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location theory

  A body of theories which seek to account for the location of economic activities. An interest in the political economy of location can be traced back to the seventeenth and eighteenth centuries, when several writers attempted to explicate patterns of agricultural land use (see Scott, 1976), and these efforts can now be seen to have culminated in the classical von Thünen model (1826). However, with the growing influence of Ricardo and then Marshall (1890; see Marshall, 1952) time was judged to be \'more fundamental\' than space. And ever since Marshall, according to Isard (1956), \'the architects of our finest [economic-] theoretical structures have intensified [his] prejudice\'. The cardinal exception to this, as Isard noted, was the German school of location theory, whose contribution — for all their differences — reclaimed and reinvigorated the constructs of an earlier generation and did much to prefigure the general theories of the space-economy which were Isard\'s own objective. Especially important here were the formulations of Alfred Weber (1909; see Weber, 1928) with respect to the location of manufacturing activity, and Walter Christaller (1933; see Christaller, 1966) and August Lösch (1944; see Lösch, 1954), who produced theories to explain the location of settlements as market centres (for historical summaries, see Isard, 1956, ch. 2; Smith, 1981, ch. 8; see also regional science).

In geography the significance of the German school was recognized by Hartshorne, whose The nature of geography (1939) was based on an exegesis of a primarily German intellectual tradition. However, location theory was not formally admitted into the developing corpus of human geography until the early 1960s, mainly through the efforts of Garrison and the Washington school in the USA and, on the other side of the Atlantic, through Haggett\'s Locational analysis in human geography (1965). During this formative period it drew much of its theoretical strength from neoclassical economics. In particular, attempts were made to use general equilibrium theory to provide a theory of industrial location capable of integrating variable cost analysis and variable revenue analysis (see Smith, 1981), while utility theory was used to reconstruct spatial preference structures within the framework of central place theory (see Rushton, 1969). Yet location theory encountered formidable problems in translating these formulations into the spatial domain, because \'the working assumptions and abstractions that the neoclassicist uses as a starting point for his analysis could never be justified in a world which recognises the existence of space as well as time\' (Richardson, 1973). These special misgivings were reinforced by a growing awareness of the more general critique of neoclassical economics, and together these objections forced a series of responses from location theory. Three main developments can be distinguished.

A long-standing concern with the spatial behaviour of rational economic man (sic; see methodological individualism) was replaced as the emergence of behavioural geography allowed for the incorporation of more realistic behavioural assumptions into location theory; in other words, for the construction of what Stafford (1972) called \'the geography of manufactures\' rather than \'the geography of manufacturing\'. Typical of these various studies, in roughly chronological order, were investigations of satisficing behaviour, the formalization of Pred\'s behavioural matrix, and whole series of models of corporate decision-making. Indeed in the second edition of Locational analysis in human geography (1977), Haggett, Cliff and Frey recorded their optimism about \'major developments in human microgeography\' (including environmental perception, phenomenology and time-geography) which promised to \'enrich\' the \'somewhat formal areas of aggregate model-building\' with which mainstream location theory continued to be preoccupied.

The single-plant, single-product firm was displaced as the primary object of industrial location theory, and earlier work on industrial agglomeration and locational interdependence was extended as the structural context of corporate behaviour gradually became more clearly defined. This was achieved in part through the refinement of the decision-making models referred to above, but more particularly through what has come to be called the \'geography of enterprise\' approach (Keeble, 1979; see also special issue of Regional Studies, 1978; McDermott and Taylor, 1982; Hayter and Watts, 1983).

The ahistorical nature of location theory was challenged through a more considered recognition of the historical specificity of the space-economy of capitalism. This had been treated by Weber in summary form (see Gregory, 1981) and it is also latent within both of the previous approaches, but what is distinctive about its explicit acknowledgement is the conjoint denial of any autonomy for location theory: \'spatial development can only be seen as part of the overall development of capitalism\' (Massey, 1977: see also Scott, 1980; Harvey 1982; Cooke, 1983a). Most of these discussions depend upon Marxian economics and political economy. Harvey\'s (1982) exegesis of classical Marxism — most of all his analysis of the contradictory needs of capital for both spatial fixity and fluidity — provides an essential benchmark. However, as Harvey admits, Marx\'s original formulations are \'powerful with respect to time but weak with respect to space\'. Other approaches in a broadly Marxian vein include theorizations of uneven development and of the changing spatial division of labour (Clark, 1980; Browett, 1984), theorizations of the differential geographies of different layers of investment (see, e.g., Massey, 1978), of strategies of industrial restructuring which transform the labour process and impact on geographies of both class and gender (Walker and Storper, 1981; Storper and Walker, 1983; Massey, 1984; Gregory and Urry, 1985; Scott and Storper, 1986; Clark, 1989), and of the segmentation and differentiation of the labour market and its implications for theories of spatial development (Cooke, 1983b). This stream of studies encompasses three fundamental features:

