of economies, and the evolution of
economic geography as a sub-discipline.

Economic Geography is considered as a study of human activities on Earth’s

surface, inevitably entailing spatial and temporal variations. Such activities are
generally divided into two categories. All the indispensable type of human
activities carried out to maintain the existence of human beings on Earth forms
the first category. Examples could be obtaining food, making clothes,
constructing dwellings, and constructing modes of transportation
infrastructure, etc. All such spatial economic activities that fetch economic
benefits or profits do fall under the ambit of second category. Broad examples
may include primary activities (farming and animal husbandry and their variety
of sub-categories), secondary activities (manufacturing industries), tertiary
activities (trade and commerce), etc. Second category of activities entails
innumerable processes, whereby goods and services are exchanged between
buyers and sellers. All the types of second category of spatial human activities
are not homogenously distributed over the earth’s surface. These are
essentially characterised by spatial variations since resources and constraints
(both natural and human), and productivity of each and every geographical
region varies from one place to another place on account of various factors.
Spatial economic activities carried out to make a livelihood forms the subject
matter of human geography. As opposed to this, all kinds of spatial economic

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activities carried out to make a benefit or profit forms the subject matter of
economic geography, one of the most dynamic branches of human geography.

Section 1.2 is devoted to the study of definition, scope and recent approaches.
Next Section 1.3 describes some fundamental themes related to economic
activities like geography of economic activities and spatial organisation of
economies etc. Last Section 1.4 elicits the evolution of economic geography
as a sub-discipline.

Expected Learning Outcomes

After studying this unit, you should be able to:
 To understand the various definitions of Economic Geography,
 To explain the scope and recent approaches of Economic Geography;
 To comprehend the geography of economic activities and spatial
organization of economies; and
 To explore the evolution of economic geography as a sub-discipline.

1.2 DEFINITION, SCOPE AND RECENT

APPROACHES
1.2.1 Definition
Economic geography is a subfield of human geography concerned with
describing and explaining the varied places and spaces in which economic
activities are carried out and circulated. Consequently, numerous scholars
have given numerous definitions to understand the meaning and scope of the
subject. Moreover, various authorities have defined Economic Geography in a
variety of ways. Still, their opinions cover a common point: the study of the
spatial distribution of man's economic activities concerning its environment, be
it physical or non-physical. Some of them have been discussed here:

Economic geography concerns the similarities and contrasts in how individuals

live from place to place (R.E. Murphy).

Economic geography is concerned with productive professions and aims to

explain why specific locations excel in manufacturing and exporting certain
goods while others are important in importing and using goods (C.F. Jones).

Economic geography studies human economic activities concerning Earth as

its home (F. Buchanan).

For MacFarlane, Economic Geography studies man's economic activity

influenced by the physical environment. These physical environmental
conditions lead to different spatial relations, making each region different.

According to Dudley Stamp, economic geography entails considering

geographical and other elements that impact human productivity, but only to a
limited extent in production and commerce.

According to E.W. Zimmermann, Economic Geography concerns man's

economic existence concerning the environment.
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In his book The Geography of Economic Activity (1962), Thoman defines

Economic Geography as the study of people's production, trade, and
consumption of goods in various parts of the world.

In the words of Hartshorne and Alexander, the study of the geographical

variation on the Earth's surface of activities connected to the production,
exchange, and consumption of commodities and services is known as
economic geography. The objective is to construct generalizations and
theories for these spatial variances.

It is a field of inquiry that has traditionally followed economics, focusing less on

reproduction than on consumption, production, and exchange (Knox and
Agnew, 1998).

Economic Geography is a geography sub-discipline concerned with the spatial

configuration of firms, industries, and nations within the emerging global
economy and its manifestations (Clark Feldman and Gestler, 2000).

Economic Geography studies how economic activities are stretched over the
Earth's surface at various spatial scales, from the local to the global, and how
they change over time and space (Encyclopaedia of Human Geography, B.
Warf, 2006).

Economic Geography is a sub-field of human geography that describes and

explains the varied spaces and places where economic activities occur
(Dictionary of Human Geography, R. J. Johnston, et al. 2009).

Economic Geography systematically studies economic resources and their

utilization within limits set by the physical, economic, and social environment.
Therefore, in simple terms, it can be defined as:

"It is an inquiry into the production, exchange, and consumption of goods by

people in different areas of the world."

Hence, an Economic Geographer must be trained along four principal lines:

1. Recognize problems and state them in a manner.

2. Develop hypotheses that promise solutions to those problems.
3. Test the adequacy of these hypotheses in providing solutions for these
problems.
4. Relate tested hypotheses to other generalizations in the body of theory.

1.2.2 Scope
The study of economic geography delves into the intricate relationship
between human societies and the utilization of Earth's resources. As human
beings evolve, so do their needs and aspirations, extending beyond mere
survival to encompass cultural and intellectual dimensions. From the early
days of paleolithic societies to the present era, the exploitation of Earth's
resources has been a constant, albeit always within the constraints imposed
by nature. Examining how resources are exploited and understanding the
limitations imposed by the physical environment constitutes a fundamental
aspect of economic geography.
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Economic geography scrutinizes the spatial distribution of resources and
encompasses the study of productive occupations. It seeks to unravel the
reasons behind the prominence of certain regions in producing and exporting
specific goods and the significance of other areas in importing and utilizing
these resources. This exploration into the spatial patterns of economic
activities provides valuable insights into global trade and commerce dynamics.

No country exists in isolation; interdependence is the norm. The complex web

of global economic relationships means that civilizations heavily rely on
supplies from distant regions, giving rise to intricate commerce networks.
Therefore, the primary objective of economic geography is to unravel the
interconnectedness of trade and commerce across the Earth's surface where
human transactions unfold.

A crucial dimension of economic geography lies in its capacity to address

resource-related challenges. With the growing awareness of resource scarcity,
economic geography plays a pivotal role in advocating for the better and more
efficient utilization of limited resources. Through rational, systematic, scientific,
and long-term planning, economic geography aims to devise strategies that
ensure sustainable resource management. The discipline guides navigating
the delicate balance between meeting present needs and preserving
resources for future generations.

The insights of Humboldt, the 19th-century German geographer, resonate in

the contemporary context. As he articulated, the Earth's diversified riches are
a vast source of human enjoyment. It is imperative to channel these riches into
a shared global understanding and utilization to achieve humanity's highest
development. This grand objective can only be accomplished through the
dedicated study of economic geography.

Ellsworth Huntington provides a comprehensive definition of economic

geography, emphasizing its broad scope. According to him, economic
geography encompasses various materials, resources, activities, institutions,
customs, capacities, and abilities contributing to multiple livelihoods. This
expansive definition highlights the interdisciplinary nature of economic
geography, incorporating elements from diverse fields to offer a holistic
understanding of the factors shaping economic activities.

Moreover, economic geography goes beyond mere description and analysis; it

aims to contribute to the formulation of reasonable estimates regarding the
future course of commercial development. Economic geography facilitates the
creation of credible projections by considering geographical conditions, aiding
policymakers and businesses in making informed decisions.

In a broader context, economic geography extends its reach to international

economies, industrial organization, business strategy, and innovation. It
operates at the intersection of theoretical perspectives drawn from these
traditions while remaining sensitive to geography's enduring influence. This
interdisciplinary approach enriches the field, allowing for a nuanced
understanding of the intricate interplay between economic activities and
geographic factors.

In conclusion, the scope of economic geography is expansive and

multifaceted. It encompasses the historical exploitation of Earth's resources,
the spatial distribution of economic activities, the dynamics of global trade and
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commerce, the challenges of resource management, and the formulation of

future trajectories of commercial development. By examining the intricate
connections between human societies and the physical environment,
economic geography provides invaluable insights into the complexities of our
economic world.

Fig. 1.1: Scope of Economic Geography.

Fig. 1.2: Nature of Economic Geography.

Economic refers to all men's activities to produce, exchange, and consume

valuable items. The scope and method of economic geography has been
defined in terms of the following three questions-

Q 1) Where is the Economic Activity located?

Q 2) What are the characteristics of economic activity?
Q3) To what other phenomenon is the economic activity related?

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Q 4) Why is the Economic Activity located where it is?

Q 5) Where is the Economic Activity located?

- The answers expected to questions 1-3 are descriptive ones.

- Questions 4 and 5, however, introduce a normative dimension concerned
with finding the best or most efficient solution to the economic problem.
However, it depends on the assumption of economic rationality of a decision-
maker who is an economic man with perfect knowledge and the ability to use
the knowledge.
Therefore, Economic Geography is the geography of people's struggle to
make a living and would include the study of:
 The construction of power/knowledge will shape discursive practice and
arbitrate between computing discourses (Watts, 1992).
 Culture and material origins emphasize social relations of reproduction and
the distanced geographies of struggles, including those involved in the
intersections within and between different sets of social relations to
establish/sustain/overthrow particular forms and geographies of such
associations (Peet, 1997).
 Conceptualizations of nature within sets of social relations and forms of
social reproduction (Harvey, 1996).
 Forms of State (O'Neill, 1997), politics, and regulation support and
legitimate particular social relations and circuits of social reproduction
(Tickell and Peck, 1992).
 Spaces, such as financial centres, of regulation and evaluation and
switching productive resources into alternative spaces of incorporation
(Sassen, 1991).
 Spaces of Labor power are articulated mainly through the Labor market
(Hanson and Pratt, 1995) and other communities, including the construction
of the built environment involved in production.
 Processes and forms of consumption and realization, including
geographies of trade, wholesale, and retail and their constitutive production
processes, and the construction of complex spaces and consumption
processes through which the meaning of commodities may be negotiated
(Crewe and Gragson, 1998).

A fair study of economic geography necessitates critically examining natural,

human, and cultural resources in various world regions, their regional
combination, and the resulting impacts on resource construction and usage
activities (Guha and Chattoraj, 2002).

1.2.3 Recent Approaches

Economic Geography makes a comparatively humble and integrated approach
to describe a country or region in terms of its natural, human, and cultural
environment concerning (hu) man's economic way of life. The nature of the
geo-economic problems is complex and varied. Such issues can, however, be
suitably discussed by the following approaches:

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1) Regional or Spatial Approach
It forms the basis of similarities and differences at regional levels, examining
the economic conditions of regions or countries. It deals with economic
rationalization and local economic development to build theories about
economic activities' spatial arrangement and distribution. This approach
amalgamates economic geography, providing a greater understanding of
diverse regions as a unit of study and their relationships with one another and
within.

2) Systematic or Commodity Approach

The approach is mainly concerned with the geographical environment of
human activities such as producing, transferring, and exchanging goods.
Buchanan's description of New Zealand's animal husbandry industries (1935)
is the best example of a systematic method. According to Wise, systematic
economic geography attempts to bridge the gap between geography and
economics as it describes and interprets the global distribution pattern of a
product (wheat), an industry (cotton textile industry), or a human occupation in
an organized way (fishing). In a nutshell, it examines the entire course of their
growth and detects whether they are progressing or regressing.

3) Principles Approach
The approach mainly studies the natural environment's effect on human
activities in different parts of the world. One may generalize the distribution of
economic activities based on fundamental concepts of economic geography,
such as the extraction of resources (coals, iron ore, or diamonds), the
localization of industries (metal fabricating or textile industries), and
commodities trading. Von Thunen's theory of agricultural land use is the best
example of this method.

4) Resource Utilization Approach

It emphasizes the use of technology in diverse ways as the basis for regional
organization. The prime objective is to understand the functions and
operations of resources in relation to a country's economic development. It
enables us to comprehend primary resources' nature, behaviour, and function
to make plans for sustainable resource usage.

5) Temporal Approach
It examines the history and development of the economic structure spatially.
The emphasis is on the shifts in the population and economic activity centers,
the evolution of regional specialization and localization patterns, and the
factors responsible for these changes based on the available historical data.

6) Behavioural Approach
The behavioural approach examines the cognitive processes underlying
spatial reasoning, place decision-making, and behaviour of firms and
individuals. Its use in economic geography is steadily increasing. Problem-
solving and behavioural decision-making are two types of decision-making
relevant to economic geography, with outcomes such as new sites for stores,
farms, or industries. Consumer behaviour, mobility or travel behaviour, and
other similar research are also relevant.
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7) System Analysis Approach
System Analysis is an approach or methodology rather than a philosophy or a
scientific paradigm. It is an analytical technique or thought that could add to
the understanding or elucidate complex structures, not a generalized theory.
The scope of economic activities includes a system of many tangible and
intangible elements. These factors affect the economic organization on a
larger scale. Complex interactions between components and conditions
sometimes give rise to adverse conditions like economic slowdown and
environmental pollution. Currently, much importance is being offered to the
system analysis method. Economic geographers use the system idea to grasp
better the components of a given reality section and the relationships between
them. Such a term emphasizes the study of both the whole and the elements.
As a result, the global economy is a collection of interconnected pieces and
sub-systems. The system approach emphasizes the study of both the whole
and the elements, i.e., the global economy as a collection of interlinked pieces
and sub-systems.

8) The Regulation Approach

Another strand of Marxist-informed research that was very influential in
economic geography during the 1990s is the regulation approach derived from
the work of a group of French economists in the 1970s. The regulation
approach stresses the critical role that broader processes of social regulation
play in stabilizing and sustaining capitalist development. These more
comprehensive regulation processes find expression in specific institutional
arrangements that mediate and manage the underlying contradictions of the
capitalist system expressed in the form of periodic crises, enabling renewed
growth to occur. The regulation focuses on five key aspects of capitalism:
labour and wage relations, forms of competition and business organization,
the monetary system, the state, and the international regime (Boyer, 1990).

9) Institutional Approach
Ron Martin (2003) has emphasized the need for an institutional perspective in
economic geography. He claims that the structure and growth of the economic
environment can only be adequately comprehended by paying close attention
to the different social institutions that support and influence economic activity.
In another way, economic activity is socially and institutionally situated. It
cannot be explained solely in terms of individual motives but rather as
entangled in larger structures of social, economic, and political rules,
procedures, and conventions. An institutional approach to economic
geography focuses on the role of these structures, both official and informal.

SAQ 1
a) Discuss the scope of economic geography.
b) Write a note on any two approaches to economic geography.

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1.3 GEOGRAPHY OF ECONOMIC ACTIVITIES AND
SPATIAL ORGANIZATION OF ECONOMIES
1.3.1 Geography of Economic Activities
Economic activities can be categorized into Primary, Secondary, Tertiary,
Quaternary, and Quinary categories. Here, the word economic pertains to all
men's activities in producing, exchanging, and consuming valuable items.

Classification of economic activities:

A. Production of economic items

1. Primary
Agriculture, forestry, fishing, hunting, collecting, and mining are primary
activities. These functions are almost inextricably linked to the natural world.

2. Secondary

Activities that turn primary goods into more usable ones are classified as
secondary. Secondary activity encompasses all sectors of the industrial
industry.

3. Tertiary

Tertiary activities arose from linking primary and secondary activities, such as
transportation and trade. These are performing services like repair, banking,
teaching, and entertainment.

4. Quaternary

Quaternary economic activity is intellectual-based. It involves work that

creates, maintains, transports, or develops information. This includes research
and development companies and information-related activities like internet
technology or computer engineering. While the other three activities involve
more physical effort, quaternary economic activity is more theoretical or
technological.

5. Quinary

These services focus on creating, re-arranging, and interpreting new and

existing ideas, data interpretation, and using and evaluating new technologies.

B. Exchange

1. Location
a. Increasing the values of commodities by changing their location (freight
transportation).
b. Satisfying people’s needs by changing their location (passenger
transportation).
2. Ownership
Increasing the value of commodities by changing their ownership (wholesale
and retail trade).
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C. Consumption
(Final stage in the economic sequence)
Human beings use commodities and services to satisfy their desires.

1.3.2 Spatial Organization of Economies

1.3.2.1 Primary Activities

Hunting, gathering, and fishing were the standard means of subsistence

worldwide before the advent of agriculture. The hunter-gatherers invented tools,
learned to control fires, and adapted to the environments based on their needs.
The development of spears for hunting was path-breaking. Hunters also
invented tools to catch fish, like hooks, harpoons, and baskets, to harvest
trapped fish by cutting small patches of standing water off the open sea. These
pre-agricultural universal forms of primary production are now practiced by only
a few thousand people worldwide in isolated and remote pockets of low and
high latitudes. A few of the present hunting and gathering practicing regions are
- the interiors of New Guinea, Southeast Asia, diminishing segments of the
Amazon rainforest, a few districts of tropical Africa, northern Australia, and the
Arctic region. Agriculture replaced hunting and gathering as the most significant
primary activities and the entire event is termed as "The First Agriculture
Revolution." It is spatially widespread and is found in every region where
productive soils, adequate moisture, and good growing season length prevail.

Agriculture is the most fundamental form of human activity. It constitutes both

the cultivation of crops and the domestication of animals. Thus, the land on
which agriculture is practiced is the most fundamental of the world's resources
as it fulfills man's basic needs of food, clothing, and shelter. The evolution
process of man indicates that initially, human beings were food gatherers, and
over time, they started cultivating. In the process, animals were tamed, first as
a source of meat and milk and later as draught animals. Men could now live in
permanent settlements and had time to develop various arts and skills. With
more scientific and technological developments, the mechanization of farms
took place, resulting in surplus production. As a result, different agricultural
systems or regions developed in various parts of the world.

An agricultural system or region is an area or region with similar agricultural

functional attributes; it may be a single farm or a group of interrelated farms with
similar agrarian characteristics. Classifying the world into different agricultural
regions is complex as the pattern of agrarian activities practiced worldwide is
very complex. Farming activities may be duplicated if one tries to classify them
according to climatic types. If classification is based on the types of crops
cultivated or animals domesticated, then one tends to ignore the methods used
in different agricultural regions. One such attempt was made by Derwent
Whittlesey in 1936. He defined the agricultural region as an uninterrupted area
with some homogeneity and a precisely defined outer limit (1936). He wrote an
article on major agrarian regions of the Earth, published in the Annals of
Association of American Geographers (Vol. 26: 199-240) in 1936.

Whittlesey World Agricultural Systems/Region:

In his monumental paper, Whittlesey delineated the agricultural systems of the
Earth based on the five characteristics of agriculture. These are:
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(a) crop and livestock combination
(b) the intensity of land use
(c) processing and marketing of farm produce
(d) the level of mechanization and
(e) types and relations of the building and other structures associated with
agriculture.

He identified thirteen types of agricultural land occupancy over the Earth and
marked their distribution on the map. These are:
1. Nomadic herding
2. Livestock ranching
3. Shifting cultivation
4. Rudimentary tillage
5. Intensive subsistence tillage (with paddy dominance)
6. Intensive subsistence tillage (without paddy dominance)
7. Commercial plantation
8. Mediterranean agriculture
9. Commercial grain farming
10. Commercial livestock and crop farming
11. Subsistence crop and livestock farming.
12. Commercial dairy farming
13. Specialized horticulture

(1) Nomadic Herding

This extensive farming type occurs where animals graze on natural pasture
land. This activity requires constant seasonal migration of the nomads with
their cattle. Nomadic herding is confined to sparsely populated parts of the
world where the natural vegetation is mainly grass. This activity can be called
the aboriginal form of livestock ranching. It is found in arid areas where crops
can be produced but not in wholly wasted deserts. The availability of water
and the presence of natural grassland decide the location of this activity, and
in most cases, the first element is the availability of water, which dominates.
Ways are very similar worldwide, but intensities and, consequently, care in
reproduction varies widely. Where animals or their products are sold, the
methods in this farming are progressive, and where the products provide only
subsistence, the procedures are traditional.

Location

No reliable data exists for demarcating the Nomadic Herding regions. A

general view is that it is spread over large areas in Saharan Africa (Sudan,
Libya, Algeria, Mauritania, Mali, Niger, and Chad), the south-western central
parts of Asia, some parts of Scandinavian countries (Norway, Sweden,
Finland) and northern Canada.

Characteristics
(a) Nomadic herding is an ecological or near-ecological system of agriculture.
It is derived mainly to produce food for the family to fulfill the daily needs
of clothing, shelter, and recreation.

