Geography Reference
In-Depth Information
$
$
BR
XH
BR
ZH
A
B
X
C
Y
D
Z
X
H
Z
H
Low Value Goods
L
Source:
McCann (2008).
Figure 7.2
Globalization, localization and economic geography
story. The reason is that the actual global distribution of production and
activities depends on the interaction between this flattening effect and the
other opposing localization trends discussed above. If we consider the
localizing tendencies regarding the production of high value goods and
services
H
, the arguments above imply that the production of these goods
and services will benefit from location-specific agglomeration economies.
The existence of agglomeration economy advantages as well as increasing
spatial transactions costs in the production of high value goods and serv-
ices
H
means that the land in the major urban areas
X
and
Z
is increasingly
dominated by the production of these high value goods. Cities
X
and
Z
expand outwards, the production of high value goods is concentrated in
just these two locations
X
and
Z
, and the bid-rent functions associated
with the production of these high value goods become steeper. The pro-
duction location
Y
, which previously had a local dominance in both the
production of low value
L
and high value
H
goods for its own hinterland
area, now disappears as an independent production centre. Instead, the
whole region between
C
and
D
now continues to function simply as a loca-
tion for producing low value goods and services
L
. The interval CD corre-
sponds to the 'flat terrain' of Leamer (2007), while
X
and
Z
correspond to
