Economic Geography
What is economic geography?
→ What economic activity happens where, and why does it happen there?
Three agents interact in space:
People (balance leisure and work is how people make decisions)
consumers
workers
Firms
Governments
Economic geography studies the mutual relationship between the actions of people, firms and
governments and the socio-economic context on different spatial scales
Causes → What drives the (spatial) decisions of firms, people and governments?
Consequences → Why are some places more prosperous (economically successful and
well-off) – in a broad sense – than others? → and what can we do about it?
Setting the scene: Global Transformations, Local impacts
Technological progress
Arthur C. Clarke Predicts the Future (1974)
Why is it that in an era in which transportation and communication costs have virtually
vanished, clusters have become more important than ever? - Edward Glaeser – Prof
Economics
Percentage of world population living in cities
Hockey stick
For economic activities that have become increasingly valuable in today's economy,
transaction costs have actually increased rather than decreased.
Climate change
hockey stick–shaped curves, similar to GDP per capita growth
Exposure to Effects of Climate Change
Which regions will lead the energy transition?
Who will be able to adopt to or benefit from the energy transition?
Economic Geography 1
, Can living standards continue to rise without further damaging the climate?
→ predictions NASA → wheat increase, mais decrease
International trade
Hockey stick
All become richer → more products → more trade/ shipments
Trade of in between products (part of products)
Rise of China
How rise of China affects America
trade not only about finished product but all the steps in between → vulnerable the system
becomes if one of the steps falls away, can’t make the product → impact where things are
produced
→ the work of Angus Maddison, who
dedicated his working life to finding the
scarce data needed to make useful
comparisons of how people lived across
more than 1,000 years
Approaches to studying Global Transformations
Economic geography approach
Economic Geography 2
, Broad outcomes → well-being, broader welfare
Models: understand importance of specific context → Scale, geography, urban-rural
dynamics, inductive
Economic approach
Monetary outcomes → GDP, income, wage inequalities, profits
Models: Search for generally applicable rules → Behavioural laws, general equilibrium,
deductive
Behavioral economics
emotional decisions?
errors?
biases?
altruism? (iets doen voor anderen zonder eigenbelang)
GDP: gross domestic product, per inhabitant
→ A measure of total output of goods and services in the economy in a given period
GDP per capital/country
→ A measure of total output of goods and services in the economy in a given period, divided by
population → to measure average income, or ‘living standards’
GDP per capita fails to fully measure well being because it:
1. Ignores inequality
GDP per capita is an average → does not take account of how the output is distributed
among the members of a population
A country can have high GDP per capita while most people are poor.
Living standards can fall even if GDP per capita rises.
2. Omits non-market activities
Household work, free time, and social relationships are not counted.
3. Excludes environmental costs
GDP counts activities like logging or oil extraction as income.
It does not subtract the loss of forests, soil, or natural resources.
Adjusting GDP for environmental depletion can significantly reduce measured growth
Inequality in global income
Economic Geography 3
, Redistribution of income → elephant carve
Inequality in global income
Hockey sticks: low-and-slow for a long time in history, but rapid growth in GDP per capita
over past two centuries
Overall, global poverty rates have decreased over time
Big differences between countries
But also vast differences within countries
Parts of these are related to spatial inequalities
purchasing power parity (PPP) PPPs are price indices that measure how much it costs to
purchase a basket of goods and services compared to how much it costs to purchase the same
basket in a reference country in a particular year, such as the United States in 2011.
decile, decile groups Deciles split a set of observations into ten equally-sized groups.
Industrial Revolution: period of cumulative innovation
technology The description of a process that uses a set of materials and other inputs, including
the work of people and machines, to produce an output. (recipe → cake)
Economic Geography 4
What is economic geography?
→ What economic activity happens where, and why does it happen there?
Three agents interact in space:
People (balance leisure and work is how people make decisions)
consumers
workers
Firms
Governments
Economic geography studies the mutual relationship between the actions of people, firms and
governments and the socio-economic context on different spatial scales
Causes → What drives the (spatial) decisions of firms, people and governments?
Consequences → Why are some places more prosperous (economically successful and
well-off) – in a broad sense – than others? → and what can we do about it?
Setting the scene: Global Transformations, Local impacts
Technological progress
Arthur C. Clarke Predicts the Future (1974)
Why is it that in an era in which transportation and communication costs have virtually
vanished, clusters have become more important than ever? - Edward Glaeser – Prof
Economics
Percentage of world population living in cities
Hockey stick
For economic activities that have become increasingly valuable in today's economy,
transaction costs have actually increased rather than decreased.
Climate change
hockey stick–shaped curves, similar to GDP per capita growth
Exposure to Effects of Climate Change
Which regions will lead the energy transition?
Who will be able to adopt to or benefit from the energy transition?
Economic Geography 1
, Can living standards continue to rise without further damaging the climate?
→ predictions NASA → wheat increase, mais decrease
International trade
Hockey stick
All become richer → more products → more trade/ shipments
Trade of in between products (part of products)
Rise of China
How rise of China affects America
trade not only about finished product but all the steps in between → vulnerable the system
becomes if one of the steps falls away, can’t make the product → impact where things are
produced
→ the work of Angus Maddison, who
dedicated his working life to finding the
scarce data needed to make useful
comparisons of how people lived across
more than 1,000 years
Approaches to studying Global Transformations
Economic geography approach
Economic Geography 2
, Broad outcomes → well-being, broader welfare
Models: understand importance of specific context → Scale, geography, urban-rural
dynamics, inductive
Economic approach
Monetary outcomes → GDP, income, wage inequalities, profits
Models: Search for generally applicable rules → Behavioural laws, general equilibrium,
deductive
Behavioral economics
emotional decisions?
errors?
biases?
altruism? (iets doen voor anderen zonder eigenbelang)
GDP: gross domestic product, per inhabitant
→ A measure of total output of goods and services in the economy in a given period
GDP per capital/country
→ A measure of total output of goods and services in the economy in a given period, divided by
population → to measure average income, or ‘living standards’
GDP per capita fails to fully measure well being because it:
1. Ignores inequality
GDP per capita is an average → does not take account of how the output is distributed
among the members of a population
A country can have high GDP per capita while most people are poor.
Living standards can fall even if GDP per capita rises.
2. Omits non-market activities
Household work, free time, and social relationships are not counted.
3. Excludes environmental costs
GDP counts activities like logging or oil extraction as income.
It does not subtract the loss of forests, soil, or natural resources.
Adjusting GDP for environmental depletion can significantly reduce measured growth
Inequality in global income
Economic Geography 3
, Redistribution of income → elephant carve
Inequality in global income
Hockey sticks: low-and-slow for a long time in history, but rapid growth in GDP per capita
over past two centuries
Overall, global poverty rates have decreased over time
Big differences between countries
But also vast differences within countries
Parts of these are related to spatial inequalities
purchasing power parity (PPP) PPPs are price indices that measure how much it costs to
purchase a basket of goods and services compared to how much it costs to purchase the same
basket in a reference country in a particular year, such as the United States in 2011.
decile, decile groups Deciles split a set of observations into ten equally-sized groups.
Industrial Revolution: period of cumulative innovation
technology The description of a process that uses a set of materials and other inputs, including
the work of people and machines, to produce an output. (recipe → cake)
Economic Geography 4