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(b) It is a declining type of agriculture.
(c) The main characteristic is the migration of nomads with their livestock in
search of forage for the animals.
(d) The Bedouins of Saudi Arabia and the Tauregs of the Sahara also practice
nomadic herding in the desert and semi-desert areas of North Africa and
South West Asia.
(e) Therefore, the chief components of nomadic herding are:
➢ Seasonal pattern of movement known as Transhumance.
➢ Various types of animals are grazed.

(2) Livestock Ranching

The extensive temperate grasslands - once known either for their nomadic
herders or by hunters - are now permanent grounds of ranches, where large
numbers of cattle, sheep, goats, and horses are reared. Everywhere, livestock
was established by the ancestors of European sedentary people in the drier
parts of the country. Their traditional beliefs, habits, and behavior have been
carried to the humid areas. There are several exceptions where they have
modified themselves according to their adopted land's harsh and insensitive
environment. An Example of South Africa's wild pig is that the pioneers were
forced to convert into nomadic herders, but with developments in
transportation, they became more comfortable with their original culture.

Livestock ranching is a semi-sedentary and extensive activity in which the

cowboy or rancher is a business operator. He usually works on a large scale
and cares for the cattle. The animals and products it specializes in vary from
region to region. Cattle, sheep, and goats are the most common animals.

Location

Livestock ranching regions are in North America, Australia, the Republic of

South Africa, Brazil, Argentina, Peru, and New Zealand.

Characteristics
The essential characteristics of livestock ranching are:
(a) It specializes in animal husbandry (rearing) and excludes crop raising in
arid and semi-arid regions.
(b) The ranchers have a fixed place of residence and operate as individuals
rather than in associations.
(c) Ranching differs from nomadic herding as
➢ The vegetation cover is continuous.
➢ There is little or no migration.
➢ Ranches are scientifically managed.
➢ The animals are raised for sale.
➢ Commercial grazing supports the development of the town.

(3) Shifting Cultivation

Shifting cultivation is a land rotation system mainly concentrated in the humid
low latitudes (rain forests and their fringe areas). This region's harsh climatic
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conditions force primitive people to move their farmed plots every few years,
usually from one to three years. However, it differs from region to region
depending on local conditions. As different people practice shifting cultivation,
it has many other names, e.g., milpa in Central America, conuco in
Venezuela, roca in Brazil, masole in Zaire, ladang in Malaysia, humah in
Indonesia, caingin in the Philippines, taungya in Myanmar, tamrai in
Thailand, poda and jhum in India and chena in Sri Lanka.

Location

Shifting cultivation is practiced primarily in the tropical rainforests and lowland

hills in Central America, Africa, and Southeast Asia. In Africa, it is also found
on the outer margins of the rain forests as tsetse – an enemy of animal
husbandry- is abundant there.

Characteristics

(a) Sites for shifting cultivation are usually selected in the virgin forest by the
elderly members of the community.
(b) The forests are cleared by fire, and the ashes are used as manure. Trees
that are not cut are left to rot naturally. This method is prominently called
"Slash and Burn Agriculture."
(c) The fields are usually small, ranging from 0.5 to 1 hectare. They are
widely spread in the forest and are separated from one another either by a
dense bush or by a stretch of forest cover.
(d) Primitive tools like hoes, sickles, and sticks are used for cultivation.
(e) Starchy foods like tapioca, yams, maize, millet, beans, upland rice, and
bananas are the common crops raised.
(f) A short crop cultivation period is alternated with a long duration of
fallowing. Therefore, field rotation is practiced in this type rather than crop
rotation.
(g) Aboriginal tribes of the tropical rainforest region mainly practice this type
of cultivation.

(4) Rudimentary Sedentary Tillage

This is a more advanced type of subsistence agriculture found in the tropical

lowlands. In this system, fallow fields are frequently reused, and the
communities engaged in crop cultivation usually stay in one place
permanently. The standard methods are crop rotation, intensive tillage, crude
implement use, and greater workforce use.

Location

This agricultural activity occurs in Southeast Asia (Indonesia, Malaysia, and

the Philippines), Sri Lanka, West Africa, and South and Central America.

Characteristics:

(a) Crop rotation occurs while fields remain fixed.

(b) Potatoes, sweet potatoes, maize, sorghum, bananas etc are grown.
17
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(c) This type of agriculture is often combined with the cultivation of cash
crops like cacao, oil palm, cocopalm, rubber, peanut, and cotton.

(5) Intensive Subsistence Tillage (with paddy dominance)

Intensive subsistence tillage is confined to the Asian monsoon region, South

and East Asia, and adjacent islands, which is wet. There is another pair of
agricultural forms, which is very different from all the rest, but the crops differ
with the presence or absence of rice in the association. The excessively
intensive farming system supports the dense population where the season is
very long to mature rice. Two crops are collected in a year where the climate is
hot, the water is less, or there is interference in cold weather. Rice produces
more grain per acre than any other crop.

Location

Intensive subsistence tillage dominated by paddy is practiced chiefly in tropical

Asia. It is carried out mainly in China, Japan, India, Bangladesh, Myanmar,
Thailand, Sri Lanka, Malaysia, and the Philippines.

Characteristics

(a) Farming is intensive, and double cropping is practiced in which more than
one crop is grown on the same land during a plantation season.
(b) Paddy is the only crop that can be raised in this type of farming. At the
same time, other food or cash crops such as sugar, tobacco, oil seeds, or
fiber crops like jute are raised generally in the dry season.
(c) Asian farmers are now producing even greater yields per acre because of
the recent introduction of improved hybrid rice varieties.
(d) Manual labor is predominant.
(e) Animal husbandry must be developed as the entire focus is on rice
cultivation.
(f) Animal and plant manures are used liberally.

(6) Intensive Subsistence Tillage (without paddy dominance)

This is a variant of the type mentioned above, and it is designed for areas
where the amount of rainfall could be much higher. These regions grow grain
crops other than rice, such as wheat and millet.

Location

It includes interior India, North-East China, North Korea, Northern Japan, and
parts of continental South–East Asia.

Characteristics

(a) The land is intensively used and worked primarily by human power.
(b) Farming in these regions suffers from frequent crop failures and famines.
(c) Wheat, soybean beans, barley, and kaoliang are grown.
(d) Irrigation is often employed as there is a lack of moisture.

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Unit - 1 Introduction
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(7) Commercial Plantation

The specialized commercial cultivation of cash crops like tea, rubber, coffee,
oil palm, cocoa, cotton, sugarcane, pineapples, and bananas on estates or a
plantation is a unique type of tropical agriculture. The Europeans initialized this
type of agriculture in their colonies. The term plantation agriculture was initially
explicitly applied to the British settlements in America than to any intra-estate
in North America, west India, and Southeast Asia, which was cultivated mainly
by Negro or other colored labor.

Location

Commercial plantations exist in various parts of the world, but it is

concentrated in the tropical regions of Asia and Africa along with tropical and
sub-tropical regions of America.

Characteristics

i) In plantation farming, a land holding is developed for the specialized

production of one tropical or subtropical crop, mainly for commercial
purposes.
ii) Climatic hazards like strong winds, the prevalence of diseases, and soil
deterioration often handicap or may even prevent the development and
establishment of the plantation.
iii) The plantation estates are generally large, mainly in thinly populated
areas. The farm size varies from 40 hectares in Malaya, India, to 60,000
hectares in Liberia.
iv) The labor is generally disciplined but unskilled and in huge numbers.
v) The characteristics features of commercial plantation are:
(a) Estate farming
(b) Foreign ownership and local labor
(c) Scientifically managed farming in the estates
(d) Heavy capital outlay

(8) Mediterranean Agriculture

A distinctive type of agriculture has evolved within the Mediterranean climate,

where there is winter rain and summer drought. This is the most satisfactory
type of agriculture, representing the stable ancient relationship between man
and land. Here, subsistence and cash crops are grown, although the emphasis
on different crops varies with the amount of rainfall received. The methods
used also differ from region to region. For example, little land labor is used in
Italy. The business here is intensive. Horticulture is well developed, giving high
returns. The Mediterranean Lands are often called the "Orchard Lands of the
World."

Location

Mediterranean agriculture is confined to the coastal parts of the Mediterranean

Sea in Europe, Asia Minor, and the North African coastal strip. Outside the
Mediterranean coastal areas, this typology is concentrated in California (USA),

19
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Central Chile, the southeast regions of Cape Province (South Africa), and the
southwest parts of Western Australia.

Characteristics

a) Factors like the length of summer drought, water availability for irrigation
and power supply, local soil conditions, financial aspects, and fluctuations
in the local, regional, and global markets govern Mediterranean
agriculture.
b) These conditions lead to four types of agriculture in this region as under:
1) Orchard farming: Citrus fruits, olives, and figs.
2) Viticulture: Grapes for wine-making.
3) Cereal and vegetable cultivation: Wheat (hard winter type), barley,
rice in river plains, green and leafy vegetables, lentils, beans, onions,
tomatoes, carrots, and sugarbeet.
4) Limited animal husbandry: goats, sheep, dairy farming, and fishing.

(9) Commercial Grain Farming

Commercial grain farming is another market-oriented agriculture type in which

farmers specialize in growing wheat. This is a recent development (a result of
the Industrial Revolution) that has occurred in the temperate grasslands of the
mid-latitudes. The area used for large-scale grain cultivation was previously
used for animal husbandry or livestock ranching. The nomadic herders also
occupied some regions. In such a type of agriculture, the balance between
crop and stock is standardized. The methods are neither intensive nor
traditional; instead, they are progressive as machinery is used to a large
extent.

Location

Great wheat belts stretch through the Canadian and American Prairies,
Argentinean Pampas, Eurasian Steppes, South African Velds, and Australian
Downs.

Characteristics

(i) The main characteristics of this system are:

a) Big farms in size
b) Comprehensive use of heavy machines
c) Wheat Monoculture
d) Low use of irrigation and fertilizer
e) Low yield per acre but high yield per labour
f) Long distance of farm from the market.

(ii) Widespread use of machinery enables commercial grain farmers to

operate on this large scale; commercial grain farming is more mechanized
than any other form of agriculture.
(i) Wheat is the main crop; Maize, Barley, and oats are other essential crops.
(ii) The wheat production regions are divided into two belts:
1) Winter wheat belt and 2) Spring wheat belt.
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Unit - 1 Introduction
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(10) Commercial Livestock and Crop Farming

This form of agriculture is often called "mixed cultivation" or "mixed

farming." It is one of the most developed forms of agriculture, mainly found in
the most developed parts of the world. Here, the ratio of crop and stock
depends on factors like the farm's location, soil fertility, animal-carrying
capacity of the land, market demand, price of crops and animals, and
government policies.

Location

It is found throughout Europe, from highlands in the West to central Europe

and Russia. It is also located in North America at 98o W Meridian, in the
Pampas of Argentina, Southeast Australia, South Africa, and New Zealand.

Characteristics

(a) The main characteristic of mixed farming is that livestock and crops are
integrated, and their ratios are standardized on the farms.
(b) This kind of farming is defined by significant investments made by farmers
who must possess extensive knowledge of all aspects of agriculture to
develop and market their goods successfully. These investments include
machinery, farm buildings, manures, fertilisers, and technical skill input.
(c) Mixed farming is mainly associated with densely populated regions where
urbanized, industrialized societies reside.
(d) More than one crop is grown; cereals dominate the land use, and the
leading grain varies with varying climatic and soil conditions.
(e) Within this system, three well-established agricultural sub-systems can be
recognized. These are:

a. Mixed farming: Crops are grown, and livestock is raised.

b. Dairy farming: This is a highly intensive type of livestock farming.
c. Market gardening and horticulture include cultivating fruits,
vegetables, and flowers.

(11) Subsistence Crop and Livestock Farming

The second of the three types of agricultural land acquisition that originated in
Northern Europe is very similar to the first one. The main difference is that the
farmer produces for self-consumption in this system and sells either in small
proportions or nothing. This is due to a lack of finance or money and farmer's
unaffordable condition of buying expensive machinery. The farmer can neither
sow the best seed nor buy good breeding stock. Their return could be better,
and they cannot sell their rare surplus in competition with the high-grade and
reliable production of commercial areas. In the absence of a competitive market
incentive, the method is raw. In this way, the vicious circle continues.

Location

Parts of Northern Europe, Maghreb countries, Central Asia, and the Mountain
region of Mexico.

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Characteristics

(a) Produced crops and raised livestock are mainly used for subsistence.
(b) The traditional way of farming.
(c) Seeds are poor in quality, and animals need to be better domesticated.
(d) Capital input is ordinarily unknown.
(e) Wheat, Maize, Rye, Barley etc are the main crops.
(f) Sheep and goats are the most important animals.

(12) Commercial Dairy Farming

Commercial dairying is the third form developed from the medieval Northern
European system. In this farming, the general rearing of the cattle is
associated with their different products such as milk, milk products (butter,
cheese, condensed milk, dried milk, etc.), and is known for dairy farming.
Commercial dairying develops only where the products can be consumed in
the immediate urban market. So far, the largest consumers of these farming
products are the population of the northern European cities.

Location

It is mainly practiced in Europe, Northern USA, Canada, Australia, New

Zealand, Denmark, Netherlands, Belgium, Finland, France, and Switzerland.

Characteristics

i) Dairying is capital intensive, and returns are high.

ii) The size of dairy cattle varies from country to country and from farm to
farm, depending on the holding size. In the United Kingdom, for example,
the ratio of cattle pasture is one cow after one acre. The average length of
dairy cattle in northwest Europe is only five cows per farm.
iii) Nearly 80% of the world's total milk production is produced in Europe,
Russia, Anglo America, Australia, and New Zealand.
iv) This type of farming requires more labor than crop farms as it is
associated with animals.

13) Specialized Horticulture

Specialized cultivation of vegetables, fruits, and flowers is called horticulture.

Producing fruits and vegetables in kitchen gardens and home orchards is the
characteristic of specialized horticulture. This is mainly found in the wetland
areas of the mid-latitude Mediterranean region. This is again found near large
metropolises as the products start perishing if not consumed quickly. Although
the production is dependent on demand, the returns are high.

Location

Horticulture is well developed in the densely populated industrial districts of

northwest Europe, Britain, Denmark, Germany, Netherlands, France, Italy,
Argentina, and North America.

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Unit - 1 Introduction
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Characteristics

(i) In horticulture, the farms are small; such farms are located where
communication links to the consumption centres are appreciably good.
(ii) The market gardens are scientifically managed to achieve optimum yields
and handsome returns.
(iii) The primary crops are vegetables and bush fruits like apples, cherries,
and pears.

1.3.3.2 World Industrial Regions

The concentration of manufacturing industries occurs in industrial regions due

to favorable geopolitical and economic conditions. The spatial distribution of
manufacturing industries shows a distinct localization trend towards a few
selected areas called 'industrial regions.' The industrial regions of the world
are unevenly distributed as the localization of industrial regions largely
depends on the availability of resources. Various other factors affect the
concentration or localization of industry as these regions have a variety of
industries and other infrastructures. These are – the type of market, large
population engaged in industrial pursuits (labor supply), cost of the land,
availability of raw materials, the network of communication lines, banking and
credit facilities on a large scale, terrain, access to water resources, and supply
of capital. Manufacturing goods through cottage industries began long before
the Industrial Revolution when communities worked together and created
finished goods. The transition from cottage industries to the Industrial
Revolution happened in the context of changing economies of scale to
generate a more significant profit by producing larger quantities of goods in
high demand, which decreased the average cost of delivering the goods. The
first steps in industrialization occurred in northern England, where cotton from
America and India was shipped to the port of Liverpool. In the 18th century,
the heart of the Industrial Revolution was England. During the early part of the
Industrial Revolution, before the railroad connected nodes of industry and
reduced coal transportation costs, manufacturing was located close to the coal
fields, and plants were usually connected to ports by a broad canal or river
system. Britain's densely populated and heavily urbanized industrial regions
developed near the coal fields. With the advent of the railroad and steamship,
Great Britain had more significant advantages globally than it did at the
beginning of the Industrial Revolution. Industrialization began to diffuse from
Europe to America and Asia in the 19th century, marking the growth of
"industrial regions." The secondary hearths of industrialization were
established in Eastern North America, Western Russia, Ukraine, and East
Asia. Each industrial region was established in areas close to coal, the primary
energy source, connected by water or railroad to ports, and heavily invested
by wealthy European merchants and local regions.

1.3.3.3. Globalization and shifting location of industries

Globalization is mainly driven by rapid and largely unrestricted flows of

information, goods, ideas, cultural values, capital, services, and people shifting
to the more-than-ever integrated world economy. It is recognized as one of the
most significant powers that affect the world economy. The four dimensions of
Globalization are economic Globalization, world opinion formation,
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Block - 1 Fundamentals of Economic Geography
…………………………………………….……...……………………………………………………………………
democratization, and political Globalization; changes in one of these
dimensions will lead to changes in the other. Global flows of information,
goods, and people are transforming patterns of economic development. Local
self-sufficiency gives way to global interdependence as people and places
increasingly connect, sometimes across vast distances. Economic
Globalization has many characteristics and effects on the world's business,
marketing, and trade. Trade is the backbone of economic Globalization.
Globalization accelerated in the 19th century during the Industrial Revolution.
As the factories became established, more companies used land for their
production and investment, replacing and selling goods with each other. The
processes of Globalization also play a significant role in contemporary
industrial geography, affecting location, organization, and activity. Industrial
restructuring amounts to a global shift in industrial investment and activity. The
process was underway by the 1980s, along with a decline in the friction of
distance due to new communication technologies. These two processes
together produced a new and dynamic industrial geography. Related to the
two globalization processes is the transition from Fordism to post-Fordism.

Fordism refers to the methods of mass production first introduced by Henry

Ford in America in the 1920s, using assembly line techniques that reduced
labor time and related costs. A surge in mass production and consumption
marks the Fordist period. Ford imported raw materials, from coal to rubber to
steel, from around the world and set up large-scale manufacturing complexes.
Also, the Fordist system gave workers the necessary income and leisure time
to become consumers of the various new mass-produced goods. Money
flowed through the world economy as consumers purchased large-scale
manufactured goods. As the global economy became more integrated and
transportation costs decreased, the advantages of concentrating production in
large-scale complexes declined, resulting in a shift toward a post-Fordist,
flexible production in the 20th century. The post-Fordist model refers to a set
of production processes in which the components of goods are made in
different places around the globe and then brought together as needed to
assemble the final product in response to customer demand. The term flexible
production is used to describe this state of affairs because firms can pick and
choose among a multitude of suppliers and production strategies to compete.
Flexible production regions emerged in response to the new flexible
production strategies and dependencies on outside suppliers. Those regions
also have a different set of labor-owner relations. Post-Fordism experienced
technological advancements like production technologies (automated tools),
transaction technologies (computer-based), and circulation technologies
(satellites) due to Globalization, making it easier for companies to take
advantage of spatial variations in land and labor costs and to serve larger
markets. Deindustrialization and reindustrialization occurred due to economic
restructuring. Deindustrialization is usually seen as a negative element as it
experiences loss of manufacturing activity and related employment in a
traditional manufacturing region in the more developed world.