{img src=show_image.php?name=2022.gif } the historical particularity of different phases of capitalist development — hence the attention paid to \'long waves\' (see Kondratieff cycles) and other periodizations of capitalism (Webber and Rigby, 1996); {img src=show_image.php?name=2022.gif } the global context of different phases of capitalist development — hence the attention paid to the new international division of labour, to multinational corporations and to the very phenomenon of globalization itself (Dicken, Peck and Tickell, 1997; Dicken, 1998; Schoenberger, 1988); and {img src=show_image.php?name=2022.gif } the structural interdependencies between commodity production, social reproduction and the urbanization of the space-economy (Cooke, 1983a; Harvey, 1985; see also collective consumption).A broad question receiving much attention within the past decade concerns how economic geography, with its sensitivity to locational variation, might contribute to a reconstruction of the other social sciences (which followed Marshall\'s advice in priviliging time over space). In taking on this project, geographers have, with strange irony, returned to Isard\'s original mission. However, while their motives may be similar, their approaches are rather different. At least two distinct thrusts are especially noteworthy.

Within the tradition of analytical political economy, economic geographers have addressed the more mathematically inclined body of work associated with economists such as Marx, Ricardo, Sraffa, Kalecki and Pasinetti (see Barnes, 1990 and accompanying papers; see also Sheppard and Barnes, 1990; cf. analytical Marxism, geography and). Their intent and effect has been to mount a serious challenge to the logical deductions arising from this (as well as more traditional neo-classical) theory when the spatial dimension of the economy is explicitly introduced. In showing how the determinate conclusions of Marxian economics — e.g. that profit rates will tend to fall over time — are thrown into doubt when space is admitted into the analysis, this work has been of key importance in illustrating the contribution of geographical theory to the wider body of economic analysis.

Still within a political-economic tradition, but employing a non-mathematical discourse, other economic geographers have rejected the logical separation between the \'growth question\' and the \'location question\' implicit in earlier location theory, and have instead sought to demonstrate how the basic theory of economic growth itself can only be properly constructed when it is explicitly couched in spatial terms (Storper and Walker, 1989). In this work, the history of economic change is viewed as the \'inconstant geography of capitalism\' and, by invoking the central analytical concept of \'geographical industrialization\', Storper and Walker demonstrate how the series of major upheavals in this history have each found their origins in the specific physical, economic and social configurations of individual places. Furthermore, the willing acceptance of a priori spatial variation in the cost and availability of factors of production that is so evident within the Weberian tradition of location theory is explicitly rejected here. Thus, the notion of local industrial growth arising \'in passive response to endowment-based local comparative advantages\' (see comparative advantage) is instead conceived of as \'an active shaping of local factor supplies by industry itself\' (Gertler, 1991). Notwithstanding the important contributions of this perspective, recent work by Herod (1997), DiGiovanna (1996) and others reminds us that one particular \'factor supply\' — that is, labour — is anything but passive in the face of industries\' attempts to shape it.

In the most general terms, then, it is clear that since the early 1970s the highly schematic representations of the geometry of space-economy have yielded to much more substantive specifications of the social and political processes (see process) which produce and reproduce constellations of economic activities in time and space. In effect, an insistence on the importance of careful specification and conceptualization (see abstraction) evident in the first-generation location theory has provided a basis for both the critique of theoretical approaches underlying the non-Marxian tradition (Sayer, 1982; Clark, Gertler and Whiteman, 1986; Storper and Walker, 1989; Barnes, 1996) as well as the construction of alternative formulations.

