Introduction to Economic

Geography
Jürgen Essletzbichler
juergen.essletzbichler@wu.ac.at
E-learning support: Paul Gross
paul.gross@wu.ac.at
WELCOME!

▪ Who am I?

▪ What can you expect?

▪ Economic Geography course taught by a trained geographer

▪ Institute of Economic Geography is located in the Department of

Socioeconomics – so economics is considered a social science and the
ECONOMY seen as embedded in SOCIETY and ENVIRONMENT

▪ Multiple theoretical lenses and methodological frameworks!

▪ The course will be CHALLENGING – different frameworks than what

you may be used to and you have to read, think and participate!
What can you expect?

▪ Key is to figure out if and why geography still matters in a

rapidly globalizing economy, declining transportation costs/time
and improved forms of digital social networking platforms

▪ What kinds of questions?

▪ Why do more people than ever live in cities?

▪ What happens if globalization produces loosers as well as winners?
▪ Are consumers responsible for social and environmental problems in
producing countries?
▪ Who manages the global economy?

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To get you started

▪ Have a look at the two figures and quotes (to follow)

▪ Which ones would you associate with economic geography and

why?

▪ Discuss them with your classmates and once you have made up
your mind go to Canvas -> Modules -> Session 1
-> Discussion: Session 1

▪ The answer does not have to be long (4-5 sentences justifying

your choice).

▪ You can earn 2 bonus points for that

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 What is economic geography?

Source: McDonald, G. (2016)

http://news.aag.org/2016/11/geography-
institutions-and-the-fate-of-people-and-planet-
in-the-21st-century/

Source: Sachs, J. (1997). Nature, nurture, growth. The Economist

What is economic geography?

“Some astonishing news reports

are coming out of China. The
United States Geological Survey,
which keeps tabs on these
things, reports that China
consumed 6,651 million tonnes
of cement in the years 2011–13
compared with the 4,405 million
tonnes the United States used
over the period 1900–1999”
(David Harvey 2016, The Ways of
Source: Zheng and Kahn (2013)
the World, p1).
Economic Geography – which quote
would you associate with it

Adam Smith David Harvey

“Some astonishing news reports are

coming out of China. The United States
Geological Survey, which keeps tabs on
these things, reports that China
consumed 6,651 million tons of cement
in the years 2011–13 compared with
the 4,405 million tons the United States
used over the period 1900–1999”
(David Harvey 2016, The Ways of the
World, p1).

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Two broad views on geography

ENVIRONMENTAL DETERMINISM

▪ Environment determines how

▪ People behave and what character traits they develop (strong form of
environmental determinism) (relationship to racism!)
▪ Nature provides opportunities (rivers, raw materials, access to sea,
good agricultural land,…) and constraints (mountains, dessert,
tropics,…) to what can be achieved (weaker form of E.D.)
▪ The strong version has been refuted by scientists, the weaker
form still lingers on
▪ Economists often call it first-nature geography (eg. Krugman)
▪ Geography is exogenously given and static
▪ „Container view“ of geography

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Two broad views on geography

PRODUCTION OF SPACE

▪ Here, it is the logic of the socio-economic system that

exerts pressure on people to invest in the production of
space (railways, ports, high-speed optic cables, cities,
skyscrapers, factories, …) produces geography
▪ This is often called second-nature geography by
economists
▪ Geography is endogenously produced and changing
dynamically
▪ The spatial structure co-evolves with the socio-economic
system
▪ Geographers also insist that how places are integrated into
the wider economic system matters: „Relational view“ of
geography

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What do geographers and economists
think?

▪ Geographers abandonned environmental determinism in the

1940s – they firmly focus on the production of space

▪ Most economists also believe that second-nature geography

is now more important than first-nature geography

▪ One major difference: Geographers understand place not as a

spatially isolated container but a territoral nexus that is
characterized by its relation with other places, institutions,
actors (think colonialism, global cities,….)

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So this course…

▪ Focus on second nature geography

▪ How and why do the requirements of the socio-economic system

(eg. capitalism) shape the production of space (infrastructure,…)?