Reindustrialization is the development of new industrial activity in a region that

has previously experienced a substantial loss of traditional industrial activity.
This process may take various forms. First, there is an increasing tendency for
small and new firms to be more competitive outside the traditional industrial

24
Unit - 1
………………………………………………...………………………………………………………………………… Introduction

areas; second, high-tech industrial activities expand rapidly; third, the

expanding service industry. It is generally assumed that, as an economy
progresses, it undergoes a transition from primary (extractive) to secondary
(manufacturing) to tertiary (service) activities. The service industries, including
transportation, utilities, insurance, real estate, education, health, and
government, are crucial components of any economy. The service industry
grew along with manufacturing during the Industrial Revolution but achieved
its rapid expansion since World War II. Outsourcing followed this, where an
outside firm is paid to handle functions previously handled inside the company
(or government) to save money or improve quality. Outsourcing is a term often
used interchangeably with offshoring. Offshoring is the transfer by a
production or service provider company to another country. Business
processing outsourcing (BPO) is outsourcing back-office and front-office
functions typically performed by white-collar and clerical workers. As firms
become international, their foreign direct investment (FDI) increases, and their
production focuses on overseas customers. For example, raw materials are
brought from Taiwan and Japan to manufacture Barbie dolls and assembled in
the Philippines, Indonesia, and China, while the design and final coat of paint
come from the United States. However, outsourcing is just one small part of
the growing international structure of today's manufacturing and service
enterprises. Transnational corporations (TNCs) have become increasingly
important in the globalizing world economy. TNCs (multinational companies)
are private firms that establish branch operations in foreign nations. The direct
impact of TNCs is limited to relatively few countries and regions. FDI—the
purchase or construction of factories and other fixed assets by TNCs—has
been a significant engine of Globalization. Although more than half of FDI
goes from one developed country to another developed country, a growing
proportion is invested in less-developed economies, potentially stimulating
their economic growth. The primary sources for outward FDI are the countries
home to the largest TNCs: the United States, Europe, Hong Kong, and Japan.
The leading destinations for inward FDI are Hong Kong, China, Singapore,
Mexico, Brazil, and India. Distance and proximity influence where FDI flows
go. For example, FDI from the United States is more likely to go to Latin
America, and Asian countries are more likely to invest in other Asian countries.

1.3.4.2. New Industrial Regions

Due to advances in flexible production, many older manufacturing regions of

East Asian and Southeast Asian economies experienced deindustrialization.
Besides, the places with lower labor costs and the right mix of laws attracted
the new industrial regions. The new industrial regions emerged due to shifts in
politics, laws, capital flow, and labor availability. East Asia, particularly, became
an important new region of industrialization. From South Korea to Singapore,
the islands, countries, provinces, and cities fronting the Pacific Ocean have
gotten caught up in a frenzy of industrialization that has made the geographic
term Pacific Rim synonymous with manufacturing. Throughout the beginning
of the 20th century, Japan was the only global economic power in East Asia.
Other nodes of manufacturing existed, but these were no threat to the regional
dominance of Japan's industrial might. The picture began to change with the
rise of the so-called Four Tigers of East and Southeast Asia - South Korea,
Taiwan, Hong Kong, and Singapore in the 1960s and 1970s. The tigers

25
Block - 1 Fundamentals of Economic Geography
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emerged as newly industrializing countries (NICs) because of shifting labor-
intensive industries to areas with lower labor costs, government efforts to
protect developing industries, and government investment in education and
training. All these NICs experienced a similar shift from agriculture to industry
as Europe experienced in the 19th century. South Korea developed from a
poor rice-producing country to an industrial giant focusing on automobiles and
high-technology products. It developed significant manufacturing districts
exporting products ranging from automobiles and grand pianos to calculators
and computers. One of these districts is the capital, Seoul (with a population of
10.29 million and a density of 16,000 people per sq. km.). Taiwan's economic
planners promoted high-technology industries, including personal computers,
telecommunications equipment, and other high-tech products. Recently, the
South Koreans have moved in a similar direction. The industrial growth of
Singapore was also influenced by its geographical setting and the changing
global economic division of labor. Strategically located at the tip of the Malay
Peninsula, Singapore is a small island inhabited by a little over 5 million
people. Half a century ago, Singapore was mainly an entrepôt (transshipment
point) for such products as rubber, timber, and oil; today, the bulk of its foreign
revenues come from exports of manufactured goods and, increasingly, high
technology products. Singapore is also a center for quaternary industries,
selling services and expertise to a global market. The growth of China's
industrial hub describes the country as the workshop of the world. The
liberalization of China's economy began in 1978 when the country opened up
to international trade and foreign investment. Hong Kong exploded onto the
world economic scene during the 1950s with textiles and light manufactures
from a mere trading colony seven decades ago. The success of these
industries, based on plentiful, cheap labor, was followed by the growing
production of electrical equipment, appliances, and other household products.
Hong Kong's situational advantages contributed enormously to its economic
fortunes. The colony became mainland China's gateway to the world, a
bustling port, financial center, and break-of-bulk point where goods were
transferred from one mode of transport to another. The country is vast and has
a substantial resource base. China planned to speed up the industrialization of
the economy, and their decisions created several major and lesser industrial
districts. Under state planning rules, the Northeast district became China's
industrial heartland due to the growth of heavy industries based on the
region's coal and iron deposits. The Shanghai and the Chang Jiang district,
the second-largest industrial region in China, developed in and around the
country's biggest city, Shanghai. The Chang Jiang district, containing both
Shanghai and Wuhan, became a major contributor to the national economy.
Modern skyscrapers presently dominate the skyline of the cities at the top of
the Chinese urban economic and administrative hierarchy—including Beijing
and Shanghai. At the same time, the Northeast has become China's "Rust
Belt" as many of its state-run factories have been sold or closed or are
operating below capacity. The "Rust Belt" has high unemployment and stalled
economic growth. Eastern and southern provinces have grown into major
manufacturing belts and have changed the map of this part of the Pacific Rim.
China thus has become the world's largest exporter, and its demands for
energy and raw materials are now affecting the global supply of key resources.
However, several of these NIC economies suffered during the financial crisis
of 1997–98 and the global recession in 2008, which resulted in the shrinking of
26
Unit - 1
………………………………………………...………………………………………………………………………… Introduction

the world economy in 2009. However, several reforms that allowed the region
to overcome these economic troubles strengthened East and Southeast Asia's
economies, and the Four Tigers continue to exert a powerful regional—and
international—economic role. Other newly industrializing countries that have
become increasingly significant global production nodes are South Africa and
parts of Central and South America. Brazil, Russia, and India demonstrated a
shift in global economic power away from the traditional economic core. India
became the world's sixth-largest economy. Although industrial production in
India is modest in the context of the country's huge size and enormous
population, major industrial complexes developed around Kolkata (the Eastern
District, with engineering, chemical, cotton, and jute industries, plus iron and
steel based on the Chota Nagpur reserves), Mumbai (the Western district,
where cheap electricity helps the cotton and chemical industries), and Chennai
(the Southern district, with an emphasis on light engineering and textiles). The
main reasons for its remarkable success are - its substantial market,
availability of resources, adequate labor, and relatively sound government
planning. A well-known feature of the Indian economy is the vibrant software
and information technology industry, especially in Bangalore. With a location
midway between Europe and the Pacific Rim, India's economic influence is
rising.

SAQ 2
a) Discuss any two agricultural regions as classified by Whittlesey.
b) Define New Industrial regions and describe how they differ from the
Industrial regions.

1.4 EVOLUTION OF ECONOMIC GEOGRAPHY

AS A SUB-DISCIPLINE
In recent years, economic geography has become a crucial area of innovation
in the social sciences and an essential reference point in the debate about the
processes of global economic change, innovation, finance, and the future of
whole cities and regions.

Economic geography became a wide-ranging multidisciplinary field in the post-

World War II and Great Depression periods. It came to be seen as a peculiar
mix of concepts, methods, cultural conventions, human interests, practices,
and empirical concerns, making it continuous ontologically with all other
concrete social or historical phenomena.

By the late 1950s, the sub-discipline had become more open for aggressive
affirmation backed by emerging quantitative methodologies. Moreover, the
long postwar boom in North America and Western Europe brought a significant
expansion of the Fordist mass-production industry and the emergence of
modern consumer society, accompanied by a complex and deepening system
of spatial disparities. Thus, regional science and spatial analysis tended to
merge to form an intellectual amalgam focused on identifying the regularities
of the space economy. Over the next decade, economic geographers
produced a body of writing of exceptional methodological sophistication and
27
Block - 1 Fundamentals of Economic Geography
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academic quality on virtually every conceivable aspect of how space and
markets interact to create urban and regional development patterns.

Fig. 1.3: Framework of Economic Geography in the Post-World War Periods.

1.4.1 The New Economic Geography

Economists have not been very interested in geography, viewing it as
irrelevant to their goal of understanding the general workings of the economy.
However, it began to change in the early 1990s as the prominent economist
Paul Krugman started to apply economic methods and tools to analyze topics
in economic geography. Krugman termed this new approach the 'new
economic geography (NEG). However, many economic geographers argued
that it should more accurately be called the 'new geographical economics' as it
represented a new form of geographically oriented economics. The field has
multiplied, attracting many economists to apply mathematical modeling
techniques to uneven development, industrial location, and urbanization
questions.

For Fujita and Mori (2005), the New Economic Geography is a new branch of
spatial economies that aims to explain the formation of a large variety of
economic agglomeration in geographical space using a general equilibrium
framework. It is an analytical framework initiated by Paul Krugman in the early
1990s. The NEG had the following characteristics:

 General equilibrium modeling - of an entire spatial economy.

 Increasing returns of indivisibilities - At the level of individual producers or
plants, it is essential for the economy not to degenerate into backyard
capitalism (in which each household or small group produces more items
for itself), which leads to imperfect competition.
 Transport Costs - which makes location matter.
 Locational movement of productive factors - Consumers are the
prerequisite for agglomeration.
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Unit - 1
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Three classes of models in the NEG are as follows:

 Core-Periphery models (Krugman)
 Regional and urban system models
 International models

Core Periphery Model

- Provides a basic introductory framework for the NEG.

- Illustrates how the interaction among increasing returns at the firm's level,
transport costs, and factor mobility can cause the spatial economic
structure to emerge and change.
- Likely to occur
a) When the transport cost of the manufacturers is low enough.
b) When varieties are sufficiently differentiated or.
c) When the expenditure on manufacturers is large enough.

Urban and Regional Systems

- Focus on the spatial coordination of agglomerations (i.e., size, number,

spacing, and inter-industry spatial coordination) while abstracting from the
internal spatial structure of agglomeration.
- "Race-track Economy" model by Krugman
In the above two types, factor mobility is crucial in nesting agglomeration.

International Trade

- A way to study the impact of internal trade on internal geography.

- Increased access to foreign markets weakens core-periphery patterns
within developing economies.

Frontiers in the theory

- Original NEG models rely heavily on the specific functional forms of utility
and production function, transport technology, etc.
- The next step is to work with an alternative set of functional forms and
technological assumptions.
- The results were refinements and extensions of the original NEG setup in
the form of:
 Replacement of the Dixit-Stiglitz monopolistic competition model with
Ottaviano, Tabuchi, and Thisse (OTT) model.
 All the new models went above the assumption that there exists
homogeneity of workers' introduction of migration dynamics; therefore,
to fully understand the spatial distribution of economic activities, one
must consider both market and non-market factors; thus, the introduction
of heterogeneity in the innate skill levels among workers (Mori and
Turrini, 2005).

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 Heterogeneous nature of location space.
 Spatial fragmentation of firms—We introduced a general equilibrium
model of monopolistic competition with two countries to investigate the
possible economic consequences of international fragmentation; this is a
crucial aspect as spatial fragmentations of production represent one of
the main ingredients of Globalization (Fujita and Thisse, 2005).
 The study of accumulation and growth needs to be integrated to face
many conceptual and analytical hurdles; the field is still in its infancy.

Fig. 1.4: Fundamental Concepts in Economic Geography.

SAQ 3
Write a short note on economic geography emerging as a new sub-discipline.

1.5 SUMMARY
In this unit, you have learnt the following:
 Economic Geography systematically studies economic resources and
their utilization within limits set by the physical, economic, and social
environment.
 It is "an inquiry into the production, exchange, and consumption of goods
by people in different areas of the world."
 Economic geographers are trained along four principal lines.
 In recent years, economic geography has become a crucial area of
innovation in the social sciences.
 It has also become an essential reference point in the debates about
global economic change, innovation, finance, and the future of whole
cities and regions.
 The concept of economic activities and their spatial organization.
30
Unit - 1 Introduction
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1.6 TERMINAL QUESTIONS
1. Define economic geography and explain how its scope has changed over
the years.

2. Write an essay on the approaches to economic geography.

3. Elucidate how the new economic geography is different from the traditional
one.

1.7 ANSWERS
Self-Assessment Questions (SAQ)
1. a) The scope of economic geography encompasses the diverse facets and
threads of natural, anthropogenic, and economic activities.
b) Any two approaches to economic geography like regional and systematic
should be discussed.
2. a) Two different agricultural regions, as classified by Whittlesey, should be
discussed.
b) Define industrial regions and new industrial regions.
3. Discuss new economic geography and its emergence in the present times.

Terminal Questions
1. Your answer should include the precise definition of economic geography
and focus on its changing scope. You may refer to Sections 1.2 and 1.3.
2. Briefly shed light on the various approaches of economic geography while
answering this question. You may refer to sub-sec. 1.4.1.
3. Your answer should highlight the subtle differences between traditional and
new approaches to economic geography. You may refer to sub-sec.
1.4.2.2.

1.8 REFERENCES AND FURTHER READING

1. Chisholm, G. G. (1908). Economic geography. Scottish Geographical
Magazine, 24(3), 113-132.
2. Gautam, A. (2013). Elements of Economic Geography, Allahabad: Sharda
Pustak Bhawan Publishers and Distributors.
3. Guha, J. L., and Chattoraj, P. R. (2002). A New Approach of Economic
Geography. Calcutta: The World Press Pvt. Ltd.
4. Hartshorn, T. A. and Alexander, J. W. (1988). Economic Geography, Third
ed. New Delhi: Prentice-Hall of India Private Limited
5. Roy, P. (2007). Economic Geography: A Study of Resources. Kolkata:
New Central Book Agency Pvt. Ltd.
6. Aoyama, Y., Murphy, J.T. and Hanson, S. (2011). Key Concepts in
Economic Geography. London: Sage.

31
Block - 1 Fundamentals of Economic Geography
…………………………………………….……...……………………………………………………………………
7. Krugman, P. (2000). Where in the world is the 'new economic geography?
In Clark, G., Feldmann, M. and Gertler, M. (eds) The Oxford Handbook of
Economic Geography. Oxford: Oxford University Press, pp. 49–60.
8. (https://www.scribd.com/document/673140955/Whittlesey-World-
Agricultural-Systems-upsc)
9. (https://www.studysmarter.co.uk/explanations/geography/regenerating-
places/economic-activity/)
10. (https://www.clearias.com/sectors-of-economy-primary-secondary-tertiary-
quaternary-quinary/)

32
 UNIT 2

KEY CONCEPTS AND DEBATES

Structure
2.1 Introduction: Key Concepts and 2.8 Redistribution and Historical
Debates Accident
Expected Learning Outcomes 2.9 Debate: Specialisation versus
2.2 Space, Place and Scale Diversification
2.3 Agglomeration Economies 2.10 Debate: Localisation versus
2.4 Isotropic Space Decentralisation
2.5 Rational Man 2.11 Summary
2.6 Circular Causation, Multiplier 2.12 Terminal Questions
and Vicious Circles 2.13 Answers
2.7 Economic Landscape and 2.14 References and Suggested
Economic Systems Further Reading

2.1 INTRODUCTION: KEY CONCEPTS AND

DEBATES
In the first unit of this course, you studied the definition, scope, and recent
approaches of economic geography. You also learnt about the geography of
economic activities and the spatial organisation of economies in the same unit.
In addition, you have also studied and become acquainted with the evolution
of economic geography as a sub-discipline within human geography. In this
Unit, you will learn about the key concepts and debates in economic
geography and their contemporary relevance, which extends not only to the
economic geographer but is also closely related to the discipline of economics.

Concepts are considered as the building blocks of a discipline. The nature of

an academic discipline is primarily defined by the fundamental concepts it
uses to describe and explain the subject matter of its inquiry. Economic
geography, as a branch of human geography, deals with the spatial
organisation of the economy. In other words, economic geography maps the
location, distribution and movement of various economic activities in
geographical space.

As a bridge sub-discipline, economic geography shares its key concepts with

geography and economics. While the concepts of space, space and scale are
fundamental concepts of geography, some of the concepts it derives from
33
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Block - 1 Fundamentals of Economic Geography
……………………………………….…………...……………………………………………………………………
economics are rational man, circular causation, multiplier, vicious circle,
economic system, redistribution and historical accidents. Research in
economic geography has broadened our understanding of these concepts. As
a result, these concepts have acquired specific meanings in economic
geography without severing links with their parental disciplines of geography
and economics. Besides these, some concepts (e.g., agglomeration
economies, isotropic space, and economic landscape) have been developed
by economic geographers.

Debates are signs of the health and vibrancy of a discipline and the presence
of scientific and democratic ethos. The continuing existence of academic
debates in economic geography is critical for its development and maturity as
an academic discipline. While economic geography is nearly one and a half
centuries old, it has witnessed many philosophical and methodological
debates. In particular, debates surrounding specialisation versus
diversification and localisation versus decentralisation have been fundamental.

In Sections 2.2 to 2.9 of this unit, we will discuss the meaning and importance
of these concepts in explaining the contemporary spatial organisation of the
global, national and regional economy.Section 2.10 of this unit also focuses on
studying the key debates in economic geography.

Expected Learning Outcomes

After studying this unit, you will be able to understand:
 the fundamental concepts of geography (e.g., space, place and scale)
which are helpful in economic geography;
 the key concepts specific to economic geography, including
agglomeration economies, isotropic space and economic landscape;
 the concepts of economic geography derived from economics, such as
rational man, circular causation, multiplier, vicious circle, economic
system, redistribution and historical accidents; and
 the critical debates in economic geography, such as specialisation versus
diversification and localisation versus decentralisation.

2.2 SPACE, PLACE AND SCALE

The Oxford Encyclopedic English Dictionary (1991: 1389) defines space in two
ways: (1) a continuous unlimited area or expanse which may or may not
contain objects, etc., and (2) an interval between one, two, or three-
dimensional points or objects. In geography, space means extent or area. It
usually stands for the Earth’s surface. The term space in geography is not
used in the sense of outer space or space in the sense of arranging things in
orderly rows. The term spatial describes a particular type of distribution that is
spread out over a surface rather than one that categorises objects, such as a
statistical distribution. It indicates an occurrence that occupies a portion of the
Earth’s surface.

Geographers usually identify three types of space - absolute, relative and

relational. Absolute space is also known as the three-dimensional Euclidean
view of space. It is expressed as a straight line between two points or a three-
34
Unit -2 Key Concepts and Debates
……………………………………………………………...……………………………………………………………
dimensional volume that any phenomenon may occupy. Absolute space is
fixed. We record or plan events within its frame. Socially, this is the space of
private property, and other bounded territorial designations (such as states,
administrative units, city plans and urban grids) (Harvey, 2004).

Relative space is a non-physical view of space. According to David Harvey

(2004: 2-3), ‘the relative notion of space is mainly associated with the name of
Einstein and the non-Euclidean geometries that began to be constructed most
systematically in the 19th Century. Space is relative in the double sense: that
there are multiple geometries to choose and that the spatial frame depends
crucially upon what is being relativised and by whom.’ Harvey (2004) further
states that ‘the uniqueness of location and individuation defined by bounded
territories in absolute space gives way to a multiplicity of locations that are
equidistant from, say, some central city location. We can create completely
different maps of relative locations by differentiating between distances
measured in terms of cost, time, and modal split (car, bicycle or skateboard)
and even disrupt spatial continuities by looking at networks, topological
relations (the optimal route for the postman delivering mail), and the like.’
Human geographers consider space as a social construct. Accordingly, they
use the concepts of time-space, cost or economic space, cognitive or
perceived space, convenience space and social space to understand the
relationship between people and their environment. These concepts signify
space as a relative phenomenon (i.e., relative space).

In a relational sense, on the other hand, space is perceived as containing and

representing within itself other types of relationships between objects. For
example, the space in the centre of a town contains and represents within
itself relationships deriving from valuation which society chooses to place on
particular locations within its occupied space (Mabogunje, 1980: 52).

The concept of space empowers economic geographers to ask basic

questions like where a particular economic phenomenon occurs on the Earth’s
surface. The idea of space is central to the field of economic geography as all
of its models and theoretical explanations use space not only to describe the
location and distribution of economic phenomena (industries, land use, retail,
shops, trade, etc.) but also as an explanation for the spatial pattern that they
form on the Earth’s surface. For example, David Harvey (1982) has sought to
understand the effect of accumulation of capital in specific geographical
spaces such as metropolitan cities. Dorren Massey (1995) has used the
concept of space to understand spatial division of labour and geography of
production.

