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AnIntroductiontoRegionalEconomicsEdgarM.HooverandFrankGiarratani1Introduction1.1WHATISREGIONALECONOMICS?Economicsystemsaredynamicentities,andthenatureandconsequencesofchangesthattakeplaceinthesesystemsareofconsiderableimportance.Suchchangeaffectsthewell-beingofindividualsandultimatelythesocialandpoliticalfabricofcommunityandnation.Associalbeings,wecannothelpbutreacttothechangesweobserve.Forsomepeoplethatreactionisquitepassive;theeconomychanges,andtheyfindthattheirimmediateenvironmentissomehowdifferent,forcingadjustmenttothenewreality.Forothers,changesintheeconomicsystemrepresentachallenge;theyseektounderstandthenatureoffactorsthathaveledtochangeandmay,inlightofthatknowledge,adjusttheirownpatternsofbehaviororattempttobringaboutchangeintheeconomic,political,andsocialsystemsinwhichtheyliveandwork.Inthiscontext,regionaleconomicsrepresentsaframeworkwithinwhichthespatialcharacterofeconomicsystemsmaybeunderstood.Weseektoidentifythefactorsgoverningthedistributionofeconomicactivityoverspaceandtorecognizethatasthisdistributionchanges,therewillbeimportantconsequencesforindividualsandforcommunities.Thus,regionalorspatialeconomicsmightbesummedupinthequestionWhatiswhere,andwhy—andsowhat?Thefirstwhatreferstoeverytypeofeconomicactivity:notonlyproductionestablishmentsinthenarrowsenseoffactories,farms,andmines,butalsootherkindsofbusinesses,households,andprivateandpublicinstitutions.Wherereferstolocationinrelationtoothereconomicactivity;itinvolvesquestionsofproximity,concentration,dispersion,andsimilarityordisparityofspatialpatterns,anditcanbediscussedeitherinbroadterms,suchasamongregions,ormicrogeographically,intermsofzones,neighborhoods,andsites.Thewhyandthesowhatrefertointerpretationswithinthesomewhatelasticlimitsoftheeconomist'scompetenceanddaring.Regionaleconomicsisarelativelyyoungbranchofeconomics.Itslatestartexemplifiestheregrettabletendencyofformalprofessionaldisciplinestolosecontactwithoneanotherandtoneglectsomeimportantproblemareasthatrequireamixtureofapproaches.Untilfairlyrecently,traditionaleconomistsignoredthewherequestionaltogether,findingplentyofproblemstooccupythemwithoutgivinganyspatialdimensiontotheiranalysis.Traditionalgeographers,thoughdirectlyconcernedwithwhatiswhere,lackedanyrealtechniqueofexplanationintermsofhumanbehaviorandinstitutionstosupplythewhy,andresortedtomeredescriptionandmapping.Traditionalcityplanners,similarlylimited,remainedpreoccupiedwiththephysicalandaestheticaspectsofidealizedurbanlayouts.Thisunfortunatesituationhasbeencorrectedtoaremarkableextentwithinthelastfewdecades.Individualswhocallthemselvesbyvariousprofessionallabels—economists,geographers,ecologists,cityandregionalplanners,regionalscientists,andurbanists—havejoinedtodevelopanalyticaltoolsandskills,andtoapplythemtosomeofthemostpressingproblemsofthetime.TheunflaggingpioneerworkandtheintellectualandorganizationalleadershipofWalterIsardsincethe1940splayedakeyroleinenlistingsupportfromvariousdisciplinestocreatethisnewfocus.Hisdomainofregionalscienceisextremelybroad.Thisbookwillfollowalesscomprehensiveapproach,usingthespecialinterestsandcapabilitiesoftheeconomistasapointofdeparture.1.2THREEFOUNDATIONSTONESItwillbehelpfultorealizeattheoutsetthatthreefundamentalconsiderationsunderliethecomplexpatternsoflocationofeconomicactivityandmostofthemajorproblemsofregionaleconomics.Thefirstofthesefoundationstonesappearsinthesimplisticexplanationsofthelocationofindustriesandcitiesthatcanstillbefoundinold-stylegeographybooks.WineandmoviesaremadeinCaliforniabecausethereisplentyofsunshinethere;NewYorkandNewOrleansaregreatportcitiesbecauseeachhasanaturalwater-levelroutetotheinteriorofthecountry;easilydevelopablewaterpowersiteslocatedtheearlymilltownsofNewEngland;andsoon.Inotherwords,theunequaldistributionofclimate,minerals,soil,topography,andmostothernaturalfeatureshelpstoexplainthelocationofmanykindsofeconomicactivity.Abitmoregenerallyandinthemorepreciseterminologyofeconomictheory,wecanidentifythecompleteorpartialimmobilityoflandandotherproductivefactorsasoneessentialpartofanyexplanationofwhatiswhere.Suchimmobilityliesattheheartofthecomparativeadvantagethatvariousregionsenjoyforspecializationinproductionandtrade.Thisis,however,bynomeansanadequateexplanation.Oneofthepioneersofregionaleconomics,AugustLösch,sethimselfthequestionofwhatkindoflocationpatternsmightlogicallybeexpectedtoappearinanimaginaryworldinwhichallnaturalresourcedifferentialswereassumedaway,thatis,inauniformlyendowedflatplain.1Insuchasituation,onemightconceivablyexpect(1)concentrationofallactivitiesatonespot,(2)uniformdispersionofallactivitiesovertheentirearea(thatis,perfecthomogeneity),or(3)nosystematicpatternatall,butarandomscatterofactivities.Whatdoesactuallyappearasthelogicaloutcomeisnoneofthese,butanelaborateandinterestingregularpatternsomewhatakintovariouscrystalstructuresandshowingsomerecognizablesimilaritytoreal-worldpatternsofdistributionofcitiesandtowns.WeshallhavealookatthispatterninChapter8.WhattheChristaller-Löschtheoreticalexercisesdemonstratedwasthatfactorsotherthannatura