Regional and Urban Economics and Economic Development

Theory and Methods

Mary E. Edwards

• Publisher: Routledge
• Year: 2017
• Print ISBN:
  9780849383175
• Edition: 1
• eBook ISBN:
  9781351551670
• Topic: Business
• Subtopic: Business General
• Index: Business

Thorough and authoritative, Regional and Urban Economics and Economic Development: Theory and Methods provides students with a sound approach to analyzing the economic progress of a region or urban area.

The textbook is divided into four sections for ease of reference. The first section, Market Areas and Firm Location Analysis introduces spatial economics and location theory, while the next section, Regional Growth and Development analyzes regional growth and development models and policy. Introducing the foundations of urban economics, Urban Land Use and Urban Form examines land rent, land use patterns, and the effects of attempts to control land uses. The final section, Urban Problems and Policy, investigates local public finance and introduces the policy analysis involved in countering urban problems.

Addressing these topics from the perspectives of how they affect the population at large and how they become established within public policy, Regional and Urban Economics and Economic Development: Theory and Methods provides students with an essential foundation not only to understand but also to contemplate the dynamics of varying economic factors as they relate to an area's growth.

Chapter 1

Nature and Scope of Regional and Urban Economics

Every economic activity has alocation, but dissimilar activities flourish in different areas. The fields of regional and urban economics consider the impact of location and distance on economic activity. Regional economics helps to determine where different types of economic activity will prosper. For instance, if regional economists look at a photograph of the Earth at night (Figure 1.1), want to know which economic activity locates where; why firms or households locate in some places but not in others, and why some activities thrive in areas that are toxic to other pursuits. Regional economists are curious about migration patterns—they ask why some households and firms choose to locate in the midst of large urbancenters and others in the suburbs or rural areas. Regional economics combines tools from microeconomics, macroeconomics, and international economics to analyze location patterns and other components of regional growth rates.

Urban economists, on the other hand, are interested in the relation of the peripheral urban areas to the city itself as well as land use patterns within a city. They study the location of employment centers relative to residential districts or green spaces (Figure 1.2). Because people often live next to other people of the same income level or those who share the same tastes, urban economists are particularly interested in land use, land rents, local government and local education policies, and housing, as well as social problems relating to poverty and crime.

Figure 1.1 The earth at night. (Photo courtesy of Mayhew, C. and R. Simmon. NASA/GSFC, NOAA/ NGDC, DMSP Digital Archive. From http://antwrp.gsfc.nasa.gov/apod/ap001127.html.)

Figure 1.2 Skyline of Houston, Texas. (Retrieved from http://commons.wikimedia.org/wiki/Image:Houston_SkyIine11.webp.)

Roots of Spatial Economics

The economic analysis of spatial problems can be traced to a 1755 treatise of Richard Cantillon, an Irish banker who lived in Paris. Cantillon examined the relationship of the cities to the surrounding countryside. Wealthier cities were located in areas that had more productive farmland. If farmers produced large amounts of surplus products, the cities bustled with economic activity.¹

Between 1800 and 1950, German scholars were at the forefront of spatial economic thought. The early German works were not known to most English-speaking economists until they were translated in the middle or late 20thcentury.Johann Heinrich von Thünen’s (1826) model of agricultural land use was briefly mentioned in Alfred Marshall’s Principles of Economics (1892), but Thünen’s book Der isolierte Staat (The Isolated State) was not fully translated into English until 1966. His agricultural land-use model forms the foundation for all urban land models today. Von Thünen’s goal was to answer the question, “I have apiece of land, what is the best use for that land?”²

In 1885, mathematician Carl Wilhelm Friedrich Launhardt pioneered the relation between land use and land rents in what are called “bid-rent functions.” He also explored the concept of market area analysis and spatial demand curves. His primary work, Mathematische Begründung der Volkswirtschaftslehre (Mathematical Underpinnings of Economics), was not translated into English until 1993.³

Alfred Weber’s Über den Standort der Industrie (Theory of Industrial Location) followed Thünen’s example by asking: “I have an industry, where do I locate it?” Walter Christaller developed a model showing how cities are linked in a hierarchical network in his 1933 work, Die zentralen Orte in Süddeutschland (Central Places in Southern Germany). Finally, in 1944 August Lösch expanded on this network with his work Die raumliche Ordnung der Wirtschaft (The Economics of Location), where he developed a formal model of market areas to complement Christaller’s system of cities. Because of World War II, Lösch’s work could not be translated into English until 1954. Even though American Economist Harold Hotelling’s (1929) article, “Stability in Competition”, is one of the most cited in current literature, most of the writings on regional and urban economics in the United States appeared after 1950.

What Makes up a Region?