As we approach the half-century anniversary of the publication of Isard\'s Location and space economy, location theorists (broadly defined) continue to define new research frontiers in a number of important areas. One major thrust has focused on the study of economic activities whose locational dynamics were for decades considered to be unworthy of geographers\' detailed scrutiny. Hence, for example, there is now a significant and growing literature on the locational tendencies of service activities (Wood, 1991; Daniels, 1993) that offers a useful corrective to location theorists\' longstanding infatuation with manufacturing and agriculture (but see also Walker, 1985 for a dissenting view). An important subcategory of this work which has attracted considerable attention concerns the geography of financial services. While the popular wisdom asserts that financial activities are, thanks to the widespread use of information and communications technologies, increasingly footloose and dispersing (O\'Brien, 1992), geographers have shown that important social and economic forces continue to reproduce strong concentrations of many financial services in the largest metropolitan centres (Corbridge, Martin and Thrift, 1994; Leyshon and Thrift, 1997; McDowell, 1997). In the area of retail services, although a long and continuous tradition extends from the seminal work of Christaller and Lösch to recent syntheses (Jones and Simmons, 1993), the past decade has seen the emergence of much important work seeking to move beyond simply explaining the location of the \'point of sale\', to situate retailing within a broader geography of consumption (see, e.g., the contributions to Lowe and Wrigley, 1996). More recently still, Scott (1996, 1997) has asserted the importance of another hitherto neglected set of activities constituting the \'cultural economy of cities\'. These activities cut across the manufacturing/ services divide and bring together the many elements of the \'sign economy\' (Lash and Urry, 1993) in which cultural assets are central to the production process and product: film, television and video production, publishing, audio recording, multimedia, animation, advertising, fashion apparel, jewellery, toys, specialty foods and furniture. (See also money and finance, geography of; retailing, geography of; services, geography of.)

Further evidence of location theory\'s rising stature comes from recent work in economics by Krugman and his colleagues (Krugman, 1991). This body of work, which is now commonly referred to by economists as the \'new economic geography\', has returned to the formalistic argumentation of Isard in order to produce a general theory of the location of economic activities under conditions of increasing returns to scale (Krugman, 1995). Not surprisingly, an agenda as ambitious as this, pursued with the modeller\'s normal accompaniment of simplifications and equilibrium assumptions (Venables, 1996), has provoked insightful critical responses from geographers themselves (Martin and Sunley, 1996). Nevertheless, the vitality of this and related debates seems to indicate that location theory is still high on the agenda of human geography and related social sciences, although its form may have changed and its ambit broadened substantially in recent years. (MSG)

