Cambridge Journal of Regions, Economy and Society - recent issues

Online Resources

2009-07-01

Editorial Statement

2009-06-30

Spatial circuits of global finance

Garretsen, H., Kitson, M., Martin, R. — 2009-06-30

Monetary geography before the Industrial Revolution

Flandreau, M., Galimard, C., Jobst, C., Nogues-Marco, P. — 2009-06-30

In this article, we study Europe's monetary geography on the eve of the Industrial Revolution. Our unit of analysis is the city and we explore inter-city linkages. Important findings include a considerable degree of integration and multilateralism with monetary centres having already emerged as vehicles for international settlements, before the Industrial Revolution.

Global banking and local markets: a national perspective

Alessandrini, P., Presbitero, A. F., Zazzaro, A. — 2009-06-30

In the early 1990s, a widely shared opinion among scholars and practitioners was that the importance of physical proximity between banks and borrowers would be doomed to decrease drastically over time and, put in extreme terms, the end of banking geography would become a real possibility. However, the empirical evidence shows the continued importance of local credit markets for small borrowers and local economic development. In this paper, we selectively review the literature on the real effects of bank consolidation and produce new evidence on the role of headquarter-to-branch functional distance on relationship lending.

Financial centre bias in primary equity markets

Wojcik, D. — 2009-06-30

This paper shows that firms from financial centres are more likely to go public than their provincial counterparts. The financial centre bias is analysed for 32 countries, including the European Union, the USA and Japan. It is particularly strong in countries with underdeveloped stock markets and closed corporate governance regimes, but it is still present in countries with the most developed stock markets and most open corporate governance, such as the UK and the USA. Potential reasons for the bias include the benefits of issuers’ proximity to Initial Public Offerings intermediaries and specialised labour markets, corporate governance incentives and institutional factors.

International capital mobility: linking the Feldstein-Horioka puzzle to the trade and equity home bias puzzles

Kool, C. J. M., Keijzer, L. M. — 2009-06-30

We revisit the Feldstein–Horioka (FH) puzzle using data for 23 Organisation for Economic Co-operation and Development (OECD) countries for the period 1973–2003. We document a sharp decline in the FH coefficient from the mid-1990s onward, supporting the hypothesis of increased economic and financial integration. Subsequently, we extend the literature and use a non-linear specification with interaction terms to empirically show that observed decreases in equity home bias (EHB) and increases in trade openness are structurally linked to the time variation in the FH coefficient. Thus, this paper empirically establishes a structural link between three puzzles in international macroeconomics and finance: the FH puzzle, the EHB puzzle and the trade home bias puzzle.

Financial liberalization and the geography of poverty

Arestis, P., Caner, A. — 2009-06-30

We investigate the possibility of further channels through which financial liberalization policies might affect poverty and discuss how various factors have produced varying outcomes in different countries. The growth channel is the only one widely accepted in the literature. We suggest that three further channels should be added to the list: the financial crises channel, the access to credit and financial services channel and the income share of labour channel. We discuss how these channels operate differently in different countries. As far as we know, no attempt has been made previously in the literature to go beyond the growth channel.

The geography of finance: after the storm

O'Brien, R., Keith, A. — 2009-06-30

This article reviews the idea that geography is becoming less and less important in finance as a result of the revolution in information and communications technology and of deregulation, in the aftermath of the economic and financial crisis of 2008. Reviewing four scenarios for the future of finance, it seems likely that the drive towards ‘the end of geography’ will be slowed by the crisis, as the wisdom of allowing the marketplace to self-regulate is reconsidered. Future information and communication technology developments may help improve information management, combating one of the features of recent market failure.

The global financial customer and the spatiality of exclusion after the 'end of geography'

Dymski, G. A. — 2009-06-30

This paper evaluates O'Brien's assertion that freer global financial flows and movement will eliminate the significance of geography for financial processes because enhanced global choice will create the global financial customer. We argue here, contra O'Brien, that expanded global choice in finance has contributed to the widening global income/wealth divide, both in the global North and the global South. Financial globalization has not made geography immaterial: instead, spatial location, informed by each area's historical and institutional background, continues to demarcate who has access to which financial services at what price. The US subprime crisis demonstrates dramatically that vulnerability to economically devastating financial crises varies dramatically across space at the national and sub-national levels.

A very geographical crisis: the making and breaking of the 2007-2008 financial crisis

French, S., Leyshon, A., Thrift, N. — 2009-06-30

The paper argues that the origins of the financial crisis of 2007–2008 can ultimately be located in four spaces: in international financial centres, in particular, in the longstanding competition that has existed between London and New York; in the insularity of the everyday geographies of money that have emerged in such centres in the wake of the apparent hegemony of financialization; in the geographical recycling of surpluses and deficits and, more particularly, the structural dependency that has grown up between China and the USA, and, finally; in the growing power of the financial media, centred in international financial centres and an increasingly significant agent in performing money and the economy in general, and in engendering mimetic forms of rationality.

Financial stability, the Basel Process and the new geography of regulation

Bieri, D. S. — 2009-06-30

The post-Bretton Woods era has witnessed the integration of the global financial system at an unprecedented pace. However, much of its institutional governance structure remains hinged on the old paradigm of national economies. Despite highly globalized financial markets, I find evidence of substantial clustering in the context of regional financial activity. Addressing the regulatory challenges of globalization, the so-called ‘Basel Process’ provides policy makers with a unique institutional arrangement that straddles the gap between the old and the new geographies of financial markets. The evolving architecture of the global financial system calls for a careful balancing of globally co-ordinated, locally decentralized regulation on the one hand and effective, centralized intervention mechanisms on the other hand.