While space has occupied centrality in the agricultural and industrial location
theories, these theories were based on an abstract notion of space. This
space is homogeneous and without any content. In short, space was
synonymous with distance. The concept of distance was used as an
explanation for economic phenomena. In recent years, this simplified and
abstracted notion of space has been questioned. During the 1990s, economic
geography underwent new developments. It saw the beginning of rapid
development in the field of spatial economics, which is also called new
economic geography. Spatial economics aims to develop spatial theories to
explain the location and distribution of economic activities on the Earth’s
35
Block - 1 Fundamentals of Economic Geography
……………………………………….…………...……………………………………………………………………
surface. It has drawn scholarly attention as a new frontier in the study of
economics. This fast-emerging field focuses on the spatial dimension of
economic activity. This is one area which mainstream economists have often
ignored. Spatial economics is based on the idea that the interaction between
agglomeration and dispersion forces determines the distribution of a particular
economic activity on the Earth’s surface. Agglomeration force draws economic
activity to a specific region, while dispersion force disperses economic activity
throughout the surrounding area (Satoru, Kumagai, IDE,
https://www.ide.go.jp/English/Research/Topics/Eco/Spatial/overview.html).
The new economic geography treats space as a complex socio-economic and
bio-physical process entity. It is based on the premise that understanding
space in all its complexity is key to understanding economic activities.

The place is also a fundamental concept of economic geography. It stands for

a space or location with attached meaning, value or significance for the human
being. It is also defined as an area of the Earth’s surface having a specific
location, unique bio-physical and human characteristics, and interconnected
with other places. Thus, a place has three components - location, locale, and
feeling. The location of a place is its position on the Earth’s surface. Locale
stands for the bio-physical and socio-cultural settings of a place. People living
in an area are attached to their place in many ways and develop a feeling for
that place over time. A feeling or sense of place is the emotional attachment of
people to an area based on their experiences.

Places can be large or small. The boundaries of places are not fixed, and so
are its constituting characteristics. They keep changing with time due to
physical, biological and socio-economic processes and technological changes.

Economic geographers use the concept of place to capture the uniqueness or

character of specific places carved out of space in terms of economic
structure. They examine the richness and complexity of particular places and
economic processes through the concept of place, which is always rooted in
natural, social, cultural, institutional, and political settings.

Geographers use the term scale in at least two distinct sense, i.e., in the
cartographic sense (for mapping the Earth or its parts) and in the broader
geographical sense (for understanding human activities on the Earth). In the
cartographic sense, scale is a vital geographic tool for creating, reading and
interpreting maps. When specifically applied to cartography, scale stands for
the relationship of an object’s length on a map to its actual distance on Earth.
Cartographic scale is presented in three ways: a fraction or ratio, a written
statement or a graphic bar scale.

On the other hand, geographers consider a spatial continuum of scales when

they try to understand space and place. These range from individual and
community scales to the global. Generally, geographers think about scale at
three levels - global, regional and local (Rubenstein, J. 2007). At the
worldwide scale, geographers identify broad patterns encompassing the entire
world. At the local scale, they recognise that each place on Earth is in some
ways unique. Geographers construct a regional scale between the local and
global. A region is an area of considerable size characterised by homogeneity
or a unique combination of physical and human features.

36
Unit -2 Key Concepts and Debates
……………………………………………………………...……………………………………………………………
In economic geography, the term scale refers to the size of the geographical
area in which a particular economic activity is studied. For example, trade
theory is developed internationally, and the national economies are studied at
a state scale. Urban and regional economies are studied at a sub-state or
regional scale. In recent years, local economies have grown in importance,
which is studied at spatial scales ranging from a household to a village to a
cluster smaller than an urban centre.

SAQ 1
What is new economic geography?

2.3 AGGLOMERATION ECONOMIES

Agglomeration economies are key factors of industrial location and a
fundamental concept of economic geography. It refers to the benefits the firms
gain by coming together to use the advantages available at an urban centre or
industrial cluster. Agglomeration economies are a powerful force that helps
explain the advantages of the clustering effect of many economic activities
ranging from retailing to transport terminals (Rodrigue, J. P., 2020). According
to Rodrigue (2020), there are three major categories of agglomeration
economies.

 Urbanisation economies: It refers to the benefits derived from population

agglomeration, such as common infrastructures (e.g., technology parks,
health care, education, entertainment, sports and transportation), the
availability and diversity of the market and labour. They favour the growth
of urban centres.

 Industrialisation economies: It refers to the benefits derived from the

coming together of co-dependent industrial activities in one place, such as
being their respective suppliers or customers. This favours the emergence
of industrial clusters.

 Localisation economies: It refers to the benefits derived from the

agglomeration of a set of activities near a specific facility, whether it is a
transport terminal (e.g., logistics parks),availability of specialised skills,
tradition, a seat of government (lobbying, consulting or law) or a large
university, technology parks, etc.

In Figure 2.1, three activities (P, Q, and R), having their respective locational
constraints, can benefit from agglomeration economies if they are located in
area A (Rodrigue, J. P., 2020). The additional transport costs that accrue may
be compensated by the cheaper functional linkages among activities. For
instance, a shopping mall comprises many unrelated commercial activities that
would otherwise have their location based on specific factors. They greatly
benefit from this clustering by sharing a common facility with many amenities
(parking lots, public space, food courts). Consumers combine multipurpose
commercial trips into one. The same rationale applies to logistics parks. Here,
distribution centres in very different supply chains are located to take
advantage of shared infrastructure and accessibility to transportation systems.
37
Block - 1 Fundamentals of Economic Geography
……………………………………….…………...……………………………………………………………………
G. Giuliano, S. Kang &Q. Yuan (2019) believe that agglomeration economies
are the external benefits firms receive from the co-location of several related
activities. In theory, there would be geographic clustering if external benefits
are more significant than the added costs of higher rents, wages, and
transport costs due to the coming of economic activities in spatial proximity. If
the opposite were the case, firms would disperse to lower-cost places. In
reality, the high cost and geographically fixed nature of the built environment
(infrastructure systems, buildings, etc.) would discourage any rapid change in
urban form due to changes in agglomeration economies. However, over time,
changes in agglomeration economies have shown a strong relationship with
the density of population and concentration of economic activity.

G. Giuliano, S. Kang &Q. Yuan (2019) consider agglomeration economies to

be a fundamental explanation for the existence of cities. According to them,
spatial clustering causes a variety of external benefits such as labour sharing,
sharing of suppliers, and specialisation. These, in turn, contribute to increased
productivity and economic growth. Over the past several decades, the
strength and nature of agglomeration economies have come into question. In
the 1990s, it was argued that information and telecommunications technology
would reduce the need for physical proximity. This, in turn, would decrease the
role of agglomeration economies; it would, in turn, lead to the decentralisation
of economic activity and the decline of the importance of cities. But in reality,
agglomeration has not diminished as expected due to the information
technology revolution.

Fig. 2.1: Agglomeration economies

(Source: Redrawn from Rodrigue, J. P., 2020).

SAQ 2
Define localisation economies.

38
Unit -2 Key Concepts and Debates
……………………………………………………………...……………………………………………………………
2.4 ISOTROPIC SURFACE
The isotropic is made up of two Greek words: iso (meaning equal)
and tropos (meaning direction). Isotropy is the claim that the universe
appears the same in all directions. An isotropic space remains uniform at all
points in all cardinal directions concerning surface features (both physical and
cultural) and material properties. This kind of environment will be conceivable
only in an area whose land surface is plane and people inhabiting there
possess similar characteristics.

In economic geography, the term isotropic space is used for a region with the
same properties everywhere. Such a region is not found in reality. Instead, it is
an intellectual construct needed in various economic geography models. For
example, a German geographer, Walter Christaller (1893-1969), developed
his Theory of Central Place (first published in 1933) to offer geometric
explanations of the relationship between the size and spacing of settlements.
It seeks to explain how settlements of varying size and functional importance
are located in relation to one another and why settlements function as
hamlets, villages, towns, or cities. This theory is based on a set of
assumptions centered around the characteristics of geographical space.
Space-related assumptions of his theory are: (1) there is an isotropic plane
(i.e., flat surface) which is uniform and on which natural resources are
uniformly distributed, (2) human population is uniformly distributed on the
plane surface, (3) all consumers living in the isotropic place have equal
purchasing power, and (4)all consumers have same taste or demand for the
goods and services. Similarly, Alfred Weber’s Theory of Location of an
Industrial Plant uses isotropic space, which has no variations in transport
costs except a simple function of distance.

SAQ 3
What isotropic surface is vital in location theories?

2.5 RATIONAL MAN

The term rationality is a matter of taking a decision based on what the
evidence indicates to be the best reasons. The term is associated with
economic man. Economic man is also known as homo economicus. It refers
to an idealised person who acts rationally, with perfect knowledge and seeks
to maximise personal utility or satisfaction. Theories based on economic man
provide a foundation for understanding how people make financial decisions.
These theories have been used to explain a wide range of economic
behaviours, such as production, consumption and travel behaviour. The
economic man is an assumption of many theories and models in economic
geography (e.g., theories of industrial location and land use). These models
make use of ‘comprehensively rational” economic man. They consider
humans as consistently rational and objective agents while making locational
decisions in space.

39
Block - 1 Fundamentals of Economic Geography
……………………………………….…………...……………………………………………………………………
Earlier, the economic man was supposed to be an entirely rational creature.
Since rationality now included assessing probabilities consistently, the
economic man too could be expected to do that. A shortcoming of the
economic theories based on economic man is that these theories assume
individuals always act in their own self-interest. However, in reality, people’s
decisions are also influenced by their emotions or cognitive biases.

Therefore, Herbert Simon disputed that the “rational” model was best. He
introduced the concept of bounded rationality to explain the process of
decision-making. He showed how people departed from the rational model for
making decisions. It is based on the idea that rationality has limits when
individuals make decisions. Under the situation, rational individuals often
make a satisfactory rather than optimal decision. In other words, decisions
should be good enough rather than the best possible decision.

1 Point of View Strengths Weaknesses When to use it

Decisions should be Consistent, Doesn’t To make big
DECISION
made systematically, rational always decisions with long
ANALYSIS
even in the face of teachable account for investment horizons
uncertainty. Decision limits of time, and reliable data –
trees provide a data, and in oil and gas and
framework, and human pharma; whether to
Bayesian statistics cognitive go grad school. Also
provide rules for abilities. in negotiations and
revisiting probability group decisions.
assessments.
2 When people make Based on Not always To design better
decisions under observed clear how to institutions, warn
HEURISTICS
uncertain conditions, human apply to ourselves away
AND BIASES
they rely on rules of behavior actual from dumb
thumb, or heuristics, decision mistakes, and better
that sometimes yield making understand the
reasonable priorities of others.
judgments but
sometimes cause big
errors.
3 The heuristics that Simple, Can be hard In predictable
people use to make without to know in situations with
GOING WITH
decisions are often extraneous advance opportunities for
YOUR GUT
very effective. information whether a learning –
heuristic will firefighting, flying,
work. sports. Also, in
highly uncertain
situations where
you can’t
necessarily rely on
data.
Fig. 2.2: Three decision-making philosophies.
(Source: Justin Fox, May 2005)

SAQ 4
Identify the limits of rational man.

40
Unit -2 Key Concepts and Debates
……………………………………………………………...……………………………………………………………
2.6 CIRCULAR CAUSATION, MULTIPLIER
AND VICIOUS CIRCLES
Circular causation is a theory developed by Swedish economist Gunnar
Myrdal in 1954 to explain regional disparities in the level of development in a
capitalist system. It can be defined as a situation wherein several causes and
effects are interlinked in a complex way, where an action is controlled or
affected by its outcome or results. It is a multi-causal approach where the core
variables and their linkages are delineated. The concept is based on the idea
that a change in one form of an institution will lead to successive changes in
other institutions. These changes are circular in that they continue in a cycle,
many times in a negative way, in which there is no end, and cumulative in that
they persist in each round. These changes do not occur all at once as that
would lead to chaos; rather, the changes occur gradually. The concept of
circular causation helps to explain regional disparities in the development
process between developed and developing countries and inter-regional
disparity between developing countries.

At an international scale, Myrdal believes that the process of economic

development results in a circular causation process, resulting in the rapid
development of already developed countries while weaker countries tend to
lag and remain poor. These concepts originated in Gunnar Myrdal’s
International-Trade Theory. Myrdal believes that international and inter-
regional economic relations involve unequal exchanges and unidirectional flow
of capital and labour. The stronger nations always exploit the weak nations
and regions. Myrdal also explains the process of growing regional disparity in
the process of economic development with the developing countries of the
world. To illustrate the process, he introduced the concepts of backwash
effects and spread effects.

Economic development in a region brings benefits not only in the region where
it occurs but it also produces some adverse effects in the surrounding regions.
The backwash effect (centripetal forces) refers to a process whereby when a
particular region in a country starts experiencing economic development, it
attracts people, human capital, physical capital (infrastructure, finance,
machines, etc.) and raw material from the poorer regions of the country to
gravitate towards itself. It renders the other areas worse off because their best
brains and capital leave them to the growing centre. In other words, the
backwash effect refers to a situation wherein economic growth in the core
region adversely affects the economic development in their peripheries by
attracting people and economic activity away from their peripheries.

On the other hand, the spread effect (centrifugal forces) refers to a situation
wherein the positive impact of economic development in the core region on
the nearby localities and labour markets exceeds the adverse impact. The
spread effect positively impacts surrounding regions if jobs, population, and
wealth overflow into these regions. The spread effect encourages the self-
expansion of new centres. Peripheral areas producing raw materials may
develop due to increasing outlets of agricultural products and may remain
stimulated continuously due to technological diffusion from the core area.

41
Block - 1 Fundamentals of Economic Geography
……………………………………….…………...……………………………………………………………………
The leading cause of regional disparities between core regions and their
peripheries is strong backwash effects and weak spread effects. Developed
regions develop at a faster rate at the cost of backward regions. Income
earned by developed regions is not reinvested in the backward areas but is
repatriated to the developed sectors/regions, leading to more development in
already developed regions. As a result, over time, this process increases the
disparity between the developed and backward regions.

In an ideal situation, there should be an equilibrium between the backwash

and spread effects. However, regional inequalities are much more profound in
developing than developed countries. This is because the spread effects
continue to become stronger in developed countries while the backwash
effects remain a salient feature of backward countries. It is believed that the
higher the level of economic development a country has already achieved, the
greater the possibilities of a higher spread effect due to improvement in
transportation and communication, higher level of education and more
dynamic communication of ideas and values. In other words, economic
development becomes an automated process once a country has attained a
higher level of economic development, i.e., development becomes its cause.

On the other hand, the major causes of the backwardness of developing

countries are weaker spread effects and more potent backwash effects. In
these countries, poverty becomes its cause in the cumulative process. No
doubt, there are some spread effects from nodal regions to the hinterland. For
example, the hinterland supplies raw materials and cheap labour to the
developed countries and receives consumer goods and services from there.
However, these spread effects never help in the self-expansion process in
rural hinterland. Myrdal describes the backwash effects of migration, the
movement of raw material and capital from backward regions to the core
region. The peripheral regions largely remain agricultural and are
characterised by low economic productivity.

In an economic system guided by capitalism, the profit motive is the primary

consideration of the spatial location of firms, and it results in the development
of those regions where the profits are maximum. Due to the free play of
market forces and the absence of any policy interferences, already developed
regions attract industries, banking, insurance, trade, transportation, and other
economic activities. Economic activities tend to cluster in these areas due to
their competitive advantage. Non-economic activities, such as science, art,
literature, and high culture, follow economic activities in these areas.

The concept of multiplier is used in economics to explain numerical coefficient

(a fixed number that is multiplied by a variable). It shows the effect of a
change in total national investment on the total national income. Introducing a
new industry or expanding an existing industry in an area also encourages
growth in other industrial sectors. This is known as the multiplier effect. In its
simplest form, it refers to how much money that is spent circulates through a
country’s economy.

Money invested in an industry helps to create jobs directly in the industry, but
it also creates jobs indirectly elsewhere in the economy. New industrial
development, for example, requires construction workers who themselves

42
Unit -2 Key Concepts and Debates
……………………………………………………………...……………………………………………………………
need housing and services such as schools and shops. An increased
demand for food will benefit local farmers, who may increase their spending
on fertiliser. Workers employed directly in the new industry increase the local
supply of skilled labour, attracting other companies who benefit from sharing
this labour pool. Other companies who supply components or use the latest
industry products are attracted to the area to benefit from reduced transport
costs.

Spin-off effects include new inventions or innovations that may lead to further
industrial development and new linkages. An area can develop as a growth
pole through this multiplier effect.

A vicious circle (or cycle) is a complex chain of events that reinforces itself
through a feedback loop with negative results. It is applied to explain the
persistence of poverty among households, communities or in a region. It is
also known as generational poverty. It implies that poverty is the cause of
poverty. The concept is used to explain when a household remains poor for
two or more two generations. Once a household becomes poor, it is very likely
that there would be no significant change in its economic status without
external intervention. A poor household may not have the capital to meet its
basic requirements for food, clothing, shelter, a marriage of children or health
care. The head of the household will borrow money from banks or private
money lenders. He may borrow more because he may not have sufficient
income to repay debt. Further, interest rates in debt keep rising with time. In
the process, he/she will add the household debt. In both ways, the
household’s total debt will increase with time. The household head has no
other option but to pass on the household debt to the next generation. In the
process, his children will be caught in the poverty trap. They will spend their
life to repay the debt their father/mother borrowed. Thus, the vicious cycle
concept is used to explain why poor people remain poor and how poverty is
passed to future generations.

The vicious cycle of poverty can be explained with the help of Figure 2.3. A
poor household will have low savings; therefore, they cannot make
investments, leading to a lack of per capita capital, lower productivity and low
income. A household with low income means a poor household.

43
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Fig. 2.3: Nurkse Model of Vicious Cycle of Poverty (VCP)

(Source: Redrawn from R. Nurkse, 1953)

SAQ 5
Define the backwash effect.

2.7 ECONOMIC LANDSCAPE AND ECONOMIC

SYSTEM
Landscape is a key concept of geography. It refers to the totality of an area’s
visible natural and human-made features. It shows how an area appears
before our eyes due to the constant interaction of society and the environment
over time. Like any other human activity, an economic activity leaves its
imprint in a given geographical space. Therefore, the concept of landscape is
also applied to the economy. The economic landscape is a territorial
expression of the economic space. The economic space is an economy-
dominated territory, accommodating a variety of spatial objects and links
between them: settlements, farms, factories, mines, religious structures,
recreational areas, transport and engineering networks. Each region has its
own internal space and connections with the external space.

The term economic landscape helps to define the complex relationship

between the economic activities performed by the society and the natural
environment in which such activities occur. Natural resources, environmental
conditions and the geographical setting provide the basis for the economic
development of a region. The socio-cultural settings of economic actions and
interactions are also considered in forming the economic landscape.

Besides resources and infrastructure, production and distribution activities are

important factors in economic landscapes. Thus, an economic landscape may
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Unit -2 Key Concepts and Debates
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be defined as an area of the surface of the Earth with natural boundaries,
within which natural components form an interconnected and interdependent
whole with at least key elements – production, market, transportation,
technology and administration.

Another critical factor is the linkage (i.e., the link between places established
due to the movement of goods, commodities, innovations, people and services
between them). As economic phenomena are not restricted to the landscape
in which they evolve, economic geographers analyse the economic landscape
by linking it to the broader regional economy. Inter-regional exchange patterns
are also considered for exploring the economic landscape.

The economic landscape is created by humankind in geographical space. It is

the physical expression of our varied economic activities: agriculture, mining,
manufacturing, and services of different types. For example, along the foothills
(duars) of West Bengal, the economic landscape appears as a layer that is
spread over the physical landscape. It is spatially expressed in the well-
managed tea plantation farms, houses of tea workers, tea processing sites
and roads linking these elements. Similarly, the economic landscape of
coastal areas of Odisha is characterised by rice fields, coconut trees, regularly
spaced interconnected villages, ponds, and other water bodies. The economic
landscape of coal mining towns is characterised by mines, derelict
landscapes, houses of mining workers and offices, roads and railways, etc.
Thus, the economic landscape of a region is an expression of the economic
activities and associated physical infrastructures in the form of buildings and
roads. Human economic activities have produced wide-ranging and, in places,
far-reaching transformations of the physical landscape.