▪ How do the emerging spatial resource systems (IT, roads, rails,

housing, offices,….) shape the socio-economic development of
particular places in relation to other places – co-evolution

▪ The result of uneven investment decisions is geographically

uneven socio-economic development

▪ Key spatial processes: Globalization and Urbanization

▪ Case studies to illustrate theoretical concepts: London, BREXIT

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Course Introduction
12
 COURSE CONTENT

Date Topic

MODULE 1: UNEVEN DEVELOPMENT

14.03. Introduction: What is economic geography?
21.03. Explaining uneven development

MODULE 2: GLOBALIZATION
11.04. Is globalization always better? 2 x 2 hour Discussion Groups

18.04. What is new about this period of globalization? 2 x 2 hour Discussion Groups

MODULE 3: URBANIZATION AND LOCALIZATION

25.04. Why do we have cities? Agglomeration economies 2 x 2 Discussion Groups

02.05. Who manages the global economy? Global cities: 2 x 2 hour Discussion groups (+
Conclusion/Exam info)

10.05. FINAL EXAM: Midterm Exam Week

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DISCUSSION GROUPS

There are two different groups: Discussion Groups 1 and 2

Homework groups: A-??

The discussion groups tell you when you have to come to class (from week 3
onwards):

Discussion Group 1: Thursday 10-12

Discussion Group 2: Thursday 12-14

▪ Please make sure that you only come to the slot that is allocated to your
group

▪ In order to do the Assignments/homework for the seminars you are split into
groups of 5 students and you will have to submit the answers prior to the
seminars (there will be a link to upload those). When you upload them please
make sure that your group codes and names are on the document:
▪ Assigment 1-Group A (for instance). All the groups will be on Canvas

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What does Vorlesungsübung (VUE)
mean

▪ Mixture of lectures and seminars.

▪ You HAVE to be present in your discussion group!!!

▪ You have to look at the videos and powerpoints prior to class as

that will be on the final quiz. So if anything is unclear ask at the
beginning of the discussion section.

▪ There are compulsory readings for each week. Your homework,

class discussions and quizzes are based on that!

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Delivery of course material

▪ Independent reading of textbook chapters and scientific papers

▪ Watching of TED talks, newspapers,…
▪ Brief lectures
▪ Discussions
▪ Group work
▪ Websites – Data, Graphs, Maps

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Learning outcomes

▪ You should be able to answer the following questions:

▪ What is the point of thinking geographically about the economy?

▪ Why is capitalism technologically dynamic, exploitative and
geographically expansive?
▪ How does capitalism lead to uneven spatial development?
▪ Does globalization produce winners only?
▪ Are consumers responsible for the social and environmental
conditions in producing countries?
▪ Why do we still live in cities?
▪ Who manages the economy?
▪ What is a region/city?

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Learning outcomes: Skills

▪ Independent reading

▪ Learn how to read and interpret scientific papers

▪ Critical thinking

▪ Finding and using various data sources

▪ Interpretation of data

▪ Using theory and data to make an argument

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Assessment

▪ There is a total of 108 points:

▪ 4 in-seminar online quizzes– (max. 5 points each) (20 points)

▪ About seminar readings

▪ In sessions 3-6
▪ There will be different quizzes at the beginning of each seminar.

▪ Answering questions in relation to readings (this will be in form of small group homework)
(max. 5 points each) (20 points)

▪ Seminar participation: max 2 points (in addition to the possible 100 points)

▪ Final exam (60 points)

▪ A minimum of 30 points has to be reached in the final exam in order to pass the course.
The exam will consist of a multiple choice part and a short open-answer part
▪ NOTICE: If you can provide documentation that you cannot participate in the exam at the
given date (eg. doctor’s note) or if you fail to obtain at least 30 points (50%) but achieve
at least 6 points (10%) at the first attempt, then you are allowed a second attempt.
Please notice that the second attempt will be during the summer break! Work related or
holiday related excuses are not tolerated! The exam will take in the final exam week.

▪
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Assessment

▪ Please be aware that this is an individual quiz. Cheating (eg. copying

from your neighbor) will result in 0 points for the quiz. Repeated
offenses will be passed on to the VR Lehre and risk a FOUR-MONTH
BAN on exams and course. This same is the case for the final exam.

▪ More information on the contents for the quizzes can be found under
"Literature“ (see the syllabus on learn for details on readings each
week)

Grading:
0 to <50 points Fail
50 to < 62.5 points Sufficient
62.5 points to <75 points Satisfactory
75.0 points to <87.5 points Good
>=87.5 points Excellent

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General points

▪ Experience shows that class attendance improves your grade!

