1.1 WHAT IS REGIONAL ECONOMICS?
Economic systems are dynamic entities, and the nature and consequences of changes that take place in these systems are of considerable importance. Such change affects the well-being of individuals and ultimately the social and political fabric of community and nation. As social beings, we cannot help but react to the changes we observe. For some people that reaction is quite passive; the economy changes and they find that their immediate environment is somehow different, forcing adjustment to the new reality. For others, changes in the economic system represent a challenge; they seek to understand the nature of factors that have led to change and may, in light of that knowledge, adjust their own patterns of behavior or attempt to bring about change in the economic, political, and social systems in which they live and work. In this context, regional economics represents a framework within which the spatial character of economic systems may be understood. We seek to identify the factors governing the distribution of economic activity over space and to recognize that as this distribution changes, there will be important consequences for individuals and for communities. Thus, regional or "spatial" economics might be summed up in the question "What is where, and why—and so what?" The first what refers to every type of economic activity: not only production establishments in the narrow sense of factories, farms, and mines, but also other kinds of businesses, households, and private and public institutions. Where refers to location in relation to other economic activity; it involves questions of proximity, concentration, dispersion, and similarity or disparity of spatial patterns, and it can be discussed either in broad terms, such as among regions, or micro geographically, in terms of zones, neighborhoods, and sites. The why and the so what refer to interpretations within the somewhat elastic limits of the economist's competence and daring. Regional economics is a relatively young branch of economics. Its late start exemplifies the regrettable tendency of formal professional disciplines to lose contact with one another and to neglect some important problem areas that require a mixture of approaches. Until fairly recently, traditional economists ignored the where question altogether, finding plenty of problems to occupy them without giving any spatial dimension to their analysis. Traditional geographers, though directly concerned with what is where, lacked any real technique of explanation in terms of human behavior and institutions to supply the why, and resorted to mere description and mapping. Traditional city planners, similarly limited, remained preoccupied with the physical and aesthetic aspects of idealized urban layouts. This unfortunate situation has been corrected to a remarkable extent within the last few decades. Individuals who call themselves by various professional labels—economists, geographers, ecologists, city and regional planners, regional scientists, and urbanists—have joined to develop analytical tools and skills, and to apply them to some of the most pressing problems of the time. The unflagging pioneer work and the intellectual and organizational leadership of Walter Isard since the 1940s played a key role in enlisting support from various disciplines to create this new focus. His domain of "regional science" is extremely broad. This book will follow a less comprehensive approach, using the special interests and capabilities of the economist as a point of departure. 1.2 THREE FOUNDATION STONES
It will be helpful to realize at the outset that three fundamental considerations underlie the complex patterns of location of economic activity and most of the major problems of regional economics. The first of these "foundation stones" appears in the simplistic explanations of the location of industries and cities that can still be found in old-style geography...