An economic system is a means by which societies, governments or markets

organise and distribute available resources, services, and goods across a
geographic region or country. Economic systems regulate the factors of
production, including land, capital, labour, and physical resources. Many
institutions, agencies, entities, decision-making processes, and patterns of
consumption comprise the economic structure of a given community.

There are many questions that arise when it comes to the economic
organisation of a country: what to produce, how to produce, when to produce,
how it is distributed, and which entity controls the economic processes.
Answering these questions helps us understand and interpret the design of an
economic system. For example, in a capitalist system dominated by the free
market, prices and production decisions are greatly controlled by private
entities. The government intervention is minimal. On the other hand, socialist
economies are characterised by the state’s control over the production and
distribution of resources and other economic processes.

Based on the economic organisation of a country, four types of economic

systems can be identified- traditional economies, command economies, mixed
economies, and market economies. Each has its distinctive characteristics,
although they also share some basic features. Each economic function is
based on a unique set of geographical and socio-economic conditions.

The traditional economic system is based on goods, services, and work. This
system relies a lot on people. There is very little division of labour or
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specialisation. The division of labour is based on age and sex. People depend
on natural resources for their survival and sustenance. The role of human and
animal power is crucial in doing economic activities. The traditional economy
is simple and the oldest of all economic systems. In some less developed
countries and isolated and backward regions, traces of traditional economic
systems are visible. It is commonly found in rural settings in third-world
nations, where economic activities are predominantly farming or other
traditional income-generating activities. This system lacks the potential to
generate a surplus. Due to its small output, there is very little wastage. Thus,
despite its primitive nature, it is highly sustainable.

In a command economic system, there is a dominant centralised authority,

usually the government. It controls a significant portion of the economic
structure. It is known as a planned system. This system is common in
communist societies. Here, economic production decisions are taken by the
government. The command system works very well as long as the central
authority exercises control with the interests of citizens in mind. However,
command economies are rigid compared to other systems. They react slowly
to change because power is centralised. They are vulnerable to economic
crises or emergencies as they cannot quickly adjust to changing conditions.

The market economic systems are based on the concept of free markets. In
other words, there is very little government interference. The government
exercises very limited control over resources. It rarely interferes with the
working of the economy. The regulation of the economy is left to the market.
However, the free market does not exist. All economic systems are subject to
some interference from the government. For instance, most governments
enact laws that regulate production and exchange. A market economy
facilitates innovations and growth. Economic growth is very high under a
market economic system. The greatest drawback of the market economy is
that it allows private entities to amass a lot of economic power without
considering the needs of less fortunate people. Further, the distribution of
resources is not equitable. The powerful control most of the resources and
enjoy the fruits of economic growth.

The mixed economic systems combine the characteristics of the free market
and state control. They are also known as dual systems. Sometimes, the term
is used to describe a market system under strict regulatory control. Many
countries, including India, follow a mixed system. Most industries are private,
while the rest, composed primarily of strategic value, are under the control of
the government. A mixed system combines the best features of market and
command systems. However, they face the challenge of finding the right
balance between free markets and government control. Governments tend to
exert much more control.

SAQ 6
Define economic landscape.

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Unit -2 Key Concepts and Debates
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2.8 REDISTRIBUTION AND HISTORICAL
ACCIDENT
The term redistribution refers to sharing resources and wealth in a just and
fairer way. For example, redistribution is the act of sharing wealth and
resources of the country in favour of the poor and weaker section of the
society or less developed region. Many countries are witnessing growing
regional inequality regarding material resources and quality of life. It is also
increasing globally, most dramatically across the line that divides North from
South. The growing social and regional economic inequality at various spatial
scales has led to the increasing demand for change in how resources and
wealth are distributed.

There are at least three processes by which redistribution can take place. First
is the changes in the government policy. Taxation and subsidy policies can
significantly redistribute economic activities within a state. For instance, tax
incentives provided by a government to promote industrial development in
specific areas can lead to the redistribution of manufacturing activities from
one region to another. Similarly, progressive taxation on rich people and
subsidies to poor people can minimise economic inequality. The development
of infrastructure is also an important component of redistribution. Building new
transportation infrastructure, such as roads, railways, airports, seaports, and
urban centres, can redistribute economic activities in geographical space. The
idea is that improvement inaccessibility can potentially attract businesses and
populations to previously remote or less developed areas. Finally, trade
agreements favouring the poorer countries can reduce global disparities in
wealth and resources. Finally, technology transfer from developed to
developing countries can generate economic opportunities in the later
countries.

The idea of historical accidents implies that there’s nothing natural or

inevitable about the economic geography of a region. Instead, they see it as
the profound result of historical accidents. Historical accidents have had
profound effects on economic geography in many ways. The unplanned
growth of urban centres often results from many historical accidents. Such
factors as the availability of natural resources, strategic locations for trade or
defence, or some random events, such as war, can lead to the emergence
and growth of an urban centre. For example, it is widely believed that
Chandigarh was built as the capital city of the Indian state of Punjab after
partition as Lahore, the capital of the united province of Punjab, went to
Pakistan after the partition.

Some historical events, such as wars, can influence infrastructure

development. For instance, the rapid expansion of road networks in the
Himalayan states of India after 1962 took place due to the Indo-China War.
These roads enhanced the accessibility, economic connections, and
development patterns in the remote mountainous valleys of the Himalayas.

Some historical accidents, such as wars, political changes, or technological

breakthroughs, can cause industries to relocate. For example, the decline of

47
Block - 1 Fundamentals of Economic Geography
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th th
handlooms in India during the 18 and 19 centuries occurred due to British
policy and the development of textile factories in India.

Sometimes, the arbitrary drawing of borders and establishment of new political

systems by the colonial powers influenced the economic geography of many
countries. For example, the partition of India led to changes in the cotton
textile industry in western India and the jute industry in eastern India due to a
decline in the supply of raw materials. It is also observed that catastrophic
events, such as earthquakes, floods, or tsunamis, can reshape economic
geography by destroying infrastructure, altering trade routes, or leading to the
migration of industries and people. The tsunami of 2004 destroyed buildings
and infrastructure in the coastal areas of India. Subsequently, the coastal
region was rebuilt due to the efforts of the government and other agencies.

These historical accidents cause less short-term than long-term changes that
shape the economic geography of a region or of a country. It can cause their
economic development or decline.

SAQ 7
Define historical accident.

2.9 DEBATE: SPECIALISATION VERSUS

DIVERSIFICATION
Usually, the business strategy of a company or a place centres around options
of specialisation and diversification. Specialisation is a business strategy that
involves a company or a region focusing on a limited range of production.
They may offer limited products and services. A business/region can
specialise in a specific product to cater to a customer’s specific needs. They
continuously improve those products to increase profits through market
competitiveness. Individual business people can also specialise in a single
product or service by focusing their attention and assets on a single market
product. It is believed that specialisation eliminates opportunities for market
growth. However, in a purely economic sense, specialisation is considered
less risky than diversification. In a geographical sense, specialisation entails a
situation when a region produces certain goods. A particular region or locality
becomes famous for a specific product. An area or place specialises and
gains expertise in one product, skill, or service. It becomes globally known
with time because it enjoys a comparative advantage in that product or
service. The Indian Railways policy of ‘One railway station, one product’ is an
example of a specialisation strategy. The other example could be the
preferment for the production of specific products in specific regions of India
(such as sweets, cuisines, fruits, beverages, crops, etc.).

On the other hand, diversification is the business strategy that focuses on

producing numerous products, services, locations, and customers to
strengthen a business’s portfolio. Business or production diversification aims
to expand marketing opportunities by accepting diverse profit opportunities.
Diversified businesses grow products, create more efficient means of
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Unit -2 Key Concepts and Debates
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production and develop new service opportunities for their customer base.
Diversification usually appeals to a previously unavailable audience. A
company may diversify products or services based on items that the company
has sold before. For example, an agricultural seeds company can diversify its
market by selling new seeds, agricultural equipment, fertiliser or insurance. In
a geographical sense, diversification reduces portfolio risk by avoiding
excessive concentration in any region or market. In other words, it involves
investing in many areas and countries. For example, a company traditionally
invested in a developed country may invest in developing countries with higher
growth potential. Diversification invites a certain amount of risk, but the
company can reduce it by meticulously planning its funds, production time and
marketing strategies.

SAQ 8
Define diversification.

2.10 DEBATE: LOCALISATION VERSUS

DECENTRALISATION
Localisation and decentralisation are planning strategies adopted by the state
for balanced regional development. The dictionary meaning of localisation is
making something local or restricting it to a particular place. A preliminary
definition of economic localisation is given by Johanisova (2007):

Economic localisation can briefly be defined as both the process and the result
of moral, political and practical support for locally owned businesses (including
co-operatives, community enterprises, etc.) that use local resources, employ
locals and serve primarily local consumers. Hence, local ownership,
production and consumption, and localisation entail efforts at local self-
sufficiency and declining reliance on imports. It leads to a more diversified
economy in producing goods and services. The content of the term ‘local’ (i.e.
the scale) varies considerably, depending on the authors and the perspective
they have adopted. An important strand of most localisation thinking is the
support of localised finance, credit and capital investment, local currencies as
well as a non-commodified and non-monetised economy. In some
perspectives, localisation also entails or leads to a decentralisation of
settlement, government and production, and communal ownership of capital.
The thrust for localisation has both pragmatic and ethical underpinnings.

According to Shuman (2006), going local does not mean walling off the
outside world. It means nurturing locally owned businesses that use local
resources sustainably, employ local workers at decent wages, and serve
primarily local consumers. It means becoming more self-sufficient and less
dependent on imports. Control moves from the boardrooms of distant
corporations and back to the community, where it belongs. Hines (2000)
defines localisation as a process which reverses the trend of globalisation by
discriminating in favour of the local.

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Three geographical dimensions of localisation can be identified on the basis of
the above definitions. Firstly, it is a process to shorten distances between
production and consumption. Secondly, it accords preference for locally
sourced factors of production, whereas know-how and innovations are globally
shared. Finally, it emphasises the sustainability of production and
consumption.

Decentralisation may be defined as the transfer of powers and responsibilities

from the central government to elected authorities at the subnational level
(regional governments, municipalities, etc.), having some degree of
autonomy. The OECD defines decentralisation as the transfer of powers,
responsibilities, and resources from central government to subnational
governments, which are defined as legal entities elected by universal suffrage
and having some degree of autonomy. In this definition, decentralisation is not
only about transferring powers, responsibilities and resources. It is also about
reconfiguring the relationships between the central and subnational
governments towards more cooperation and coordination (Devas and Delay,
2006). Some other terms associated with decentralisation are devolution,
delegation, decentralisation and decongestion. Devolution is the transfer of
powers from the central government to lower-level autonomous governments,
which are legally constituted as separate levels of
government. Delegation involves transferring decision-making and
administrative authority for well-defined and specific tasks from the central
government to semi-autonomous lower-level units, such as state-owned
enterprises or urban and regional development corporations. De-concentration
is a geographic displacement of power from the central government to units
based in a region.

SAQ 9
Define decentralisation.

2.11 SUMMARY
In this unit, you have learnt the following:
 Concepts are the building blocks of a discipline, and the nature of an
academic discipline is defined by the fundamental concepts it employs to
describe and explain the subject matter of its inquiry. As a bridge sub-
discipline, economic geography shares its fundamental concepts with
geography and economics.
 While space, place and scale are basic concepts of geography, some of the
concepts it derives from economics are rational man, circular causation,
multiplier, vicious circle, economic system, redistribution and historical
accidents. Research in economic geography has broadened our
understanding of these concepts. As a result, these concepts have
acquired specific meanings in economic geography without severing links
with their parental disciplines of geography and economics. Besides these,
some concepts (e.g., agglomeration economies, isotropic space and
economic landscape) have developed within economic geography.
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Unit -2 Key Concepts and Debates
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 Debates are signs of the health and vibrancy of a discipline and the
presence of scientific and democratic ethos. The continuing existence of
academic debates in economic geography is critical for its development
and maturity as an academic discipline.
 While economic geography is nearly one and a half centuries old, it has
witnessed many philosophical and methodological debates. In particular,
debates surrounding specialisation versus diversification and localisation
versus decentralisation have been fundamental.

2.12 TERMINAL QUESTIONS

1. Describe the concept of economic space.

2. Discuss the significance of rational man in theories of economic geography.

3. Describe various types of economic systems.

4. Discuss the debate of specialisation and diversification in economic

geography with examples.

5. Critically examine reasons for the decentralisation and localisation as

development strategies.

2.13 ANSWERS

Self-Assessment Questions (SAQ)

1. During the 1990s, new economic geography developed to seek an
explanation of economic activities with the help of a theoretical construct
that accorded primacy to space in all its complexities. It has been defined
as a locational theory of production which seeks to explain the mechanism
of formation and evolution of the economic spatial structure.
2. Localisation economies are examples of agglomeration economies. They
refer to the benefits that can be derived from clustering a set of activities
near a specific facility, e.g., a transport terminal, specialised skills, historical
tradition, or a technology park.
3. The presence of an isotropic surface means that the land surface is plane,
and people inhabiting it possess similar characteristics. It means all other
spatial factors except distance remain constant. A simplified and abstracted
space ensures that an explanation for the location of industries and
variations in land use becomes easier because only one variable, i.e.,
distance, is used in the analysis.
4. A significant limitation of theories based on rational man is that they
assume that an individual always acts rationally for profit maximisation.
However, in reality, individuals’ decisions are also influenced by their
emotions or cognitive biases.
5. Backwash effect refers to a process whereby when a particular region in a
country starts experiencing economic development, it attracts human and
physical capital and raw material from the poorer regions of the country to
gravitate towards itself. This process renders the other areas of the country
51
Block - 1 Fundamentals of Economic Geography
……………………………………….…………...……………………………………………………………………
worse off than before. The best brains and capital leave peripheral regions
and go to already developed region.
6. Economic landscape is a territorial expression of economic space. It is an
economy-dominated space, accommodating a variety of spatial objects,
such as settlements, farms, factories, mines, religious structures,
recreational areas, transport and engineering networks, and links between
them.
7. The idea of historical events implies that there is nothing natural or
inevitable about the economic geography of a region. Instead, they see it
as the profound result of specific historical accidents, such as wars,
catastrophic events, redrawing of international boundaries, policy changes,
etc.
8. Diversification is the business strategy in which a company introduces
numerous products, services, locations and customers to strengthen its
business portfolio.
9. Decentralisation refers to the transfer of powers and responsibilities from
the central government to elected authorities at the local or sub-state level
(village panchayats, municipalities, etc.), having been constituted
democratically with some degree of autonomy.

Terminal Questions
1. Refer to Section 2.2
2. Refer to Section 2.5.
3. Refer to Section 2.7.
4. Refer to Section 2.9.
5. Refer to Section 2.10.

2.14 REFERENCESAND SUGGESTED

FURTHER READINGS
1. Fox, J. (May 2015).From “Economic Man” to Behavioral Economics,
Harvard Business Review. At https://hbr.org/2015/05/from-economic-man-
to-behavioral-economics;
2. Castree, N. (2004): ‘David Harvey’ in Phil Hubbard, Rob Kitchen and Gill
Valentine. (ed.) Key Concepts in Space and Place, New Delhi: Sage
Publications. 181-188.
3. Crang, Mike, and N. J. Thrift (2000): Thinking Space. London: Routledge.
4. Gregory, D, Johnston, R., Pratt, G., Watts, M.J. and S. Whatmore (2009).
Dictionary of Human Geography, Sussex: Willey-Blackwell.
5. Harvey, David (2004): Space as a Key word. Paper for Marx and
Philosophy Conference, 29 May 2004, Institute of Education, London; At
https://frontdeskapparatus.com/files/harvey2004.pdf;
6. Hawkins, J. M. and R. Allen (1991): The Oxford Encyclopedia of English
Dictionary, Clarendon Press.

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Unit -2 Key Concepts and Debates
……………………………………………………………...……………………………………………………………
7. Holloway, S.L., Stephen P. Rice and Gill Valentine. eds. (2003): Key
Concepts in Geography, New Delhi: Sage Publications.
8. Johnston, R.J., D. Gregory, G. Pratt and M. Watts, (2000): The Dictionary
of Human Geography, 4th edition, Oxford, Blackwell Publishing Ltd.
9. Krugman, P. (1995): Development, Geography and Economic Theory,
Cambridge: The MIT Press.
10. OECD (2018), Practical Methodological Guide for the World Observatory
on Subnational Government Finance and Investment, OECD, Paris;
11. Boex, J. (2011). Exploring the Measurement and Effectiveness of the
Local Public Sector: Toward a Classification of Local Public Sector
Finances and a Comparison of Devolved and Deconcentrated Finances.
At ttps://www.urban.org/sites/default/files/publication/24961/412474-
Exploring-the-Measurement-and-Effectiveness-of-the-Local-Public-
Sector.PDF.
12. Myrdal, G. (1957), Economic Theory and Underdeveloped Regions,
London: University Paperbacks, Methuen.
13. Rodrigue, J. P. (2020), The Geography of Transport Systems, Fifth
Edition, New York: Routledge. At
ttps://transportgeography.org/contents/chapter2/transport-and-
location/agglomeration-economies/
14. Devas, N. and Delay, S. (2006). Local democracy and the challenges of
decentralising the state: An international perspective. Local Government
Studies, 32 (5): 677-696.
15. Johanisova N. (2007). A comparison of rural social enterprises in Britain
and the Czech Republic. PhD thesis, Department of Environmental
Studies, Faculty of Social Studies, Masaryk University, Brno, Czech
Republic. Accessible at: http://is.muni.cz/th/38023/fss_d/%20-%2042k
16. Shuman M.H. (2006). The Small-Mart revolution: How local businesses
are beating the global competition. Berrett-Koehler Publishers: San
Francisco.
17. Hines C. (2000). Localisation: A global manifesto. Earthscan: London.
18. Corporate Finance Institute (2020). Economic System. At
https://corporatefinanceinstitute.com/resources/economics/economic-
system/
19. Mabogunje, A. L., (1980): The Development Process: A Spatial
Perspective (New Jersey: Holmes & Meier Publishers Inc).
20. Massey, D. (1984): “Introduction: Geography Matters” in Massey, Doreen
and Allen, John (ed.) Geography Matters: A Reader, The Open University
Press, New York, 1-11.
21. Gregory, D., Johnston, R., Pratt, G., Watts, M.J. and S. Whatmore (2009).
Dictionary of Human Geography, Sussex: Willey-Blackwell.
22. Giuliano, G., Kang, S. & Yuan, Q. (2019): Agglomeration economies and
evolving urban form. Annals of Regional Science. 63, 377–398 (2019).
https://doi.org/10.1007/s00168-019-00957-4

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Block - 1 Fundamentals of Economic Geography
……………………………………….…………...……………………………………………………………………
23. Hammond, C.W. (1979). Elements of Human Geography, London: Unwin
Hyman.
24. Myrdal, G. (1957), Economic Theory and Underdeveloped Regions,
London: University Paperbacks, Methuen.
25. Holloway, S.L., Stephen P. Rice and Gill Valentine. eds. (2003): Key
Concepts in Geography, New Delhi: Sage Publications.
26. Rubenstein, J. (2007) Defining Geographic Scales. pp. 7-14. In College
Board Advancement Placement Programme (ed.). AP Human Geography,
Professional Development Workshop Material- Special Focus- Scale;
Accessed at https://apcentral.collegeboard.org/media/pdf/ap-sf-human-
geo-scale.pdf;
27. Krugman, P. (1995): Development, Geography and Economic Theory,
Cambridge: The MIT Press.
28. Nurkse R (1953): Problems of Capital Formation in Underdeveloped
Countries. New York: Oxford University Press.