▪ In order to be able to do the online quizzes and get extra points

for participation you will need to bring your PHONE and/or
LAPTOP because you have to access canvas.wu.ac.at for that.

▪ In order to anser the quizzes, you will need to read the

relevant papers PRIOR to coming to class.

▪ There will be ZERO TOLERANCE for cheating! I will report you

immediately

▪ Discussions are based on group work, quizzes are done

individually! No copying of quizzes -> BANNED FROM EXAM

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QUESTIONS SO FAR?

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 Part II: Thinking
Geographically
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Aims of this session

1. To understand the distinctive elements of a geographical mode

of thinking.
2. To elaborate on key concepts such as location, distance,
territory, place, scale, relations.
3. To apply these concepts to economic phenomena.

COPYRIGHT © 2013 BY JOHN WILEY & SONS, INC. ALL

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Some working definitions….

▪ The neo-classical definition of Economics is “the study of how

society makes choices in managing its scarce resources and the
consequences of this decision-making„ (Crespo Cuaresma 2018)
▪ From a socio-economic perspective we are less interested in the
allocation and distribution of scarce resources but about the
processes that generate and distribute value and wealth.
▪ Socioeconomics is then the discipline that studies how humans
organize society and transform nature to create and distribute
value in order to meet human needs
▪ This means that economics cannot be separated from the study
of society, nature, politics…..REMEMBER ZUWI I

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Socioeconomics

▪ First, socioeconomics is not as tight and easily summarized a

framework as mainstream (neoclassical) economics beause it draws
on a lot of different disciplines. MULTI-DISCIPLINARITY and
MULTI-PERSPECTIVITY
▪ The application of multi-disciplinary and multi-theoretical perspectives is
understood as necessary in order to generate different viewpoints,
research problems and research questions to be subjected to scientific
investigation

▪ Second, socioeconomics does not believe that the economy is an

independent entity that can be isolated from social, political or
cultural processes. The economy is EMBEDDED in SOCIETY and
NATURE and cannot be studied in isolation. The way the economy is
embedded varies across space (economic geography) and time
(economic history).

▪ Third, because economic choices affect individuals, social groups,

regions, and countries differently (some win, some loose), any
economic decision necessarily has POLITICAL and MORAL
implications that are not ignored by socioeconomists.

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The need for multiple lenses

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Economic Geography

▪ Economic geographers are interested in explaining the causes and

consequences of uneven development within and between regions. The
discipline’s goal has long been to offer multi-faceted explanations for
economic processes – growth and prosperity as well as crises and decline –
manifested across territories at various scales: local, regional, national and
global.

▪ Contemporary economic geographers study geographically specific factors

that shape economic processes and identify key agents (such as firms, labour
and the state) and drivers (such as innovation, institutions, entrepreneurship
and accessibility) that prompt uneven territorial development and change
(such as industrial clusters, regional disparities and core – periphery).
Ayokama et al. 2010, p.1

▪ So using the example of facebook we will try and illustrate why a spatial
perspective is important, i.e. why economic activity does not just happen in
place, but that where things happen affects economic activity

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 Thinking geographically about facebook

▪ Figure 1.1 Facebook – the transcendence of geographical distance?

▪ Source: © Jinx Photography Brands/Alamy Limited
▪
▪

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Facebook

▪ Graduate Student at Harvard

▪ Creates facebook in February 2004
▪ Six months later established in
Silicon Valley, CA, just outside the
campus of Stanford University
▪ 2010 man of the year at Time
magazine
▪ 2012 about 850 million people
worldwide use facebook
▪ When Facebook shares were floated
in 2012, the company was valued at
80-100 billion US$ (more than media
giant News Corporation, Time Warner
or Sony and General Motors)

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What does it mean to think
geographically?

▪ Facebook is a profoundly geographical story if we take

“geographical” to mean the patterning of economic activities on
the earth’s surface.

▪ Space is not a straight forward idea – it is more than just an

empty canvas on which those patterns are imprinted

▪ We DO NOT just want to describe patterns, but explain them.

▪ Economic activities are shaped by spatial relations – is not just

about where things happen, but WHY they happen where they
do – it is an EXPLANATORY FACTOR!

▪ For this purpose we have to introduce four key spatial

conceptions: location, territory, place, scale

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Location

▪ Location involves the positioning of

people and objects relative to each
other (a key variable here is
distance).

