Spatial Economics and Development

DeEc 5102
Course Contents:
• Introduction to Economic Geography • New Economic Geography
• Von Thunen & Central Location • Agglomeration Economies
Theory • Cities and Zipf’s Law
• Core Model in Economic Geography • Congestion and Spreading
• Proximity and Market Access forces
• Geography & Economic Development, real world cases
• Spatial variables in Spatial and Development policy
• Spatial Interaction, Spatial Shocks and Spatial Policies
• Spatial Planning in Urban Innovation & Development
 Spatial Economics and Development
DeEc 5102
Course aims
• understanding of the interaction and impacts b/n economic factors and
geographical factors & outcomes as human economic behavior.
• introducing topics including fundamentals of spatial economics, models in
economic geography, principles of locational decisions; spatial interaction,
agglomeration economies and congestion, spatial variables in spatial
development policy analysis, spatial planning in urban development and real-
world spatial policy cases.
Course tools evaluation:
• Lectures • Assignments (50%)
• Discussions • Final Exam (50%)
 Chapter 1: Introduction

Compare:
• city centers and suburbs,
• On main street or back yards • Answer (b): location,
(a) where is the land or house rent more i.e., space, i.e., spatial
expensive? (b) why? economics

So, Definition?
Spatial economics is economic science branch that studies/explains why
there are peaks and troughs in the spatial distribution of wealth and people,
from the international and regional to the urban and local.
 Spatial Economics and other related disciplines
e.g., Economic Geography, Geographical Economics, Spatial Economics, ….

(A) Economic Geography

= is branch of geography – studying geographical pattern or distribution (mapping)
of economic elements and/or activities and how they (distributions etc.) came or
come about.

= some define as the subfield of human geography which studies economic activity
and factors affecting them.

= some scholars (e.g., Clark, G. L.; Feldman, M. P.; Gertler, M. S.; Williams, K.
(2003). The Oxford Handbook of Economic Geography. OUP Oxford. ISBN 978-0-19-
925083-7) (not many) also consider as a subfield or method in economics.
= Economic geography takes a variety of overlapping approaches to many
different topics (overlapping with geographical economics, spatial economics,
urban economics etc.) including:
• the location of industries,
• economies of agglomeration
• economic linkages (e.g., transportation),
• international trade patterns,
• development patterns & linkages,
• real estate geography,
• ethnic economies,
• core-periphery theory,
• the urban economics , the
• environment-economy interaction,
• culture-environment interaction, and
• globalization.
(B) Geographical Economics
= is branch of economics – economic science that studies how geographical
elements influence level, patterns and distribution of economic activities & how
economic principles (should) address, manage or utilize them

According to famous scholar Jacques-François Thisse (2011). Geographical Economics: A

Historical Perspective. Dans Recherches économiques de Louvain, Vol. 77, No. 2-3, pp 141 -
168.
= geographical economics aims at explaining why economic activities choose
to establish themselves in some particular places. The ultimate goal of
geographical economics is to explain the riddle of uneven spatial
development (using economics science tools like cost, price, demand, supply,
utility, etc.).
- The why includes factors influencing/reasons behind/ the presence or
establishment of economic activities or levels at specific places.
(C) Spatial Economics
= Spatial economics is economic science branch that studies/explains why there are peaks
and troughs in the spatial (over spaces) distribution of wealth and people, from the
international and regional to the urban and local.

= it is concerned with the allocation of (scarce) resources over space and the
location of economic activity.

= It discusses many similar elements as in economic geography and

geographical economics, but more intimate about the relationship &
interactions between space (location) & economic activities.

= more concerned with the interaction between two locations by proximity –

e.g., neighbouring regions or states or provinces interact and affect each other
than those far away (e.g., spatial lag, spatial interaction in research model)
Three levels of Spatial Economics questions/concerns:

(i) Core /1st Level Questions:

• Why are there cities?
• Why do some regions prosper while others do not?
• Why do we observe residential segregation?
• Why do firms from the same industry cluster together?

These are intrinsically ‘spatial’ questions, that is, questions in which

the spatial dimension plays a dominant role.
It would be difficult, for example, to speak meaningfully about the
existence and growth of cities without some explicit consideration of
space.
(ii) 2nd Level Questions:
• the analysis of technological spill-overs – how technology spread to
different locations?
• the determinants of trade flows – what determines trade among
different locations (import sources & export destinations)?