54
 UNIT 3

LINKAGES BETWEEN
GEOGRAPHY AND ECONOMICS
Structure
3.1 Introduction 3.4 Alternative Economic
Expected Learning Outcomes Geographies
3.2 Significance of Geography in 3.5 Summary
Economy 3.6 Terminal Questions
3.3 Recent Trends in Economic 3.7 Answers
Geography 3.8 References and Suggested
Further Readings

3.1 INTRODUCTION
In previous Units 1 and 2 of Block 1, you have studied and learnt about the
introduction and key concepts along with debates as a fundamental part of
economic geography. In this Unit, you will study and learn about the linkages
between geography and economics along with its nuances with myriad
dimensions.

Title of this Unit itself evokes a sense of close relationship that exists between
two frontier discipline of knowledge i.e., linkages between geography and
economics. Geography derives its subject content or material from economics
both directly as well as indirectly. First question may strike your intellect is that
geography is concerned with the creation of maps and diagrams to depict
diverse array of both physical and human features whereas economics with
that of graphs to depict the diverse array of economic activities and their
characteristics over the earth’s surface. However, in reality, you may come
across lot of overlaps between the two subjects altogether in variety of ways.
Economics quintessentially deals with the production, distribution and
consumption of various goods and services. It entails modus operandi for
functioning and governing of economic structures. Besides, it also tries to lay
an emphasis on the behavioural traits of concerned human population that
tries to effectuate changes in the type and pattern of goods and services in
one or other geographical areas or regions. Here comes the role of
Geography that not only provides the base in terms of availability of both
physical resources base as well as human resources, but also significantly
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determines the levels of development which a particular society or community

is able to harness through a number of its characteristics. These may include
location, place, interaction between human and environment, migration and
region (core concept of geography) etc. In essence, a geographer is a person
who can answer the questions dealing with the issues of location, place,
direction, and accessibility etc.

Section 3.2 describes the significance of geography in economy. Section 3.3

is devoted to the study of recent trends in economic geography. Next Section
3.4 tries to explore the new dimensions related to the development of
alternative economic geographies.

The aim of this Unit is to make the learners not only to learn the significance of
relationship between geography and economics but also appreciate the
problem-solving abilities of geography as an integrative and synthesizing
discipline cutting across the social sciences, physical and natural sciences
along with technical sciences (deriving the subject matter and strength).

Expected Learning Outcomes

After studying this unit, you should be able to:
 define the significance of geography in economy;
 discuss the recent trends in economic geography; and
 explain the broad areas of alternative economic geographies

3.2 SIGNIFICANCE OF GEOGRAPHY IN

ECONOMY
You already read and learnt about the three key filaments of geography that
are attached with almost every phenomenon and their associated functioning
in Unit 2 of same block. For recapitulation purpose, we are once again
mentioning here in this Unit. These are known as space, place and location.
Geography provides a systematic description of the planet earth and its
diverse systems in a coherent manner. It studies both organic as well as
inorganic phenomena in a holistic sense to comprehend the planet earth as
the habitat of human beings, where spatial economic activities take place. In
this process, human beings try to transform the natural precincts of
environments to suit their requirements and at the same time also adapts to
the limits imposed by the environment. A geographer is a specialist who not
only studies both the physical and human features of the planet Earth over
space and time but also tries to discern the reasons behind similarities and
differences. Contrary to this, historian is a specialist who studies the events or
phenomena concentrated in specific places, like colonial rule in India. The
difference between the geographer and historian is that of perception in
understanding the phenomena.

Quintessentially, the Economists study the effects of space on the economy

whereas Geographer's interest lies in the study of impact of economic
processes on spatial structures, which marks the entire spectrum of economic
activities. Likewise, there is also a subtle difference between the two as far as
their methods and approaches to deal with issues and problems of spatial,
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social, economic and environmental phenomena are concerned. On one side,

the task of economic geographer start with the conceptualisation of a problem
in much more holistic sense by including the fundamental concepts of
geography like space, place, and scale to exclusively as well as inclusively
deal with an array of economic phenomena under investigation. It could be of
social, economic, environmental and political dimensions entailing diverse
types of economic activities. On other side, an economist’s approach rests on
the principle of homogenization that sees the entire economic world as one,
irrespective of what an economic geographer does.

More specifically, economic geography deals with the few seminal questions
as far as location and distribution of economic activities are under
investigation. In this quest, it also tries to find the nuanced answers and
solutions concerning the uneven geographical development and processes
that provides the directions for local, regional and global economic
development. There are four major questions being investigated in economic
geography as under:

1. First line of question revolves around the word ‘what’.

What are the various types of economic activities being practiced in
particular geographical regions over space and time? How these are
different from each other and the contributing factors and processes etc.,
for the spatial variations and similarities?
2. Second line of question revolves around the word ‘where’.
Where marks the location of economic activities e.g., near the source of
raw material or market or availability of cheap labour etc.
3. Third line of question revolves around the word ‘why’.
Why a particular type of economic activity is concentrated in a particular
geographical location? Thus, it necessitates the valid explanation to be
sought for the same.
4. Fourth line of question revolves around the word ‘so what’.
So what refers to the implications and consequences of particular
arrangements and processes concerning the diverse array of economic
activities?

As per the known tradition of genesis of any domain of knowledge is the

recognition of the fact that no academic subject comes into picture on its own
or in other words, it has a natural existence. Some scholar like Trevor Barnes
(2000) had put forward the argument, that subjects must be ‘invented’ in the
sense of being created by people at particular times. The very first course on
economic geography course was taught at Cornell University in 1893. George
G. Chisholm’s book titled ‘Handbook of Commercial Geography’ earned the
distinction of first English textbook, which was published as early as in the
year 1889. And, the beginning of a research journal on Economic Geography
was started after a long period of time in the year 1925. This is how the
beginning of economic geography commenced and subsequently it kept on
refining its content and came to be established as one of the most dynamic
branch of human geography currently. On the other spectrum, the beginning
of economics subject started little late during 19th century, coinciding with other
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subjects of social sciences stream. Both economic geography and economics

subjects began their academic journey with dissimilar roles and
characteristics. However, the goal of both the disciplines remains more or less
parallel to each other oriented towards the growth and development of
geographical regions over the earth’s surface.

While geography is considered as the study of spatial variations and areal

differentiations over Earth’s surface including its both physical and human
features on one hand, economics is considered as the study of production,
consumption and exchange as governed by the market forces, irrespective of
time and space. Like other subjects of natural sciences such as physics and
chemistry, economics developed as a theoretical discipline whereas economic
geography grew as a strongly factual and practical enterprise based domain of
knowledge. During later part of 19th century, commercial geography laid down
the basis for the study of economic geography as a distinct sub-branch,
prominently from 1880s up to 1930s. This was the period of factual information
and it was believed that there is a difference in product of one place from
another place. From 1930s onwards, a departure in its approach marked the
contours of economic geography whereby the attention from commercial
relations of a global system transitioned into unique regions. This was the time
period of regional geography, as defined by a famous geographer named
Hartshorne in 1939. He laid the emphasis on the ‘areal differentiation’ that
helps to describe and interpret the variable character of the Earth’s surface,
being accomplished with the help of identification of distinct regions.

Nature of economic geography is somewhat synthetic, which tries to find out

the relationships between processes and things as opposed to separation of
the same. However, mainstream economics is purely analytical that tries to
distinguish the economy and its associated processes, by excluding from its
social-cultural and traditional contexts.

Geography in tandem with its both physical and cultural setting plays a pivotal
role in the economy of any geographical region over the earth’s surface.
Without having a nuanced understanding of geography, the economy of a
region remains somewhat sluggish so as to derive proper benefits from the
available set of given resource and constraints alike. There is a deep
connection between geography and economics as the study of former without
the intricate knowledge of later remains incomplete. Long back, a very famous
American economic geographer named O.A. Baker has very aptly described
connection between geography and economics (Baker, 1926). Another
famous economist Paul Krugman from MIT, U.S.A has also tried to highlight
this deep connection that exists between economics and geography through
his work on trade and growth in the year 1991 (Krugman, 1991). The
significance of geography in economy becomes even more important as the
former is equipped with the real-time analysis of sub-metre level data of both
physical and human features made possible by the combination of two
developments. First one is advancements in its core techniques and methods’
coinciding with the availability of high resolution satellite images and second
one is the impetus and thrust provided by the advancements that happened in
the field of information and communication technologies (ICTs) during the last
couple of decades. Remote Sensing coupled with Geographic Information
System has provided a diverse language to the subject of geography and also
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made it rich in terms of its discourse and significance to variety of professional

arenas. It is equipped with the power of latest software and advocates the
science of where with sound geographic approach to provide holistic solutions
to the business enterprises, government, society and nation for promoting the
tenets of sustainable future world amidst the dire necessity during
contemporary times. It includes the precise application of geographically rich
and integrated information to provide comprehensive and holistic solutions
related to diverse array of topical issues of colossal dimensions and scale.
Some of the notable topical issues may include climate change, urban and
regional planning, food and climate smart precision farming, optimum
utilisation of natural and human resources etc. No doubt, one such arena is
economics from where economic geography has derived its roots.
Quintessentially, geography is concerned with the study of five filaments
(location, place, human-environment interaction, movement and region).
These five filaments together make up the entire gamut of the subject and the
deeper knowledge of these provides an advantage to get engaged into variety
of professions. That means geography somehow directly as well as indirectly
plays a significant role in the economies and hence the kind of economic
activities. As well known to all of you, economic activities are of diverse kinds.
Principally, there are three types including primary, secondary and tertiary
economic activities. However, two more sub-types are also been categorised
under the last type of tertiary economic activities. These two are known as
quaternary and quinary economic activities.

Geography not only deals with these economic activities but also tries to
understand and analyse the factors responsible for generating the similarities
and differences between regions. The factors could be both geographical as
well as non-geographical in both nature and type. We can surmise that almost
every question of economics in one way or other tends to engage the
geographical perspective. Let us understand this statement with few
examples: 1) suppose an entrepreneur/businessman/industrialist is looking for
a best possible location to set-up either a factory/industry or find out the
market for selling their products. You know that the entire range of spatial
economic activities takes place in certain well defined location and a place
attached to it, involving geography. This is the beginning, not an end in itself
as the significance of geography extends much beyond into the horizon. 2) To
plan the movement of skilled workforce (security and disaster management
personnel) and material during the times of emergency. Emergency could be
of many types, e.g. war, social protests, natural disasters, and accidents etc.
3) To plan the safe movement of animals in the reserve forests, to avoid the
potential human-animal conflict while erecting the infrastructural amenities,
particularly transport lines. 4) To plan the sectoral development of a market or
residential complexes to maximise the best possible utilization of available
place. 5) To plan out the management of wetland resources so as to
neutralize the growing menace of climate change by helping to reduce the
carbon footprints. 6) To plan out the smart city projects etc.

As mentioned earlier, Remote Sensing and GIS together have provided a

powerful language to geography. Their significance also covers myriad
aspects (in the context of spatial economic activities), as varied as designing
and planning, implementation and monitoring etc. As far as topical issues are

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concerned, they also cover the best possible utilisation of both natural and
human resources, with an aim to make the country progress well.

In essence, geography plays a key role in diverse decisions taken by the

human societies across the regions. It could involve selection of appropriate
sites for varied purposes (housing, industry, and entertainment etc.), planning
of markets, emergency response preparedness (use of satellite phones and
sophisticated machineries as witnessed during recent tunnel emergency of
2023 in Uttarakhand Himalayas), network distribution planning (telephone,
sewerage system, water, oil and gas pipelines, rail and road etc.),
demarcation of a small residential plot to that of redrawing of country level
boundaries. With the growing power of satellite imageries (both domestic and
international) with sub-metre level accuracies, mapping software along with
powerful computers are facilitating the utilization, management, and
monitoring of variety of natural resources that includes host of economic fields.
These may range from the precision agriculture to smart city to that of
monitoring of natural resources etc.

SAQ 1
Briefly highlight the essence of significance between geography and economics.

3.3 RECENT TRENDS IN ECONOMIC

GEOGRAPHY
A lot of changes have taken place during the last two to three decades in the
philosophy as well as practice of economic geography. Such kinds of changes
are perceptibly tangible across the spectrum of both analytical and quantitative
models. The basic purpose of such models is to seek the answers that may
help to tell us the reasons revolving around the omnipresent phenomena of
inequality, particularly economic. Inequality related to spatial distribution of
wealth and people can be seen in its multifarious forms and layers. It could be
seen at local, regional, national and international levels and across the strata
of the society based on socio-cultural traits. Many of the changes are being
taking place directly as a result of infusion of digital technologies in the society
and economy at nano levels. It has accentuated the transformation of
economic activities across the world at unprecedented levels and greatly
influenced the overall trajectory of economic geography. There is an
increasing and focused attention on such changes being bestowed by the
researchers including economists and social scientists etc. Most notable
research areas circumvent around diverse strands of digital technologies such
as e-commerce, remote work, and digital platforms. They are basically trying
to explore the way such technologies affect economic activities and their
spatial organization across the three-fold classification of economic activities.
Nowadays, corresponding with the increasing rate of urbanisation and
grooming of white collar jobs, two higher order economic activities are also
being investigated. These two are quaternary and quinary activities.

Earlier, theoretical work used to be based upon methodical/basic or analytical

models, thus making empirical research a challenging task. However, it
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necessitated a change in the theoretical assumptions, which used to be

employed in theoretical work. Nonetheless, as understood the focus of
quantitative models rests upon applied dimensions concerning a particular
phenomenon. In present times, the form of economic geography rests upon
not only merely by the description of facts and figures but it also includes the
inputs derived from both theoretical assumptions and related empirical
research analysis. The prime aim of quantitative models was centered on the
applied dimension of economics. Therefore, the union between geography,
particularly economic geography and economics has given birth to
interdisciplinary approach to deal with myriad aspects of economic activities
over space and time. In this light, the subject matter of economic geography or
more appropriately New Economic Geography revolves around the
interdisciplinary trajectories to deal with various modes of functioning of
institutions, market and economy with a fresh and innovative perspectives.
Such developments are triggered by the application of technologies in various
spheres like e-marketing, e-commerce and others enabled by the virtual
seamless optical technologies. These technologies have led to the death of
distance decay model in geography, as used to be believed earlier.

Since long back, modes of production have remained the dominant medium of
transacting and managing all sort of economic activities. A mode of production
directly or indirectly helps to determine the economic and social systems in an
economy of a geographical region or administrative unit. It provides the
direction the way resources are utilised, diverse functions are organised and
the way accumulation of wealth leads to inequalities in society. There are
diverse types of modes of production as recognised by the economic
historians, such as subsistence, slavery, feudalism, capitalism and socialism
etc. Over the period, out of these, capitalism has emerged as one of the most
dominant modes of production in the world. As known to all of you, capitalism
denotes private ownership of the means of production. A particular
entrepreneur is the owner of means of production that may encompass units
of production and associated chains on one hand, whereas skilled manpower
provides the diverse array of human services in lieu of wages to the owner of
an enterprise. One of the distinguishing features of capitalism against other
modes of production is difference between consumption and production units.
It leads to the creation of ancillary services particularly concerned with the
connectivity and accessibility for that particular product.

Recent trends in economic geography marks a transition in its approach and

methodologies. Earlier, it was practiced on the basis of descriptive approaches
which now have changed towards scientific interpretation of economic factors
underpinning the economic activities in its physical environment. Such
transition has been facilitated by host of newer technological developments
that is happening in various fronts and spheres, affecting the economy as well
as economic activities. All these technologically driven set of developments
have directly or indirectly accentuated the economic agglomeration and further
shot up the historically prevalent levels of economic inequality between
developed, developing and least developed countries, rich and poor, urban
and rural, literate and illiterates and so on. Furthermore, by and large, diverse
strands of economic activities are being constantly shaped and fashioned by
the influence of geopolitics as evident from ongoing developing atmosphere of

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various spaces. These may encompass air, underwater, and virtual spaces
that is acquiring central pivot. Recently, the unprecedented outbreak of COVID
pandemic has further worsened the deep rooted economic inequality inherent
to capitalist modes, especially among the have-nots within the poorer
segments of populace across the binaries of developed and developing
countries. Development of analytical and quantitative models in the sub-
discipline of economic geography within Human Geography tries to explain the
responsible factors behind the unequal distribution of wealth and population.
In doing so, it tries to draw the attention of specialists towards the general
equilibrium models, prevalent persistent levels of heterogeneity, and ever-
increasing microeconomic data in digital world. Cross and inter-disciplinary
dialogue and collaboration has emerged as a challenge in the field of
economic geography, particularly economics, economic sociology, and
endogenous growth theory. Such hybrid amalgamation and churning is
anticipated to provide solution to issues related to institutional heterogeneity
and disproportionate spectrum of opportunities available to one and all marred
with capitalism driven problems. The essence is to lend an integrative study of
diverse domains of knowledge to arrive at integrated and holistic solutions for
dealing with topical issues.

Since last couple of years, with the technological innovations happening in as

diverse fields as satellite communication, computer technologies, transport
communications, has radically transformed the way trade and economic
interaction are being executed and transacted. Besides, facilitating the
exchange of goods and services, information, money and migration of
populace, it has also helped to sharply eliminate the distance between
countries situated across the continents and islands of the world. Nowadays,
the world has truly become global as exemplified from the availability of
various products and services. Basically, recent trends in economic geography
are unleashing the geographical shift that is taking place in diverse types of
national and international economic activities across the world in an altogether
intriguing ways. It has been facilitated by the increase in purchasing power
parity of populace and demographic characteristics of diverse geographical
regions across the world in varied levels and scales or dimensions.

Since early 1990s, economic geography has been guided by new set of
approaches. The aim is to put an emphasis on the cultural, institutional and
evolutionary foundations determining the course of economic processes. The
root of these approaches goes back to the variety of concepts and domains of
knowledge. Some of the notable ones include concepts like postmodernism,
post-structuralism, along with domains of subject knowledge such as cultural
studies, anthropology, economic sociology and institutional and evolutionary
economics etc. These try to raise the questions of difference, embeddedness,
evolution and practice which were hitherto kept at bay within the branch of
economic geography since long. Nowadays, the recent trend of economic
geography seems to be geared towards charting the course of inclusive and
sustainable development in tune with the Millennium Development Goals
(MDG) set forth by United Nations (UN).

SAQ 2
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Briefly highlight the essence of recent trends in geography.

3.4 ALTERNATIVE ECONOMIC GEOGRAPHIES

In the course of time, all the disciplines of inquiry tend to undergo a change.
Such change is seen in terms of search for alternative strands of studying the
subject matter in tune with the changing requirements. Again, requirements
also circumvent around two trajectories. First trajectory is related to the
disciplinary advancements when one working hypothesis or model is replaced
by another better hypothesis or model. Second trajectory is related to the
overall demands of subject as well as its relevance as per the changing needs
of society, nation and economy altogether. The seeds of alternative strands
seem to stem from the time much before industrial revolution, since 1700. The
major thrust came from the capitalist form of economy, which underwent
diverse forms and evolved into the present form of capitalism. In this form of
economy, the ultimate aim is to derive the profit and maximise returns from the
economic interactions and trade. It could be of several types like bilateral,
trilateral and multi-lateral etc. In this venture, the owner of the means of
production tends to become richer and richer with every successive annual
turnover with the passage of time on one spectrum. On the other spectrum,
the skilled manpower (administrative, technical, non-technical and housing
staff etc.) who provides the much required services in its diverse formats tend
to receive only a fixed part in terms of wages. In this sense, there are wide
level of inequalities in remuneration as far as type of economy and level of
development of a particular geographical region or nation is concerned. All
sort of economic activities over the space involve movement of various items
and commodities. These are information, goods and services, capital, labour
(including skilled, semi-skilled and unskilled etc.) and technology etc. With the
passage of time commensurate with increasing technological advancements,
it has acquired the form of globalisation involving the trade and economic
interaction between people and economic organisation such as firms,
factories, production units etc. It inevitably tends to helps two forms of
economy in a geographical region. These two are popularly known as formal
and informal economy. In formal type, the wages or remunerations are
standardized across the threefold classification of activities, which again
differs among developed, developing and least developed group of countries
across the world. In the second type i.e., informal economy, there are
widespread disparities, particularly in the two later cases across professions or
economic activities due to lack of enforcement of necessary law and order
regulations. Many skilled workers are compelled to provide their workmanship
at much lower wages against what they actually deserve. These types of
discriminatory practices have not even spared the human-centric professions
such as health and education. This seems to be stemming from the profit
maximisation driven approach of capitalist economy. As an opposition, many
alternative forms of economy encompassing socialist, anarchist,
fundamentalist and democratic and others came up to confront the
discriminatory practices from time to time across the world. The intention here
is to bring out the uneven development accruing from the practice of prevalent
paradigms of development that gave the fertile ground for the birth of
alternative strands of economic geographies.
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New economic geography is considered synonymous with alternative

economic geographies. It has been moved from description to retrodiction,
prediction and explanation concerning the economic activities over the vast
expanse of national and international dimensions. Nonetheless, these profit
oriented strands of capitalism have not only paved the way for the generation
of alternative economic geographies but also opened up new vistas of
economy apart from this. These approaches are surely geared towards
promoting an egalitarian variant of economic activities, per se. Some of the
notable strands are socialist economy, non-capitalist and notably non-
governmental organisations, promoting the grassroots level diverse economic
activities.