▪ The most basic way of thinking about

space is as a grid of points we can
describe using a system of
coordinates.

▪ A conception of space based on some

definable measure of position is
referred to as absolute space.

▪ Absolute space allows the specification of point

locations, lines, and areas.
▪ Space here is simply a grid for defining an absolute
position.

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Location (cont.)

▪ We can also examine the location

of people and things in space in
terms of their position in relation to
each other.

▪ Relative positions allow us to start

thinking about patterns in
economic space.

▪ Overcoming distance requires time

and money and so is nearly always
a factor in determining the location
of economic activities.

▪ Example: Raw materials and

finished goods transported for
longer distances become
more expensive or they
deteriorate more in quality.

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Location (cont.)

▪ The distance between points on a map is not necessarily the most significant
factor in determining the effect of location on economic activities.

▪ Relative space is frequently more important in economic terms than absolute

space.

▪ For many years, economic geographers have sought to understand how the
“friction of distance” affects the spatial pattern of economic activities:

▪ Johann von Thünen examined the way distance affected agricultural

land use patterns. фрукти.
типу що корів триматимеш найблидже до ринку, бо молочні продукти псуються. далі будуть овочі і
а пшениця найдалі від центру міста (ринка), бо збирається і продається лише раз на рік
▪ Walter Cristaller tried to figure out why distances between different
sized cities appear regular (central place theory) типу все тяжіє до центру
▪ Alfred Weber attempted to explain where factories locate in relation
to sources of raw material and markets depending on
transportation costs of raw materials (to factory) and finished
products (from factory to market) (economic location theory)

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But does location still affect Facebook?

▪ In what sense could location still be important if people can access it

anywhere in the world, order things from any where in the world
from anywhere, etc. buy things without „friction of distance“

▪ Software downloads, movies, ebooks can all be accessed from

anywhere

▪ So why and how may location and distance still be important? What
does facebook do? What kinds of tasks do they need to perform to
run the business effectively (innovation, marketing, producion,
distribution,….)? What kinds of location factors are required for
those divisons/tasks? In other words what determines where they
locate those divisions/tasks?

▪ Have a quick discussion and think, keeping the business model of

facebook in mind, why location and distance is still important, or
actually, critical for their success

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Facebook and the role of distance
Why location matters

▪ First, Facebook sells advertising space – they get paid per

click or view
▪ In order to maximize the chance of customers actually buying
from advertisers they tend to target customers in their
geographic proximity

▪ Second, in order to access information quickly they require big

computer server capacity – land, cheap electricity and water
(for cooling), good connectivity to internet
▪ Interesingly, the cotton textile mills of Manchester at the
beginning of the 19th century had similar locational
requirements!

▪ Third, the business needs app developers and big data

analysts

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 Territory Qualities that distinguish one area from another
defined by lines and shading that indicate the entities that control these territories

▪ “A bounded space under the control of a group of people,

usually a state” (Elden, 2009, xxv).

▪ If location/distance are about coordinates on a map and the

physical space that separates them, then territory is about
carving out defined portions of space and exercising power over
them.

▪ The primary form of territorial power is exercised by

governments:
▪ Affecting economic activities within their territories and
economic flows across their borders.

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 Figure 1.3 The Facebook friend map – global intensities of Facebook friend relationships,2010

Anything out of the ordinary?

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Territory (cont.)

▪ National governments have the power to enforce the boundaries

of their territory:
▪ Controlling flows of workers, products, money.

▪ Territorial space also implies the power to exert some control

over certain processes within those boundaries:
▪ Education and training programs run by
governments.
▪ Laws concerning property, pollution, contracts.
▪ Welfare, unemployment benefits, and tax policy.

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Place

▪ Places are formed when space takes on certain unique

characteristics that are meaningful to the people who interact
with them.

▪ Places may have cultural or political significance, but they also

shape economic patterns in important ways.

▪ Economic places do not create themselves internally—they are

the product of various flows across space that intersect
differently in different places to generate one-of-a-kind
outcomes.

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Place

▪ The characteristics of a place are also fundamentally shaped by

human activity.
▪ Forms of government, religious traditions, linguistic
groups, norms relating to gender roles, architecture,
artistic expression, ways of interacting with other
people, levels of wealth and inequalities of wealth,
the types of work that people do, the shops that
exist and the things that they sell.

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Relations – the construction of place

▪ Differences between places are created as much by the connections

between places as they are by processes that are internal to them.

