Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Location, location, location: Economists document key role of spatial component in economic growth

20.12.2011
Location and other geographical factors play an important role in supporting economic growth and development in emerging markets, a new study from the Consortium on Financial Systems and Poverty has found.

The study, which examines growth in the Thai economy between 1986 and 1996, shows that a high concentration of enterprise in an area predicts high subsequent growth in and around that area. Entrepreneurial activity decreases virtually by the mile the further away one gets from centers of economic concentration.

In addition, other geographic conditions, such as flat topography and proximity to transportation, also show a strong correlation to enterprise growth.

These are the findings presented by Robert M. Townsend and John S. Felkner in a article in the current issue of Quarterly Journal of Economics, "The Geographic Concentration of Enterprise in Developing Countries."

Townsend, a professor of economics at the Massachusetts Institute of Technology and principal investigator of CFSP, and Felkner, a research scientist at the University of Chicago's National Opinion Research Center, used extensive economic and physiographic data down to the village level in Thailand. Their conclusions are drawn from an economic model that was tested against actual developments over time.

Thailand, the subject of intensive research by Townsend, is largely considered an Asian success story. It has shown consistently strong growth despite military coups, tsunamis, and the Asian financial crisis.

In the 10-year period studied, village wealth doubled, and by 1992 the ratio of money-like-assets to GDP, which indicates the level of financial intermediation, exceeded the level in the United States. At the same time, the country industrialized, with the fraction of GDP in manufacturing rising from 23 to 35% and the number of households in non-farm enterprises increasing by 27%.

However, this growth is not taking place uniformly throughout the country. Among the key findings of the study, which may suggest insights to other developing countries, are:

There are high concentrations of enterprise around the capital of Bangkok and along main transportation arteries running north. At the rural village level, concentrations of enterprise within each province center surrounding large towns and intersections of major highways.

Levels of enterprise drop as the distance to market and infrastructure grows.

Over time, areas of high concentrations of enterprise (and those nearby) show increasing levels of enterprise. This suggests that enterprise fosters more enterprise.

At the national level, there is some dissipation of large, central core concentrations of enterprise. In rural areas, the patterns are more mixed, but show little dissipation.

Numerous regions remain stagnant. From the perspective of the national scale, some regions appear to be permanently lagging, such as the Northeast, and other areas appear to have both low levels of enterprise and low growth.

In rural areas, growth in enterprise is related to favorable environmental conditions such as good soil, proximity to rivers, and flat topography.

"We think these findings are important because we establish that concentrations of enterprise across space in a developing country play a crucial role in the larger process of development," notes Townsend.

"This could have important implications for developing economies, particularly for financial intermediaries, transportation planning, and industrial organization."

Robert M. Townsend is the Elizabeth and James Killian Professor of Economics in the Department of Economics at MIT. Prior to that, Townsend was the Charles E. Merriam Distinguished Service Professor in the Department of Economics at the University of Chicago, where he remains a Research Associate. Since 1997, Townsend has undertaken large scale village surveys in Thailand to analyze the interaction between household decisions and community behavior at different levels of aggregation including families, villages, regions, and country-wide. John S. Felkner is a research scientist at the National Opinion Research Center, University of Chicago.

The Consortium on Financial Systems and Poverty (CFSP) is a research organization comprised of leading and emerging economists. Their goal is to improve the lives of the world's poor and to reduce poverty through helping to identify, design, and implement more efficient financial systems.

Jennifer Roche | EurekAlert!
Further information:
http://www.uchicago.edu

More articles from Business and Finance:

nachricht How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung

nachricht Demographic change depresses tax revenues
04.11.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Novel silicon etching technique crafts 3-D gradient refractive index micro-optics

A multi-institutional research collaboration has created a novel approach for fabricating three-dimensional micro-optics through the shape-defined formation of porous silicon (PSi), with broad impacts in integrated optoelectronics, imaging, and photovoltaics.

Working with colleagues at Stanford and The Dow Chemical Company, researchers at the University of Illinois at Urbana-Champaign fabricated 3-D birefringent...

Im Focus: Quantum Particles Form Droplets

In experiments with magnetic atoms conducted at extremely low temperatures, scientists have demonstrated a unique phase of matter: The atoms form a new type of quantum liquid or quantum droplet state. These so called quantum droplets may preserve their form in absence of external confinement because of quantum effects. The joint team of experimental physicists from Innsbruck and theoretical physicists from Hannover report on their findings in the journal Physical Review X.

“Our Quantum droplets are in the gas phase but they still drop like a rock,” explains experimental physicist Francesca Ferlaino when talking about the...

Im Focus: MADMAX: Max Planck Institute for Physics takes up axion research

The Max Planck Institute for Physics (MPP) is opening up a new research field. A workshop from November 21 - 22, 2016 will mark the start of activities for an innovative axion experiment. Axions are still only purely hypothetical particles. Their detection could solve two fundamental problems in particle physics: What dark matter consists of and why it has not yet been possible to directly observe a CP violation for the strong interaction.

The “MADMAX” project is the MPP’s commitment to axion research. Axions are so far only a theoretical prediction and are difficult to detect: on the one hand,...

Im Focus: Molecules change shape when wet

Broadband rotational spectroscopy unravels structural reshaping of isolated molecules in the gas phase to accommodate water

In two recent publications in the Journal of Chemical Physics and in the Journal of Physical Chemistry Letters, researchers around Melanie Schnell from the Max...

Im Focus: Fraunhofer ISE Develops Highly Compact, High Frequency DC/DC Converter for Aviation

The efficiency of power electronic systems is not solely dependent on electrical efficiency but also on weight, for example, in mobile systems. When the weight of relevant components and devices in airplanes, for instance, is reduced, fuel savings can be achieved and correspondingly greenhouse gas emissions decreased. New materials and components based on gallium nitride (GaN) can help to reduce weight and increase the efficiency. With these new materials, power electronic switches can be operated at higher switching frequency, resulting in higher power density and lower material costs.

Researchers at the Fraunhofer Institute for Solar Energy Systems ISE together with partners have investigated how these materials can be used to make power...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ICTM Conference 2017: Production technology for turbomachine manufacturing of the future

16.11.2016 | Event News

Innovation Day Laser Technology – Laser Additive Manufacturing

01.11.2016 | Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

 
Latest News

UTSA study describes new minimally invasive device to treat cancer and other illnesses

02.12.2016 | Medical Engineering

Plasma-zapping process could yield trans fat-free soybean oil product

02.12.2016 | Agricultural and Forestry Science

What do Netflix, Google and planetary systems have in common?

02.12.2016 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>