Geography Reference
In-Depth Information
before or after arriving at a particular institutional border. As such, from
the perspective of economic geography we can consider these costs to be
fundamentally aspatial in construction, although clearly geographical in
terms of their implementation (McCann 2005). In what follows we will
consider only the first and second types of spatial transactions costs, which
are explicitly dependent on geographical distance.
7.2.1
Falling Spatial Shipment Costs
A particular subset of spatial transactions costs are those directly related
to the costs of moving goods or information across space. These costs are
dependent on communication and transportation technologies and, as a
combined group, we can refer to these as spatial
shipment
costs.
Since the 1980s we have seen dramatic improvements in the ability of
decision-makers and planners to coordinate activities across space. The
primary reason for these improvements has been the enormous techno-
logical developments in information and communications technologies
(ICTs). Information technologies employing satellite and fibre-optical
technology allow for greater quantities of information to be transmitted
at much lower costs than was previously possible (McCann 2007). These
developments have increased market access for individual firms and
also meant that complex operations across diverse locations can now be
managed both more efficiently and effectively than in the past. For indus-
tries trading specifically in information, such as finance, advertising, mar-
keting and tourism, modern ICT technologies provide new possibilities
for the supply of information-based services across a global market space.
Market access has therefore increased dramatically for huge numbers of
firms trading in information-based services (McCann 2007, 2008). At the
same time, such technological progresses also allow decision-makers to
undertake the coordination of spatial arrangements of activities which
were previously unfeasible and, as mentioned in Chapter 6, this is most
noticeable in the case of the increasing offshoring and outsourcing of
many types of service industry activities. This is evident in examples such
as international accounting, where New York banks transfer their book-
keeping requirements overnight to firms in Ireland or India, in order to
have them updated in time for the opening of the money markets the
next day. Other examples include Silicon Valley firms which subcontract
software development activities to producers in Bangalore, while still
maintaining daily contact and control of the Indian software development
process from California. These observations all imply that information
shipment costs must have fallen dramatically over recent decades.
Similarly, there is also evidence that many of the sectors which have