▪ Places are not just shaped by modern connections, but are also the
result of historical place-making:
▪ London as the historical center of empire, or the colonial
imprint on modern-day Manila or Mumbai.

▪ Studying a place is not about studying just that location. Focusing

on the complexities of a specific place is a geographical undertaking.

▪ Geographical thinking seeks to uncover complexity rather than

deriving universal “laws” or principles.

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Place and Facebook

▪ Why in Silicon Valley?

▪ Can you venture a guess?

▪ But also the user density varies nationally?

▪ China we discussed
▪ But only 2% of Japanese are on facebook? Why?
▪ Has a huge impact on advertising – Although there was an 8.5 billion US$
worth of online advertising business in Japan, facebook captured only a
tiny share of it

▪ Multinational corporations have to deal with different cultural

practices in different divisions across the globe,…management and
organizational problems…

The world‘s local bank

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Scale

▪ Both territories and places are

defined areas of space, but
they might represent a range
of different scales

▪ State territories vary widely in

size.

▪ Scale becomes complicated

when we are thinking about
space in economic life.
▪ Which scale should we
focus our attention upon?
▪ How do different scales Figure 1.4 Spatial scales
Source: Adaptation from Castree, N., Coe, N. M., Ward, K.
relate to each other? and Samers, M. (2004) Spaces of Work:
Global Capitalism and, Geographies of Labour, figure 0.1.

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Question

▪ Problem: The Viennese local government wants to make sure

that the Viennese population gets trained and employed.

▪ What is the appropriate scale of action?

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Scale (cont.)

▪ Scales are not hierarchical, and larger scales do not always determine what
goes on at smaller scales.

▪ The scales listed above are humanly created, not naturally occurring:
1. A scale such as “the national” or “the urban” refers to entities
that we have collectively created.
2. Each of these scales is being actively constructed and
reconstructed with ongoing changes in our economies (the
“production of scale”).

▪ For instance, the power of Wall Street Financiers may influence U.S.
national economic policy making
▪ Rice farmers located in California, USA may have more power to
influence global WTO agricultural trade policies than rice farmers in
Vietnam, etc.
▪ Legislation at the level of the EU has an impact on national policy
making (eg. Common technical standards) – The EU as important
scale did not exist prior to 1957!

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 Why did Facebook locate its server in
Prineville, Oregon?

Figure 1.6 The location of Prineville, Oregon

▪ Figure 1.5 Facebook’s data center in Prineville, and an extension facility under construction
▪
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Why did they locate in Beaverton,
Oregon?
Facebook and Scale
▪ National Scale: It is part of the United States – protected by the
U.S. government (seen as secure); also certain infrastructure
(high speed fibre optic cables / satellites in place)

▪ Regional Scale: West coast – tried to find cool climate (lower

cooling costs) (but: Prineville actually a dry area – so they use a
different cooling system)

▪ Local Scale: Prineville has for a long time been plagued by high
unemployment;
▪ Cheaper labor force; support in form of land for the server facility
▪ Cheap electricity (because of local oversupply no longer needed bc
other companies left)
▪ But also somewhat isolated from other metropolian areas – easy to
secure -> less security personel

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Why did they locate in Prineville,
Oregon?

▪ Territory:
▪ high unemployment area that meant that local government provided
funding (land)
▪ US. Government provides legal protection

▪ Place: Prineville is a traditional working class community – they

are not the hipsters working in Silicon Valley; they see
themselves as the coal face of IT (basically relatively low-level
engineers that get the servers going)

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 The relation between space, territory,
place, and scale

Figure 1.7 Space, territory, place, and scale

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Relational space
What should you retain

▪ You should be able to talk/write coherently about basic

geographic concepts and be able to apply those concepts to
explain various spatial socio-economic problems: space,
location, territory, place, scale, relational space

▪ You should understand the difference between first-nature and

second nature geography

▪ You should be able to use the geographic concepts in order to

explain how Facebook is also very much a geographic story

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NEXT WEEK

▪ For next week please read CHAPTER 3 of COE ET AL.

▪ Next week will be online again!

▪ Bring your LAPTOP/IPAD/SMART PHONE, in case there are

exercises for bonus points.

▪ READINGS – will be provided on learn – for those interested

there is plenty of further reading! I would definitely encourage
it!

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 Any Questions?

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THANK YOU!
Hope to see you next week