Since the advent of LPG drive of late 19th century, which further widened the
gap between haves and have-nots, more prominently in the global south. It
provided a kind of impetus to the alternative strands of economic geography a
required thrust and momentum. It has seen the rise of capitalism and its
alternatives marked with variety, diversity and uneven development. Besides,
alternative economic spaces have been championed by two of the prominent
feminist geographers namely Kathy Gibson and late Julie Graham. They have
set a radical tradition as not to consider the economy as a single system
rather as “a zone of cohabitation and contestation among multiple economic
forms’’ (Gibson- Graham, 2006). Furthermore, alternative global networks of
trade and development is spearheaded by a movement that seeks to promote
more fairer and ethically guided types of social relation as far as global
economic networks are concerned. Nowadays, gender balance in integrated
growth and development has also picked up a momentum in the discourse of
economic geography and economics.

Alternative economic geographies tend to enunciate the kind of discourses

with an egalitarian approach to make the fruits of development available to
wider sections of society. These are designed to uncover the cause of uneven
growth and development and provide solutions to tackle inequality in its
several forms. These may include social, economic, and educational along
with crucial health related issues. The purpose of alternative economic
geographies is basically to unleash the decentralisation of means of
production.

In nutshell, you must have understood that alternative economic geographies

are geared towards egalitarian approach whereby means of production are not
centralised. Rather, the fruits accruing from an economic activity should reach
to its employees in a proportion commensurate to their skills and abilities. In
other words, they should also be provided with their due advantages accruing
from the economic ventures or profits of a company, organisation or economic
outfit, besides their fixed remuneration. This calls for the adoption of
alternative strands as far as operationalistion of diverse types of economic
activities are concerned apart from historically predominant mode, i.e.,
capitalism.

SAQ 3
Briefly discuss the main filaments of alternative economic geographies.
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3.5 SUMMARY
In this unit, you have learnt the following:

 Learnt about the linkages and their importance between geography and
economics.
 Learnt about the significance of geography in economy.
 Learnt about the recent trends in economic geography.
 Learnt about the alternative strands of economic geographies and their
changing discourses with the passage of time and diverse requirements of
both the subject and economy.

3.6 TERMINAL QUESTIONS

1. Explain in detail the significance of geography in economics.

2. Discuss the recent trends in economic geography.

3. What are alternative economic geographies? Critically elaborate.

3.7 ANSWERS
Self-Assessment Questions (SAQ)
1. The significance of geography in economics gets reflected through its three
fundamental concepts. These are space, place and location. Your locale
may incorporate some elements of these concepts as far as functioning of
economy is concerned.
2. Recent trends in economic geography are governed by the ever-changing
dynamics of market forces on one hand and technological transformations
on the other hand.
3. Alternative economic geographies include a host of contemporary topics
like modern forms of economic activities and their way of operations across
the world.

Terminal Questions
1. Your answer should highlight the significance of geography in economics.
Refer to Section 3.2.

2. Your answer should succinctly discuss the recent trends in economic

geography. Refer to Section 3.3.

3. Your answer should be able to bring the main features of alternative

economic geographies. Refer to Section 3.4.

3.8 REFERENCES AND SUGGESTED

FURTHER READINGS
1. Anderson and William P. (2012). Economic Geography. New York:

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Routledge.
2. Aoyama, Yuko et.al. (2011). Key Concepts in Economic Geography.
London: Sage.
3. Bagchi-Sen, S., & Lawton-Smith, H. (2006). Economic Geography.
London: Taylor & Francis.
4. Baker, O.E. (1926). Economics and Economic Geography. Papers and
Proceedings of the Thirty-eight Annual Meeting of the American Economic
Association. The American Economic Review, Vol. 16 No. 1. March 1926,
Supplement, pp.112-114. Reference on p. 113.
5. Barnes J. Trevor and Christophers Brett (2017). Economic Geography: A
Critical Introduction. New York: John Wiley & Sons.
6. Berry, B.J.L. et.al (1976). The Geography of Economic Systems. New
York: Prentice Hall.
7. Coe N. M., Kelly P. F. and Yeung H. W. C. (2007). Economic Geography:
A Contemporary Introduction. Oxford: Blackwell Publication.
8. Fujita Masahisa, Krugman Paul and Venables Anthony (2001). The
Spatial Economy: Cities, Regions and International Trade. Cambridge:
The MIT Press.
9. Hartshorne, T. A. and Alexander, J. W. (2010): Economic Geography.
New Delhi: PHI Learning.
10. Hudson, R. (2005). Economic Geographies: Circuits, Flows and Spaces.
London: Sage.
11. Knox, P., Agnew, J. A., & McCarthy, L. (2014). The Geography of the
World Economy. New York: Routledge.
12. Lee R. and Wills J. (eds.), (1997). Geography of Economics. New York:
Arnold Press.
13. M. Neil, Kelly F. Philip and Yeung C.W. Henry (2019). Economic
Geography: A Contemporary Introduction, Edition 3. New York: John
Wiley & Sons.
14. MacKinnon, D., & Cumbers, A. (2018). An Introduction to Economic
Geography: Globalisation, Uneven Development and Place. New York:
Routledge.
15. Saxena, H.M. (2018): Economic Geography (2nd Edition), Jaipur: Rawat
Publication.

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 UNIT 4

KEY ISSUES
Structure
4.1 Introduction 4.5 Flat World
Expected Learning Outcomes 4.6 Summary
4.2 Economic Reasons for 4.7 Terminal Questions
Variations in Distribution of 4.8 Answers
Population and Wealth 4.9 References and Suggested
4.3 Mystery of Economic Growth Further Readings
4.4 Declining Role of Distance and
Proximity

4.1 INTRODUCTION
In the first three units of Block 1, you have studied and learnt about the
introduction, key concepts and debates along with linkages between
geography and economics. In this unit, you will study and learn about the key
issues revolving around the fundamentals of economic geography. Needless
to mention that the fundamentals form the backbone of any domain of
knowledge on the one hand and also helps to tread the trajectory of a subject
in right direction on the other hand.

Economic Geography is the study of natural environment and its influence on

human being’s economic activities. It shows how the economic activities like
production, transport and distribution of commodities and settlement are
influenced by the physical environment. It is within the scope of Economic
Geography to describe and explain the natural divisions and artificial
boundaries of countries, the distribution of population, towns and their
industries and the mode of life of the people. Economic geographers also
examine how the economy is affected by social, political, and environmental
factors. Economic Geography developed during the quantitative revolution,
which started in 1950s and picked-up momentum from 1960s onwards
significantly. Now, the discipline of geography has embarked into the digital
age, particularly with the advent of remotely sensed satellite data coupled with
ever powerful computer aided mapping software’s. It has expanded the
prowess of a geographer manifold to study both the physical and cultural
phenomena with real-time data inputs.

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The spatial structure and distribution of economic activity is the main emphasis
of the economic geography branch of human geography. It looks at how
different economic activities and processes are spread throughout the surface
of the Earth and how they interact with the natural and cultural contexts in
myriad ways.

Economic geography has two functions. In the first place, it gives a correct
account of the existing economic resources of the world; and in the second, it
suggests ways in which the latter may be utilised for the benefit of mankind.

The study of economic geography has a long history. One of the first scholars
to examine the subject was German economist Johann Heinrich von Thünen,
who wrote a book titled ‘The Isolated State’ in 1826. In this work, von Thünen
examined how different factors (such as transportation costs and the
availability of resources) affected where businesses/land uses were located.

Economic Geography is very important because it helps us understand the

world around us. By studying how the economy is distributed, we can learn
about the factors that influence where businesses choose to locate
themselves. We can also gain insights into how different regions of the world
interact with each other economically.

Economic Geography also helps us to make better decisions about things like
transportation and trade. By understanding the mode of travel and trade, one
can optimise the transportation networks and make certain that goods and
services flow smoothly between different areas.

It is important to understand some key concepts while studying economic

geography. This will help you to understand the nuances on key issues
concerning the subject matter of economic geography. These are briefly
discussed as below:

 Location: Location is a key factor that affects the economy; businesses

tend to locate themselves near their customers, suppliers, and other
important resources.
 Transportation: Transportation costs play a big role in determining the
location of business establishments. The closer a business is to its
customers, the lower its transportation costs will be.
 Resources: The availability of resources (such as land, labour, and capital)
can also affect where businesses choose to locate themselves. If a
business needs access to a specific resource, it will often locate itself near
that resource.
 Trade: Trade is an important part of the economy and can have a big impact
on economic geography. When businesses trade with each other, they often
need to transport goods and services over long distances. This can impact
the location of businesses and the way that the economy is distributed.

In Section 4.2, the reasons for variations in the distribution of population and
wealth have been described. Next Section 4.3 is earmarked for the study of
mystery of economic growth. Last two Sections 4.4 and 4.5 are devoted to the
study of declining role of distance and proximity along with flat world, that
describes the tenet of local to global and vice-versa.
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Expected Learning Outcomes
After studying this unit, you should be able to:
 To understand the economic reasons for variations in the distribution of
population and wealth;
 To explain the mystery of economic growth;
 To discuss the declining role of distance and proximity; and
 To describe the concept of flat world.

4.2 ECONOMIC REASONS FOR VARIATIONS IN

DISTRIBUTION OF POPULATION AND WEALTH
The distribution of population across regions and countries is influenced by a
variety of factors. These factors are often interconnected and can vary over
time. Here are some major reasons for the distribution of population:

1. Physical Geography

 Topography: The physical features of an area, such as mountains, plains

and rivers can greatly influence population distribution. Flat and fertile
plains tend to attract more population compared to rugged terrains.

 Climate: People are often drawn to areas with favourable climates, such
as temperate zones, where conditions are conducive to practice
agriculture and comfortable living.

2. Economic Opportunities

 Employment Opportunities: Regions with thriving economies and ample

job opportunities tend to attract a higher population. Urban areas and
industrial hubs are often densely populated due to economic activities.

 Natural Resources: Areas rich in natural resources, like minerals or

fertile soil, may have higher populations as people are drawn to exploit
these resources for economic gain.

3. Cultural and Social Factors

 Cultural Heritage: Historical and cultural factors influence population

distribution. Some regions may have a long history of settlement and
cultural significance, attracting inhabitants.

 Social Networks: People often migrate to areas where they have family
or community ties. Social networks play a crucial role in determining
settlement patterns.

4. Political Factors

 Government Policies: Government policies, including immigration

policies and regional development initiatives, can impact population
distribution. Incentives for settling in specific areas or restrictions on
movement can influence population patterns.

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 Conflict and Stability: Political instability and conflict can force people to
migrate, leading to uneven population distribution.

5. Infrastructure and Accessibility

 Transportation: Regions with well-developed transportation

infrastructure, such as roads, railways, and airports, tend to attract more
population due to increased accessibility.

 Urbanization: The growth of cities and urban centres often leads to

higher population density in these areas, driven by better amenities and
services. Some notable examples are New York, London, Paris, Tokyo,
and Beijing etc.

6. Technological Advancements

 Telecommunications: Advances in technology, particularly in

telecommunications, can enable people to work remotely, reducing the
necessity to live in specific geographic locations for employment/business.

7. Healthcare and Education Facilities

 Quality of Services: Regions with better healthcare and education

facilities may experience higher population growth as people seek access
to these essential services for themselves and their families.

8. Environmental Factors

 Natural Disasters: Areas prone to natural disasters like earthquakes,

hurricanes, or floods may experience lower population density due to the
associated risks. Such risks carry the potential to jeopardise their life as
well as source of livelihood in adverse ways.

Understanding population distribution requires considering the dynamic

interplay of these factors, and changes in any one of them can lead to shifts in
population patterns over time.

Hence, the distribution of population and wealth across different regions and
countries of the world are the result of complex interplay of physical and
economic conditions. In general, three types of factors affect the distribution of
population and the occupations.

1. The first type of factor includes climate, location and relief. These three
factors are persistent and universal. These are present in every part of the
world at all times, and the differences in them from one part of the Earth to
another affects the work of people, in many ways. Both directly and
indirectly they play a significant part in the way man utilizes the natural
resources of the Earth for livelihood and prosperity.

2. The second type of factor includes natural resources like minerals, water,
soils, native plants and native animals which influence the livelihood of the
people and subsequently affect the population distribution and density.
Natural resources are widely distributed; many areas lack an adequate
supply or a variety of them. For example, many land areas lack minerals in
sufficient quantity and variety for major industrial developments. Areas of
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drifting desert sands lack water, and extensive rugged and rocky lands are
devoid of soils suitable for tillage. Some parts of the Earth have few usable
plants, whereas others lack sufficient native animal life for human use.
However, areas that do possess an abundance of usable resources
become significant only when human beings employ them in providing the
essentials of life.

3. The third type of factor affecting population distribution and density is

represented by human accomplishments. By the discovery of fire, by
domesticating animals and plants, by developing improved breeds of
animals and varieties of plants, by making effective use of the discoveries
of medical science, and by inventing, perfecting, and applying all kinds of
artifacts, tools, and machinery, humans have been able to not only adjust
themselves effectively to the universal and persistent geographical factors,
but have also modified considerably their physical and biological
environment while making use of varied natural resources in numerous
ways. By engaging in hunting, fishing, forestry, grazing, farming, mining,
manufacturing, transportation, and trade humans have entered and settled
the more habitable portions of the Earth. Of course, some areas have been
more favourable to human spatial activities than others, and as a result, in
part, at least, of these favourable conditions, population densities vary
greatly in different parts of the Earth.

Apart from these three major factors, there are many factors which affect the
distribution of population and wealth which are discussed below:

1. Natural Resources: Regions rich in natural resources tend to attract both

population and wealth. This can include fertile land for agriculture,
minerals for extraction, and energy resources like oil and gas. Countries
or areas with abundant natural resources often experience economic
booms and attract a larger population. Example: The Middle East,
particularly countries like Saudi Arabia and Qatar, possess vast reserves
of oil. This has led to significant wealth accumulation in these regions,
attracting both population and diverse range of economic activities as per
the resource potentials and constraints alike.

2. Access to Transportation and Trade Routes: Proximity to major

transportation routes, such as rivers, ports, and railways, can significantly
impact a region's economic activity. Areas with good access to
transportation are more likely to become economic hubs, attracting both
people and capital. Example: The Panama Canal and Suez Canal have
historically been crucial trade routes, facilitating the movement of goods
between the Atlantic and Pacific Oceans, and Mediterranean and Red
Sea respectively. Countries located near such strategic transportation
routes, like Panama and Egypt; tend to benefit economically from
increased trade.

3. Industrialization and Urbanization: Industrialized urban areas tend to

have higher concentrations of both population and wealth. Industries like
manufacturing, technology, and finance are often centered in urban hubs
due to factors like access to a skilled labour force, infrastructure, and
markets. Example: The Greater Tokyo Area in Japan and National Capital

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Territory in India are the most densely populated urban areas in the world.
Their economic prosperity, driven by a highly advanced industrial and
technological base, has attracted a large population seeking employment
and economic opportunities.

4. Government Policies and Regulations: Government policies and

regulations can have a profound impact on the distribution of population
and wealth. For example, tax policies, business regulations, and land use
policies can incentivize or discourage economic activity in certain areas.
Example: Singapore is often cited as an example of a country with
favourable Government policies that have encouraged economic growth.
Its stable political environment, low tax rates, and business-friendly
regulations have attracted a concentration of wealth and population.

5. Education and Workforce Development: Regions with well-developed

educational systems and a skilled workforce are more likely to attract
businesses and industries that require specialized knowledge or
expertise. This, in turn, leads to higher income levels and a larger
population. Example: Information Technology (IT) Industry in India, and
the emphasis on IT education, has led to the development of a highly
skilled and technically proficient workforce in India.

6. Market Access and Consumer Base: Proximity to large consumer

markets can be a significant driver of economic activity. Areas that have
access to a large population of potential consumers are often more
attractive to businesses. Example: The European Union (EU) provides a
large and integrated consumer market. Countries within the EU, like
Germany and France, have access to this vast consumer base, which
encourages economic activity and attracts businesses.

7. Cost of Living and Business Operations: The cost of living and

conducting business in a particular area can greatly affect population and
wealth distribution. High-cost areas may attract high-income individuals
and businesses, while lower-cost areas may be more appealing to those
seeking affordability. Example: Mumbai, India, is a densely populated city
with a high cost of living. Despite this, it is an economic hub due to its
concentration of financial institutions, multinational corporations, and a
highly skilled workforce.

8. Historical Factors and Path Dependence: Historical events, such as the

presence of old industries or the legacy of past economic activity, can have
a long-lasting impact on the distribution of population and wealth. This is
known as path dependence, where past conditions shape current economic
outcomes. Example: The Ruhr region in Germany was historically known
for its coal and steel industries. Although, the importance of these industries
has declined, the region's economic structure and infrastructure were
heavily influenced by this historical legacy.

9. Globalization and Trade Agreements: Regions that are well-connected

to the global economy through trade agreements and international
business networks are more likely to experience economic growth and
attract population and wealth. Example: Mexico has benefited from its
proximity to the United States and its participation in trade agreements like
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North American Free Trade Agreement (NAFTA), now known as United

States Mexico Canada Agreement (USMCA). This has led to the
establishment of a significant number of manufacturing and export-
oriented industries, particularly in border regions.

10. Infrastructure Development: The presence of modern infrastructure,

including reliable energy, transportation, and communication networks, is
crucial for economic development. Well-developed infrastructure attracts
businesses and supports a growing population. Example: China's rapid
economic growth has been facilitated by extensive infrastructure
development, including high-speed rail networks, modern ports, and
advanced telecommunications. This has supported economic activity and
attracted population to key urban centres.

11. Access to Financial Services and Capital: Availability of financial

services, such as banking, investment, and access to capital markets, is
essential for economic growth. Regions with a well-functioning financial
sector tend to attract businesses and individuals seeking financial
opportunities. Example: New York City is often considered the financial
capital of the World. The concentration of financial institutions, including
Wall Street, makes it a global hub for finance, attracting large number of
financial institutions, business houses, ancillary economic activities and
professionals.

It's important to note that these factors are interrelated and can interact in
complex ways. Additionally, non-economic factors, such as political stability,
government policies, and cultural preferences, also play a significant role in
shaping the distribution of population and wealth. The regions or nations with
favourable non-economic factors are known for their high level of growth and
consistent development, e.g.: Switzerland and Singapore. You may have
observed the way some of these factors operate in reality in terms of practical
context.

SAQ 1
How natural resources attract the concentration of population and wealth?
Discuss in brief.

