Economic development

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INTRODUCTION: 1

THE ROLE OF GEOGRAPHY IN ECONOMIC DEVELOPMENT 1

WHAT DOES THE DISTANCE MATTER? 3

WHAT DETERMINES DISTANCE COSTS AND HOW DOES ICT RESHAPE THEM? 4

WHAT ARE THE LIMITATIONS OF ICT'S EFFECT ON DISTANCE? 6

CONCLUSION 9

REFERENCES AND BIBLIOGRAPHY 10

Introduction:

New communications and information technologies (ICT) have made the communication in long distance more and more convenient and cheap. It seems that the developing countries would benefit sufficiently from the decreasing costs of establishing communications networks, which could results in "the prospect of better provision of education, health care, and host of other services" (Anthony J. Venables, 2001). Based on that, some writers argue that the geography would be meaningless for the economy development once those developing countries are armed with good communications. On the contrary, some writers believe that geography still matters a great deal for economic interaction and for the spatial distribution of income.

The objective of this paper is to evaluate those claims from the both sides. To draw the conclusion, a few questions must be answered properly: what and in which way does the distance mean to the development of national economy? How the ICT would change the situation? Does it work as effectively as expected? By analysis the limitation of ICT in term of rewriting the rule of economic geography, this paper will definitely support the opinion of that distance still matters.

The role of geography in economic development

When we take a look at the economic development in the global view, it is easily found how important role is played by geography. For example, those countries of the Temperate Zone are richer than countries in the tropics, and per capita income in Europe follows a downward tend from the north-west corner. There are large regional inequalities in development, with population concentrated in a few densely populated areas.

To identify the reason, there are usually two seemingly contradictory approaches. One approach emphasizes the role of inherent features of the landscape in shaping development patterns, which explains differences in economic development between locations by the physical characteristics of the location. The other approach argues that even in the absence of physical differences between locations, some locations are in the 'core' and others are in the periphery, which stresses on how the tension between "centripetal" and "centrifugal" forces.

According to Paul Krugman (1998), "centripetal" forces, such as forward and backward linkages in production and increasing returns in transportation, are to promote concentration. The "centrifugal" forces, such as factor immobility and land rents, are to promote dispersal because it can "produce a process of self-organization, in which more or less symmetric locations can end up playing very different economic roles."

As a result of impact of centripetal factors, some highly developed economic region have been established. Businesses in those regions would enjoy the advantages of large market, which promote the lager-scale production and lower cost of intermediate goods, also the benefits of specialized skilled employee supply and "information spillovers"(Paul Krugman, 1998). There were significant social and economic advantages in being located close to those "core" regions, which are usually some super cities such as New York. The physical fabric that makes up a city - blocks of land, buildings, streets, commercial areas, neighbourhood - all contribute to the physical flow of goods and people. Urbanisation has been encouraged by the need to overcome (or save) time through minimising space. Cities have developed to make communication easier, to reduce the "friction" of distance and physical space. In older cities it can be seen that by gathering as many of the necessities of life into a small area - home, work, marketplaces,...
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