Various research find development level or GDP, culture, transport

costs, diplomatic relations, market integrations etc. as the factors
affecting the spatial patterns of technology spill-over, trade,
investment, labour movement and other economic activities.
(iii) 3nd Level Questions: (the weakest in relation to space)
• what are the drivers of investment?
• How important are firing costs to explain unemployment?
• What are the returns to education?

They are seemingly unrelated to spatial factors or locations, but, to answer

these questions (from spatial economics perspective), the main role of
space or location is to provide possibly a major source of variation
(variables varying across space or locations) for empirical research.

For instance, different regions of a country have different education

systems with, say, different age limits, this variation can be used to
produce some meaningful estimates of the returns to education across
spatial locations.
Spatial Economics is also interconnected with other economics
disciplines
(e.g., development economics, globalization, international economics or
trade, behavioural economics or cultural economics, etc.)

- development has spatial pattern & location variable relationships

- innovation has spatial pattern & location variable relationships
- culture & related behavioural economics has spatial pattern, etc.

Some, we learn through assignment & research articles with these elements
Geography of Economic Development, real world cases
Spatial Light as development indicator
Spatial Light as development indicator
Spatial Light as development indicator
Under 5 years kids stunting
HDI growth (change), 2010 - 2020
HDI 2018 (level)
HDI 2018
(level)
Spatial mapping helps to compare yourself
or others position relative to others
Spatial mapping helps to compare yourself
or others position relative to others
Spatial mapping helps to compare yourself
or others position relative to others
Within national space
Polygon vs circle size
Which country?
Administrative spaces & across mapping
 The Von Thünen model: Central Location theory
• The Von Thünen model is a
predictive theory in human
geography that predicts humans
will use land in relation to the
cost of land and the cost of
transporting products to market.
 The Von Thünen model: modified, & modifying
factors
• The Von Thünen model
is a predictive theory in
human geography that
predicts humans will
use land in relation to
the cost of land and the
cost of transporting
products to market.

• Is this modified?

Not modified
 The Von Thünen model: modified, & modifying
factors
• What are the modifying
factors?
Answers
• Mountains (blockages)
• Rivers (facilitating)
• Transportation facilities,
• Technologies (transportation or production, etc.
making production possible where not possible
before)
• Presence of other populated centres or cities
• etc
 The Von Thünen model: modified, & modifying
factors
• How about this ,
Is this modified?

• Yes, this is modified

 The Von Thünen model: modified, & modifying
factors
• How about this ,
Is this modified?

• Yes, this is modified

 Further on urban spatial variables
• Spreading factors • Agglomeration factors
Population, Population,
income growth, income growth,
low price of land low price of land
access to appropriate housing access to appropriate housing
Job availability Job availability
Government policies Government policies
Crime level Crime level
Public transportation Public transportation
…. ….
…. ….
(these with negative influence) – e.g., expensive (these with positive influence) – e.g., low crime
housing, traffic congestion level, low land price
 Zipf’s Law: cities ranking
Zipf’s Law: words in a linguistic corpus, in which the frequencies of
certain words are inversely proportional to their ranks. Named for linguist
George Kingsley Zipf, who around 1935 was the first to draw attention to
this phenomenon, the law examines the frequency of words in natural
language and how the most common word occurs twice as often as the
second most frequent word, three times as often as the third word and
so on until the least frequent word. The word in the position n appears
1/n times as often as the most frequent one.

It says that for most countries the size distribution of cities strikingly fits a
power law: the number of cities with populations greater than S rank is
proportional to 1/S.
Zipf’s Law: cities ranking
Assignment 1: in group of 2 – 3 students
Location of 5 key economic activities (e.g., GDP level, Transportation Technology,
Agriculture/Farming, Metal production, Computer/ICT, etc., top 5 differ from era
to era):
(Group – 1): BC, 2022 years ago, before year 0
(Group – 2): year 0 – 800 AD
(Group – 3): year 801 – 1300 AD
(Group – 4): year 1301 – 1800 AD
(Group – 5): year 1800 – 1950
(Group – 6): year 1950 – now
Choose topics randomly or by consensus
Max: 3 - 4 pages
deadline & instructions will follow soon.