4.3 MYSTERY OF ECONOMIC GROWTH

The "Mystery of Economic Growth" refers to the question of why some
countries or regions experience sustained, long-term economic growth while
others do not. This has been a central concern of economists and
policymakers for centuries. Despite significant advances in economic theory
and empirical research, there is still no consensus on all the factors that drive
economic growth. Understanding the mystery of economic growth involves
exploring the complex factors that contribute to a nation's sustained increase
in its real Gross Domestic Product (GDP) over time. Economic growth is a
multi-dimensional phenomenon influenced by a myriad of factors. Several
theories and factors contribute to this complex phenomenon. These are
discussed as under:
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1. Technological Progress: Technological advancements and innovation
are often seen as the primary drivers of long-term economic growth. The
developments of new technologies, such as the steam engine, electricity,
or information technology, have historically led to increased productivity,
efficiency, and economic output. Example: The Information Technology
(IT) revolution of the late 20th century, driven by the development of
computers and the internet, led to significant economic growth in countries
like the United States. This innovation transformed industries, created new
opportunities, and boosted productivity substantially.
2. Human Capital: The skills, knowledge, and educational level of a
country's workforce (human capital) are crucial inputs for economic
growth. Well-educated and skilled workers are more productive and can
adapt more readily to technological changes. Example: South Korea
experienced rapid economic growth, often referred to as the "Miracle on
the Han River," from the 1960s to the 1990s. This growth was driven by
the substantial investments in education and skill development, which led
to a creation of highly skilled and productive workforce over time.
3. Physical Capital: Investment in physical capital, including infrastructure,
machinery, and technology, is essential for economic growth. Adequate
infrastructure supports the efficient functioning of an economy.
4. Institutional Framework: Strong and effective institutions, including legal
systems, property rights, and regulatory environments, are necessary for
economic growth. Clear property rights, contract enforcement, and a
transparent legal framework create a conducive environment for the
functioning of economic activity. Example: Singapore is often cited as an
example of a country with strong institutions and good governance. Its
transparent and efficient legal system, low levels of corruption and stable
political environment have played a crucial role in fostering economic
growth.
5. Market Structure and Competition: Monopolistic or heavily regulated
markets can stifle growth. On the other hand, competitive markets tend to
be more efficient and lead to higher levels of innovation and productivity.
Example: China's economic transformation since the late 1970s, known
as the "Chinese Economic Miracle," was driven by a series of market-
oriented reforms. Opening up to foreign investment, introducing Special
Economic Zones (SEZs), and liberalizing certain sectors led to rapid
growth.
6. Access to Finance: Availability of credit and financial resources is crucial
for investment in new technologies, businesses, and infrastructure.
Example: The rise of venture capital and startup ecosystems in places
like Silicon Valley has played a pivotal role in fostering innovation and
economic growth. Access to capital for new and high-potential businesses
is key driver of economic dynamism.
7. Trade and Globalization: Engaging in international trade and being part
of the global economy can stimulate economic growth by providing access
to larger markets, promoting specialization, and facilitating the transfer of
knowledge and technology. Example: The growth of global value chains
and trade liberalization has facilitated economic growth in countries like

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Vietnam. By participating in Global Production Networks (GPNs), Vietnam

has experienced rapid industrialization and export-led growth.
8. Resource Allocation and Efficiency: Efficient allocation of resources,
where factors of production (land, labour, and capital) are used in their
most productive ways, is vital for growth. This includes minimizing waste
and ensuring that resources are allocated to their highest value uses.
Example: Norway's management of its oil wealth through its Government
Pension Fund Global (commonly known as the Norwegian Oil Fund,
NWOF) is often praised as a model for sustainable economic growth. The
fund invests oil revenues for future generations, preventing resource
depletion and ensuring long-term economic stability.
9. Political Stability and Governance: A stable political environment,
effective governance, and absence of corruption are critical for sustained
economic growth. Political instability and corruption can deter investment
and disrupt economic activities. Example: Switzerland is known for its
stable political environment, social cohesion, and well-functioning
institutions. These factors have contributed to a high level of economic
prosperity and growth over the years.
10. Cultural and Social Factors: Cultural attitudes towards work, risk-taking,
and entrepreneurship can influence economic growth. Societies that value
innovation, entrepreneurship, and education tend to be more conducive to
growth. Example: The culture of entrepreneurship and innovation in
Silicon Valley is often cited as a critical factor in driving economic growth
in the technology sector. This culture fosters risk-taking, experimentation,
and the development of new frontiers of technologies.
11. Geographic and Environmental Considerations: Natural resources,
climate, and geography can have an impact on economic growth. Regions
with favourable conditions may have inherent advantages, but they also
need the right institutions and policies to harness these advantages
effectively.
12. Demographic Trends: Population growth, age distribution, and workforce
participation rates (WPR) can influence economic growth. A growing, well-
educated, and productive workforce can be a significant driver of
economic expansion. Example: The "Demographic Dividend" observed in
countries like South Korea and Taiwan during their rapid growth phases
resulted from a favourable age distribution, where a large working-age
population supported economic expansion. Currently, India is also
experiencing and passing through this phenomenon. It provides the
opportunity to take vantage both demographically as well as economically,
aimed at betterment of the nation, if harnessed properly.

While these factors provide a framework for understanding economic growth,

it's important to note that they are highly interconnected and can interact in
complex ways. Moreover, the relative importance of these factors can vary
depending on the specific circumstances and context of a country or region.
As a result, the "mystery" of economic growth remains a subject of ongoing
research and debate among economists, social scientists, administrators, and
policy makers alike.

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SAQ 2
Highlight the role of human capital in economic growth.

4.4 DECLINING ROLE OF DISTANCE AND

PROXIMITY
The declining role of distance and proximity, often referred to as the "Death of
Distance," is a phenomenon driven by technological advancements,
globalization, and changes in communication and transportation. It describes
how physical distance has become less of a barrier in various aspects of
modern life, including business, communication, education, and even social
interactions. You might be pondering over that what does this phenomena
denotes, how it functions in reality, what are its important parameters and so
forth. Here's a detailed description of this trend:

Advancements in Communication Technology

1. Internet and Information Technology: The widespread availability of the

internet and digital technologies has revolutionized communication. It
allows for instant and low-cost communication across the globe, enabling
real-time interaction regardless of physical location.

2. Telecommunication Infrastructure: High-speed internet, Fiber-optic

networks, and the proliferation of mobile devices have greatly enhanced the
quality and speed of communication, making it possible to connect with
people and businesses worldwide.

Globalization and Trade

1. Supply Chains and Logistics: Improved transportation networks,

containerization, and efficient logistics have made it easier and cheaper to
move goods across vast distances. This has led to the globalization of
production and supply chains, allowing companies to source materials and
components from different parts of the world. It helps to provide the
crucially essential infrastructural amenities to move any product from one
region to another (both domestically and internationally) and fosters the
contours of economic growth and development.

2. Market Access: Access to global markets has expanded significantly.

Companies can now reach a global customer base through e-commerce
platforms and online market places, reducing the importance of physical
proximity to consumers. Some lead examples are Amazon, Flipkart, eBay
and others.

Remote Work and Telecommuting

1. Digital Work Tools: Collaboration platforms, video conferencing, and

project management tools enable individuals and teams to work together
seamlessly, regardless of their physical location. This has led to a surge in
remote work and the rise of virtual teams.

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2. Flexible Work Arrangements: Advances in technology have made it

possible for many professionals to perform their tasks from anywhere with
an internet connection. This has significant implications for the traditional
office-based work model.

Education and Online Learning

1. E-Learning Platforms: The availability of online courses, webinars, and

virtual classrooms has democratized access to education. Students can
now enrol in courses offered by institutions and experts from around the
world without the need to be physically present on a real campus.

2. Global Collaboration in Research and Academia: Researchers and

academics collaborate on projects and share knowledge across borders,
leveraging digital platforms for communication and data sharing.

Cultural Exchange and Social Interaction

1. Social Media and Virtual Communities: Platforms like Facebook, Twitter,

and Instagram facilitate connections and interactions between individuals,
regardless of their physical location. Virtual communities allow people to
share interests and experiences globally.

2. Virtual Events and Conferences: Webinars, virtual conferences, and

online events enable participants to engage with speakers and attendees
from anywhere in the world, reducing the need for travel. Thus, such type of
interaction tends to promote the tenet of the flat World.

Healthcare and Telemedicine

1. Remote Consultations: Telemedicine allows patients to consult with

healthcare professionals remotely, providing access to medical expertise
without the need for physical proximity.

2. Remote Monitoring and Diagnostics: Medical devices and wearable

technologies enable healthcare providers to monitor and diagnose patients'
conditions from a distance. It is somewhat akin to the art and science of
remote sensing, with which you will become familiar as well as study and
learn both theory and laboratory components in your 4th semester courses.

Cultural and Societal Shifts

Changing Perceptions of Distance: With the increasing reliance on digital

interactions, people are becoming more accustomed to conducting important
activities from a distance. This shift in perception further diminishes the
significance of physical proximity.

Environmental Considerations

Reduced Travel-Related Emissions: The declining role of distance can have

positive environmental impacts by reducing the need for extensive travel and
commuting, leading to a decrease in carbon emissions associated with
transportation. It may pave a smaller yet impactful step towards promoting the
tenet of sustainability to upkeep and protect the environment and its myriad
bounties.
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Overall, the declining role of distance and proximity is reshaping how
individuals, businesses, and societies operate and interact. While physical
presence remains important in some contexts, technological advancements
continue to redefine the limitations imposed by distance, opening up of new
opportunities for global collaboration and connectivity.

SAQ 3
Briefly highlight the declining role of distance and proximity with suitable
examples.

4.5 FLAT WORLD

The concept of a "Flat World" in terms of economic geography was
popularized by Thomas L. Friedman in his book titled "The World is Flat." It
describes a globalized world where advancements in technology,
communication, and transportation have significantly reduced barriers to trade,
communication, and collaboration across the domestic and international
borders.

The flat world is closely tied to the digital transformation of societies and
economies. It involves the pervasive use of digital technologies, big data,
artificial intelligence, and automation. This digital revolution further accelerates
global connectivity and facilitates rapid information exchange seamlessly.

Here are the key aspects of the "Flat World" in terms of economic geography:
 Technological Advancements: Friedman argues that the rapid pace of
technological innovation, particularly in information technology and
communication, has levelled the playing field for businesses and individuals
worldwide. This has enabled even small companies and individuals to
participate in the global markets. It represents and signifies the adage ‘local
to global and global to local’.
 Economic Interdependence: The flat world underscores the deep
economic interdependence among the comity of nations. Economic
decisions and events in one part of the world can have cascading effects
globally, emphasizing the need for a comprehensive understanding of
global economic dynamics. It is like disturbance in one part of the
ecosystem may affect and induce similar or far-reaching changes in other
parts of the ecosystem as well.
 Globalization and Integration: The "Flat World" reflects the increasing
integration of economies around the globe. Companies can now source
materials, components, and services from different parts of the world,
creating complex global supply chains. This integration has led to a more
interconnected global economy.
 Outsourcing and Offshoring: The ease of communication and
transportation has facilitated the outsourcing and offshoring of various
business functions, such as manufacturing, customer service, and back-
office operations. This has allowed companies to seek cost advantages and
access specialized expertise in different parts of the world.
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 Digital Platforms and E-commerce: The rise of digital platforms and e-

commerce has transformed how businesses operate. Online market places
and platforms like Amazon, Alibaba, and eBay have created global
marketplaces where businesses can reach customers worldwide,
regardless of their physical location.
 Virtual Collaboration and Remote Work: Advancements in
communication technology have made it possible for individuals and teams
to collaborate effectively from different geographic locations. This has led to
the rise of remote work and virtual teams, enabling companies to tap into a
global talent pool.
 Emergence of Global Players: The "Flat World" has seen the emergence
of multinational corporations with operations spanning multiple countries.
These companies have become major players in the global economy and
often have a presence in multiple regions.
 Access to Information and Knowledge: The internet and digital
technologies have democratized access to information and knowledge. This
has empowered individuals and businesses to acquire skills, information, and
expertise from a wide range of sources, regardless of their physical location.
 Cultural and Language Considerations: In a "Flat World," understanding
and respecting different cultures and languages become crucial for effective
global business operations. Cultural sensitivity and adaptability are key
skills for success in this environment.
 Challenges of Unequal Development: While the "Flat World" offers
opportunities for global participation, it also highlights the disparities in
development and access to technology between different regions. Bridging
these gaps is a key challenge for policymakers and businesses.
 Cyber Security Challenges: The interconnected nature of a flat world
introduces cybersecurity challenges. As businesses and individuals
exchange sensitive information globally, there is a growing need to address
cybersecurity threats and protect against data breaches and cyber-attacks.
It has been made more vulnerable due to the misuse of powers of AI,
recently. It seems to be leading to the generation of anti-social activities like
crime as well. Thus, it may put the socio-cultural fabric of the society and
nation under immense risk.
 Environmental Considerations: The "Flat World" has implications for
sustainability and environmental impact. Global supply chains and
transportation can contribute to carbon emissions and environmental
degradation, emphasizing the need for sustainable practices.

Overall, the concept of a "Flat World" underscores the transformative impact of

technology and globalization on economic geography. It emphasizes the
interconnectedness of economies and the potential for individuals and
businesses to participate in the global marketplace, regardless of their
geographic location. However, it also raises important considerations
regarding equity, security, sustainability, and cultural awareness in this new
economic landscape.

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SAQ 4
How technological advancement has promoted the idea of flat world?
Comment briefly.

4.6 SUMMARY
In this unit, you have learnt the following:
 Economic geography studies the relationship between human beings,
earth’s resources and how human beings can exploit these resources for
their own betterment.
 Human beings themselves are a resource which if properly trained can
extract gold from the infertile soil. The distribution of population is
dependent on the availability of economic resources. Wherever resources
are available and humans have developed the technologies to exploit these
resources, the population of those regions have increased exponentially.
 Economic growth of a region is also dependent on a variety of factors like
availability of resources, labour and capital. To these, we can also add few
more like technological advancement, government policies and market
places.
 These and some more affect the economic growth in an economy. With the
proliferation of information technology to the lowest levels of the society, the
world has really become a flat place.
 The solutions to the problems faced by the people of developed countries
are provided by the people of developing or under-developed countries.
Isn’t it the wonder of technology and the future for such type of services is
very bright as with the coming up of new broadband widths like 5G and 6G,
the world will really become flat as the time differences for getting the
services will reduce drastically.

4.7 TERMINAL QUESTIONS

1. Discuss the economic reasons for variations in distribution of population
and wealth?
2. Explain with examples the mystery of economic growth.
3. Write detailed notes on the following:
(i) Declining Role of Distance and Proximity
(ii) Flat World

4.8 ANSWERS
Self-Assessment Questions (SAQ)
1. Regions having availability of rich natural resources like fertile land for
agriculture, minerals for extraction, and energy resources like oil and gas
inevitably tends to attract both population and wealth.
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2. The combination of skills, knowledge, and educational level of a workforce

(human capital) acts as a fundamental inputs as far as economic growth of
any region is concerned.
3. It is a phenomenon driven by technological advancements, globalization,
and changes in communication and transportation, greatly reducing the
physical distances.
4. The idea of flat world refers to a globalized world. It is characterised by the
advancements in technology, communication, and transportation. These
advancements have drastically reduced barriers to trade, communication, and
collaboration across the domestic and international borders.

Terminal Questions
1. Refer to Section 4.2.
2. Refer to Section 4.3.
3. Refer to Section 4.4.

4.9 REFERENCES AND SUGGESTED

FURTHER READINGS
1. Castells, M. (1996). "The Rise of the Network Society." Wiley-Blackwell.
2. Dasgupta, A. (1959). “Economic and Commercial Geography.” A.
Mukherjee.
3. Fujita, M., Krugman, P., & Venables, A. J. (1999). "The Spatial Economy:
Cities, Regions, and International Trade." MIT Press.
4. Friedman, T. L. (2005). "The World is Flat: A Brief History of the Twenty-
First Century." Farrar, Straus and Giroux.
5. Jones, C.F. & Darkenwald, G.G. (1965). “Economic Geography” 3rd Edition,
Macmillan Company.
6. Krugman, P. (2000). "Where in the World is the 'New Economic
Geography'?" The World Economy, 23(6), 775-781.
7. Martin, R. (1999). "The New 'Geographical Turn' in Economics: Some
Critical Reflections." Cambridge Journal of Economics, 23(1), 65-91.
8. Lucas, R. E. (1988). "On the Mechanics of Economic Development."
Journal of Monetary Economics, 22(1), 3-42.

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GLOSSARY
Alternative : It refers to the study of economic activities other than
Economic dominant modes of production, like capitalism.
Geography
Anthropization : The conversion of open spaces, landscapes, and natural
environments by human action.
Anthropogenic : Caused or influenced by people, either directly or
indirectly.
Backward : The part of the non-farm sector that provides inputs for
Linkage agricultural production.
Cultural : Cultural economy investigates the relationship between
Economy economic activities and cultural factors. It explores how
cultural practices, beliefs, and values influence economic
behaviour and contribute to the diversity of economic
landscapes.
Economic : It is a subfield of human geography concerned with
Geography describing and explaining the varied places and spaces
in which economic activities are carried out and
circulated.
Economic : Economic geography is the study of the spatial
Geography distribution of economic activities and their impact on the
landscape. It explores the location, organization, and
spatial relationships of various economic phenomena,
such as industries, trade, and resources.
Economics : The study of means of production, distribution and
consumption of wealth among the human society on the
earth’s surface over space and time.
Factory : A building where the actual manufacturing of the product
takes place.
Feedback Loop : A cause-and-effect system in which the outputs of
system feedback are inputs and prompt new cycles.
Firm : An organisation that produces and sells goods and
services to generate revenue and profit.
Flow : Movement of people, goods, services and information
between places.
Forward Linkage : The part of the non-farm sector that uses agricultural
output as an input.
Geo- : It is an approach to analyzing economic phenomena that
Econometrics takes into account geographic data and spatial
relationships between economic systems.
Geography : The study of physical and cultural features of the earth’s
surface over space and time. It tries to discern the
relationships, similarities and differences among the
countless phenomena including both physical and
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cultural features.
Geo-Statistics : It is a class of statistics used to analyze and predict the
values associated with spatial or spatiotemporal
phenomena. It incorporates the spatial (and in some
cases temporal) coordinates of the data within the
analyses.
Globalization : Globalization is the process of increased
interconnectedness and interdependence among
countries, economies, and cultures. Economic
geography plays a crucial role in understanding how
globalization affects the spatial distribution of economic
activities and influences regional development.
Growth Pole : A point of economic growth (usually urban locations,
benefiting from agglomeration economies).
Industrial : Industrial geography focuses on the spatial distribution of
Geography industries and manufacturing activities. It explores
factors such as the location of industrial clusters,
transportation networks, and the impact of
industrialization on the environment.
Industrial Plant : An integrated workplace, usually all in one location,
where goods are produced.
Investment : Production of goods that will be used to produce other
goods.
Location Theory : Location theory is a branch of economic geography that
examines the factors influencing the location of
economic activities. It seeks to understand why certain
businesses or industries choose specific locations and
how these choices impact regional development.
Mental Map : An image of a place or event that a person carries inside
his or her head.
Productivity : The amount of output that can be produced with a given
set of inputs.
Profit : The excess over the returns to capital, land, and labour
(interest, rent, and wages).
Rationality : The use of knowledge to attain goals.
Regional : Regional development in economic geography refers to
Development the uneven distribution of economic activities and
resources across different regions. Researchers in this
field explore the factors that contribute to regional
disparities and the policies that can promote more
balanced development.
Resource : Resource geography focuses on the spatial distribution
Geography of natural resources, such as minerals, energy sources,
and agricultural land. It explores how the availability and
exploitation of these resources impact economic

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activities and development.
Spatial : Of or related to spaces
Spatial : Spatial distribution refers to the arrangement or pattern
Distribution of a particular phenomenon across space. In economic
geography, this concept is used to analyze how
economic activities are spread across different regions
and locations.
Spin-Off Effect : The potential secondary economic effects of project or
development.
Trade and : Economic geography also examines the patterns of
Transportation trade and transportation networks. This includes the
analysis of trade routes, transportation infrastructure,
and the spatial organization of markets.
Urban And Rural : Economic geography also considers the spatial patterns
Geography of economic activities in urban and rural areas. It
explores the dynamics of urbanization, the growth of
cities, and the role of rural economies in the broader
economic context.

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