The two major categories of regions are functional (operational) and administrative (political). Ideally, but rarely, these signify the same geographical area. The functional regions depend on some type of homogeneity within the area. The administrative regions are determined by political subdivisions and often become the area in which policy decisions are implemented.

The primary issue of regional economics concerns the appropriate delineation of a region. The traditional response was fairly easy. Siebert (1969), for example, defined a region as a “subsystem of a national economy.” Historically, regional economic analysis has been limited to one country, but no longer. National frontiers are not always adequate to define spatial units of analysis because functional regions transcend political boundaries. The Red River Valley Region, for instance, extends from the border between North Dakota and Minnesota into Manitoba, Canada. Maine’s economy is more similar to that of New Brunswick, Canada, than to that of Nebraska.

The Blue Banana and the European Boomerang are also examples of such functional regions. As shown in Figure 1.3, Europe’s Blue Banana encompasses the southwest of England, Lille (France), Brussels (Belgium), Luxembourg, The Netherlands, the Ruhr and the Rhine Valleys, Switzerland, and the north of Italy. Similarly, Central European cities of Gdansk, Poznan, Wroclaw, Prague, Brno, Bratislava/Vienna, and Budapest form what Gorzelak (1996) calls the Central European Boomerang. The Central European Boomerang is predicted to become the core of this part of Europe because of the greater number of connections its cities have with the West. A final example of a European functional region is the proposed Mediterranean Arc in Europe includes the contiguous areas that border the Mediterranean Sea in Italy, France, and Spain.⁴

Figure 1.3 Europe’s Blue Banana and the corresponding Boomerang. (Map courtesy of Borsi Balazs, GKI Economic Research Co. and the Office for Official publications of the European Communities 2005. The RECORD Experimental Map innovative Research Organizations in European Accession Country, http://www.zsi.at/attach/RECORD_experimentaI_map.pdf,January 2004.)

Classifying Regions

Classifying regions is the most basic task in spatial analysis, but at the same time, it can be one of the most controversial problems for both administrative and functional regions. For example, much controversy comes from redistricting political boundaries of the congressional districts to dilute the strength of the opposing party (gerrymandering) in the United States.⁵

Regional Boundaries within a Multilingual Country

Language or other cultural differences delineate market areas that are contained within and between country boundaries. Rossera (1990) analyzed patterns of telephone calls within Switzerland in 1985 to trace informal economic boundaries in acountry with four distinct national languages. He found that the French and German sections phone each other infrequently because the two languages are quite different. People who speak Romansh, on the other hand, communicate as often with those who speak German as they do with those who speak Italian. The Swiss-French and Swiss-Italians, probably because of the common linguistic root, connect much more often with each other than with their German compatriots.

The territories of Switzerland’s four languages are as follows: 1: French; 2: German; 3: Italian; 4: Romansh.

Rossera (1990); Map courtesy of Encyclopedia of
Linguistics from an article by from Ray Harlow, entitled,
Switzerland. http://strazny.com/encyclopedia/
sample-region.html

Think About It…

List the different administrative regions in which your city or neighborhood is included. On the Internet, search for the name of your city along with the word “region” or “district.”

State (province, prefecture)_________

County, borough, or parish _________

Congressional district _________

Smaller cities may be part of a township within a county or a “census delineated area” _________

Counties may be part of metropolitan areas _________

Watershed district _________

School district _________

Economic development region _________

Judicial districts _________

Police precinct _________

County commissioner district _________

Other: _________

Often, secondary data are created and made available by administrative regions. With the growing availability and precision of various Geographic Information Systems (GIS) in providing information specific to areas smaller than counties, the definition of a region based on the geographic level of available data may soon become less of an issue. Unfortunately for the researcher, most economic data are currently available only at the county or the state level. Generating accurate data for areas smaller than those at the county or state level is very expensive to obtain and potentially invades the privacy of the firms or residents in the area.

A functional region requires agreater degree of commonality than an administrative region. Examples of functional regions in the United States include the Bible Belt, the Corn Belt, the Black Belt, the Rust Belt, the Jello Belt, the Snow Belt, and the Tornado Alley. These regions are homogeneous relative to a specific descriptor, but they are seldom administrative regions in that they do not have their own governing bodies.

Functional regions are not necessarily contiguous. Homogeneous economic regions may transcend political and national boundaries or be subsets within a ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Foreword
• Preface
• Acknowledgements
• About the Author
• List of Figures
• List of Tables
• Contents
• 1 Nature and Scope of Regional and Urban Economics
• PART I: MARKET AREAS AND FIRM LOCATION ANALYSIS
• PART II: REGIONAL GROWTH AND DEVELOPMENT
• PART III: URBAN LAND USE AND URBAN FORM
• PART IV:URBAN PROBLEMSAND POLICY
• Index