References Barnes, T.J. 1990: Analytical political economy: a geographical introduction. Environment and Planning A 22: 993-1006. Barnes, T.J. 1996: Logics of dislocation. New York: Guilford Press. Browett, J. 1984: On the necessity and inevitability of uneven spatial development under capitalism. International Journal of Urban and Regional Research 8: 155-76. Christaller, W. 1966: Central places in southern Germany. Englewood Cliffs, NJ: Prentice Hall (originally published in German in 1933). Clark, G.L. 1980: Capitalism and regional inequality. Annals of the Association of American Geographers 70: 226-37. Clark, G.L. 1989: Unions and communities under siege. Cambridge: Cambridge University Press. Clark, G.L., Gertler, M.S. and Whiteman, J.E.M. 1986: Regional dynamics: studies in adjustment theory. Boston: Allen and Unwin. Cooke, P. 1983a: Theories of planning and spatial development. London: Hutchinson. Cooke, P. 1983b: Labour market discontinuity and spatial development. Progress in Human Geography 7: 543-65. Corbridge, S., Martin, R. and Thrift, N., eds, 1994: Money, space and power. Oxford: Blackwell. Daniels, P. 1993: Service industries in the world economy. Oxford: Blackwell. Dicken, P. 1998: Global shift, 3rd edn. New York: Guilford Press. Dicken, P., Peck, J. and Tickell, A. 1997: Unpacking the global. In R. Lee, and J. Wills, eds, Geographies of economies. London: Edward Arnold, 158-66. DiGiovanna, S. 1996: Industrial districts from a Regulation perspective. Regional Studies 30: 373-86. Gertler, M.S. 1991: Review: Storper and Walker\'s The capitalist imperative. Economic Geography 67: 361-4. Gregory, D. 1981: Alfred Weber and location theory. In D.R. Stoddart, ed., Geography, ideology and social concern. Oxford: Blackwell. Gregory, D. and Urry, J., eds, 1985: Social relations and spatial structures. London: Macmillan. Haggett, P. 1965: Locational analysis in human geography. London: Edward Arnold. Haggett, P., Cliff, A.D. and Frey, A.E. 1977: Locational analysis in human geography, 2nd edn. London: Edward Arnold. Hartshorne, R. 1939: The nature of geography: a critical survey of current thought in the light of the past. Lancaster, PA: Association of American Geographers. Harvey, D. 1982: The limits to capital. Oxford: Blackwell. Harvey, D. 1985: The urbanization of capital. Oxford: Blackwell. Hayter, R. and Watts, H.D. 1983: The geography of enterprise: a reappraisal. Progress in Human Geography 7: 157-81. Herod, A. 1997: From a geography of labor to a labor geography: labor\'s spatial fix and the geography of capitalism. Antipode 29: 1-31. Isard, W. 1956: Location and space economy. Cambridge, MA: MIT Press. Jones, K. and Simmons, J. 1993: Location, location, location: analyzing the retail environment, 3rd edn. Toronto: Nelson. Keeble, D. 1979: Industrial geography. Progress in Human Geography 3: 425-33. Krugman, P. 1991: Geography and Trade. Cambridge, MA: MIT Press. Krugman, P. 1995: Development, Geography and Economic Theory. Cambridge, MA: MIT Press. Lash, S. and Urry, J. 1993: Economies of signs and space. London: Sage. Leyshon, A. and Thrift, N. 1997: Money space. London: Routledge. Lösch, A. 1954: The economics of location. New Haven: Yale University Press (originally published in German in 1940). Lowe, M. and Wrigley, N. 1996: Retailing, consumption and capital. Harlow, Essex: Longman. McDermott, P. and Taylor, M. 1982: Industrial organization and location. Cambridge: Cambridge University Press. McDowell, L. 1997: Capital culture. Oxford: Blackwell. Marshall, A. 1952: Principles of economics, 8th edn. London: Macmillan (1st edn 1890). Martin, R. and Sunley, P. 1996: Paul Krugman\'s geographical economics and its implications for regional development theory: a critical assessment.Economic Geography 72: 259-92. Massey, D. 1977: Towards a critique of industrial location theory. In R. Peet, ed., Radical geography: alternative viewpoints on contemporary social issues. London: Methuen; Chicago: Maaroufa, 181-96. Massey, D. 1978: Regionalism: some current issues. Capital and Class 6: 106-25. Massey, D. 1984: Spatial divisions of labour: social structures and the geography of production. London: Macmillan. O\'Brien, R. 1992: Global financial integration: the end of geography. London: Pinter. Regional Studies 1978: Organization and industrial location in Britain. Regional Studies 9: part 2. Richardson, H.W. 1973: Regional growth theory. London: Macmillan. Rushton, G. 1969: Analysis of spatial behavior by revealed space preference. Annals of the Association of American Geographers 59: 391-400. Sayer, R.A. 1982: Explanation in economic geography. Progress in Human Geography 6: 68-88. Schoenberger, E. 1988: Multinational corporations and the new international division of labor: a critical appraisal. International Regional Science Review 11: 105-19. Scott, A.J. 1976: Land and land rent: an interpretative review of the French literature. Progress in Geography 9: 101-45. Scott, A.J. 1980: The urban land nexus and the state. London: Pion. Scott, A.J. 1996: The craft, fashion, and cultural-products industries of Los Angeles: competitive dynamics and policy dilemmas in a multisectoral image-producing complex. Annals of the Association of American Geographers 86: 306-23. Scott, A.J. 1997: The cultural economy of cities. International Journal of Urban and Regional Research 21: 323-39. Scott, A.J. and Storper, M., eds, 1986: Production, work, territory. Boston: Allen and Unwin. Sheppard, E. and Barnes, T.J. 1990: The capitalist space economy: analysis after Ricardo, Marx and Sraffa. London: Unwin Hyman. Smith, D.M. 1981: Industrial location: an economic geographical analysis, 2nd edn. New York: John Wiley. Stafford, H. 1972: The geography of manufacturers. Progress in Geography 4: 181-215. Storper, M. and Walker, R. 1983: The theory of labour and the theory of location. International Journal of Urban and Regional Research 7: 1-41. Storper, M. and Walker, R. 1989. The capitalist imperative; territory, technology, and industrial growth. Oxford: Blackwell. Venables, A. 1996: Equilibrium locations of vertically linked industries. International Economic Review 37: 341-59. Walker, R. 1985: Is there a service economy? The changing capitalist division of labor. Science and Society 49: 42-83. Walker, R. and Storper,M.1981: Capital and industrial location. Progress in Human Geography 5: 473-509. Webber, M.J. and Rigby, D. 1996: The golden age illusion. New York: Guilford Press. Weber, A. 1928: Alfred Weber\'s theory of the location of industries. Chicago: University of Chicago Press (originally published in German in 1909). Wood, P. 1991: Flexible accumulation and the rise of business services. Transactions, Institute of British Geographers NS 16: 160-72.

Suggested Reading Cooke (1983a), chs 6-10. Smith (1981). Storper and Walker (1989), chs 1-4.



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