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Importance of Geographic Space and Location
agglomeration rich in knowledge resources is more conducive to firm growth than being located
in a region that is less endowed with knowledge resources” (Audretsch and Dohse, 2007, p. 79;
Polese & Shearmur, 2006).
Many other industries, such as the entertainment industry have found themselves confronted not
only by the new technology, but also by spatial determinants. Currah suggests that for the most
part the Hollywood studios are not ready to explore new opportunities (here: within economic and
geographic spaces) and, instead, they have been fighting a rapid spatial expansion of new
ventures made possible by Internet. According to Currah the studios’ main goal is to establish a
‘closed sphere’ (or closed space) of innovation at a global level. He further asserts that
Hollywood already has been successful in creating and legitimizing a similar ‘closed sphere’
(space) at a regional level in Los Angeles (Currah, 2007).
Finally, it has been well documented that firm’s location is substantially influenced by qualitative
factors as well, such as various amenities offered in different locations. Those geographically
based amenities including safe environment, cultural and recreational opportunities, etc., which
are not necessarily found in all urban centers, impact on employees’ satisfaction and productivity
and affect final locational choices.
INDUSTRY CLUSTERS
In modern literature the notion of industry clusters, based in geographic space, is usually traced
back to Marshall and his Principles of Economics, which was published more than a century ago.
However, Marshall was not the first one to emphasize the importance of externalities and
agglomerations. It was actually van Thunen who back in 1826 provided a detailed account of
main reasons behind economic agglomerations (Fujita & Krugman, 2004). Industrial
concentrations and industry clusters are not quite new as they were part of the standard textbooks
in economic geography and regional economics in the second half of the twentieth century
(Conkling & Yeates, 1976; Hoover, 1975).
In addition, there were a number of very important related concepts, which in some cases
attempted to reconcile the importance of economic and geographic spaces. Some of the most
influential ideas in regional policies were based on the notion of growth poles and growth centers.
The theory of growth centers was very popular in regional development and economic geography
especially in 1960s and 1970s. There are few examples of those powerful concepts applied in the
real world with the support and often leadership of different government agencies and even the
assistance from the leading U.S. universities. For example, Ciudad Guyana in Venezuela was
developed because of the Venezuelan government plan based on the theory of growth centers and
with the help from U.S. consultants. Ciudad Guyana stands today as a testimony to the power,
and also some limitations, of the theory of growth centers and the possibilities of a coordinated
intervention in geographic space. Unfortunately, some of those innovative concepts, which gave
birth to the theory of growth centers and contributed to their popularity are relatively little known,
or perhaps remembered in the English speaking world today. It was actually French economist
Francois Perroux who was behind the original theory of growth poles, which he clearly defined
within economic rather than geographic space. Perroux viewed ‘dynamic growth poles’ as true
engines of the economy, but unfortunately his outstanding ideas were never fully translated into
geographic space. In the end, a simplified theory of growth centers based in geographic space
and influenced by potential benefits of spatial concentration of economic activities became far
more popular and was often adopted by practitioners, but this was only a much weaker substitute
to Perroux’ growth poles (Walecki, 2001).
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