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Local vs. Global Location of Firms and Industries

Author

Listed:
  • N. Jovanovic, Miroslav

    (UN Economic Commission for Europe)

Abstract

Where economic activity will locate in the future is one of the most important questions in economics. Even though advances in technology have reduced the cost of transport, communication and information gathering and processing, hence curtailing the ‘distance penalty’, local proximity (clusters) of firms that produce similar, competing and/or related products together with supporting institutions still matter. Economies of scale, activity-specific backward and forward linkages (indivisible production), accumulated knowledge and skills, innovation, existence of sophisticated customers and a fall in transportation costs play relevant roles in the ‘protection’ of clusters and absolute locational advantages of certain locations. ‘Global’ competitiveness often depends on highly concentrated ‘local’ knowledge, capabilities and common tacit codes of behaviour which can be found in a geographical concentration (cluster) of firms.

Suggested Citation

  • N. Jovanovic, Miroslav, 2003. "Local vs. Global Location of Firms and Industries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 60-104.
    • Handle: RePEc:ris:integr:0226
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    Citations

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    Cited by:

    1. Dan Rickman & Belal Fallah & Mark Partridge, 2011. "Geographic Determinants of Hi-Tech Employment Growth in U.S. Counties," ERSA conference papers ersa11p518, European Regional Science Association.

    More about this item

    Keywords

    Global; Local; Cluster; Linkages; History; Lock-in;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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