Geography Reference
In-Depth Information
convergence across space. The reason is that reductions in the real costs
of shipping information and goods across space implies that geographical
peripherality is becoming relatively less of a handicap to accessing global
markets. Indeed, there is much evidence to suggest that such conver-
gence is already taking place in many parts of the global economy such
as Europe (Fingleton 2003a) and the US (Higgins et al. 2006). However,
there is also a great deal of evidence which points in the opposite direction
(e.g., Fagerberg and Verspagen 1996, 2002; Fagerberg et al. 1997; Dunford
and Smith 2000; Fagerberg et al. 2007; Brakman and van Marrewijk 2008;
Fagerberg and Srholec 2008). Although there are difficult empirical issues
associated with measuring convergence (Higgins et al. 2006), the rate of
convergence in many arenas of the global economy appears to be either
surprisingly slow, non-existent, or even negative.
1
Thus, convergence is far
from being an established tendency despite the development of commu-
nications and transportation technologies. The fact that spatial
shipment
costs have fallen does not imply that spatial
transactions
costs have fallen.
Indeed, as we discuss in the next two sections, there are both theoretical
arguments and broad empirical evidence which suggest that while the first
have declined, the latter have actually risen.
7.2.2
Rising Spatial Transactions Costs
The theoretical argument that spatial shipment costs have fallen while
spatial transactions costs have risen is that improvements in ICT tech-
nologies themselves increase the quantity, variety and complexity of the
knowledge and information produced and handled. This in turn increases
the costs associated with acquiring and then diffusing such knowledge
and information across space. These rising costs become apparent when
one replaces the 'widespread knowledge' assumption with the alternative
assumption regarding how knowledge may be generated, reproduced and
exchanged if it is not treated as equivalent to information (Steinmueller
2005).
2
The process by which knowledge evolves and spreads through the
economy involves changing its nature between tacit and codified forms
(Cowan and Foray 1997). While modern ICT technologies 'have rendered
codification easier and more valuable in certain situations, they have not
changed the fundamental structure of costs and benefits' (Cowan and
Foray 1997, p. 620). In the same line, Fagerberg and Verspagen point out
that technological 'diffusion in some sense seems to have become more
“difficult” and demanding over time' (Fagerberg and Verspagen 2002,
p. 1303). As was discussed at length in Chapters 4 and 5, much of the infor-
mation which is transmitted easier and faster through ICTs will originally
have emerged from knowledge of a non-standardized tacit nature, which