Editorial Statement

2009-03-28

Editorial: Rescaling the state: new modes of institutional-territorial organization

Lobao, L., Martin, R., Rodriguez-Pose, A. — 2009-03-28

The state and uneven development: the governance of economic development in England in the post-devolution UK

Pike, A., Tomaney, J. — 2009-03-28

This paper draws upon territorial and relational approaches as well as work on the economics and politics of devolution to argue that a geographically sensitive political economy of the ‘qualitative state’ can interpret the roles, structures, strategies and practices of states in attempting to resolve the governance of uneven development. An empirical analysis of the UK state's governance of economic development within England reveals the construction of enabling frameworks at the national level and, in the wake of regionalization and regionalism, the encouragement of new ‘spatial imaginaries’ (cities and/or city-regions, localisms and pan-regionalisms). The result has been complexity, experimentation, fragmentation and incoherence with largely negative implications for territorial equity and justice. We conclude by reflecting upon the limits of projects of state decentralization and spatial policy under a strong national economic growth orientation in addressing the governance of uneven development.

Examining the interaction between vertical and horizontal dimensions of state transformation

Buchs, M. — 2009-03-28

Two dimensions of state transformation often analysed separately can be identified as vertical authority shifts between different levels of government and horizontal authority transfers between state and non-state domains. This article firstly reviews three existing approaches that highlight links between vertical and horizontal state transformation: multi-level governance, policy networks and sections of the rescaling literature. However, these approaches do not yet provide a framework sufficient to enable a more thorough and detailed examination of the relationship between these two dimensions. The article thus proceeds to develop a multifaceted framework in order to facilitate further research into this relationship, a necessity if we are to understand more fully whether vertical and horizontal authority shifts complement or contradict one another within the transformation of the state's role in governing society and economy.

Territorial policy communities and devolution in the UK

Keating, M., Cairney, P., Hepburn, E. — 2009-03-28

Devolution in the UK forms part of a wider process of spatial rescaling across Europe. Little work has been done on its effect on interest articulation. The literature on policy communities treats them as sectoral in scope. We propose the concept of ‘territorial policy communities’ to designate territorially bounded constellations of actors within and across policy sectors, emerging in response to the rescaling of government. Devolution may leave existing systems of interest articulation unchanged, leaving ‘regions without regionalism’; it may confine some groups within territorial boundaries while allowing others the freedom to choose’ between levels of government; or it might promote a general territorialization of interest representation and the emergence of territorial policy communities. The UK's four models of devolution help test the effects of stronger and weaker forms of devolution on the territorialization of groups.

The scalar dimension of welfare state development: the case of Swedish and Finnish social assistance systems

Scarpa, S. — 2009-03-28

Following Neil Brenner's 3-fold periodization, the article analyses the historical development of the Swedish and the Finnish social assistance systems, from the early phase of Spatial-Keynesianism, through the phase of Endogenous Development Policies, to the present phase of Locational Policies. The Swedish and the Finnish cases have been often clustered in the same welfare regime typology but little investigation has been done on the ways in which the territorial organization of their welfare systems has differently affected their trajectories of development. The article explains how the interrelationship between national and local welfare policies has been firstly established and subsequently evolved in a different manner in the two countries.

A fiscal perspective of state rescaling

Martinez-Vazquez, J., Timofeev, A. — 2009-03-28

Recent socio-spatial studies point out a number of ongoing trends in the ‘scale division of labour of the state’, including among others, ‘destatization’, ‘denationalization’ and ‘internationalization’. We draw on the literature in public economics to review several approaches to measuring state rescaling. We employ these measures to produce empirical evidence on the extent of state rescaling and its determinants. We find that over the last two decades there has been a world trend towards decentralization while the average government size has not changed.

'Rescaling the state' in question

Cox, K. R. — 2009-03-28

This paper puts in critical focus a major tenet of the state rescaling literature. This is that over the last 25 years or so there has been a significant decentralization of state functions, largely with a view to re-energizing national economies. Several points are at issue. The first is that the evidence for a decentralization of any significance is insubstantial. Second, the territorial structure of the state has indeed been in question but largely as a result of bottom-up forces contesting it, in part, on distributional grounds. And third, the American case underlines both the Eurocentric character of this literature and the weakness of whatever decentralization has indeed occurred.

Open questions on state rescaling

Brenner, N. — 2009-03-28

Recent work on state rescaling has opened up productive lines of theorization and research. However, this literature contains many open theoretical, interpretive, methodological and empirical questions. By drawing attention to several of these, this article aims to promote reflection and debate on possible future lines of research within this field. I argue, in particular, for greater attention to questions of method—specifically, to the mediations linking abstract concepts to concrete, contextually specific investigations. The article concludes by outlining three research frontiers that could be productively explored within future work on state rescaling—logics of explanation, comparative analyses and questions of periodization.

Online Resources

2009-03-28

Online Resources

2008-10-29

Editorial Statement

2008-10-28

The world is not flat: putting globalization in its place

Christopherson, S., Garretsen, H., Martin, R. — 2008-10-28

Globalization and economic geography: the world is curved, not flat

McCann, P. — 2008-10-28

This paper analyses the argument put that the world is becoming flatter from the perspective of economic geography and spatial economics. In order to do this, we consider the variety of empirical evidence available, much of which appears to be prima facie rather paradoxical. However, it is possible to reconcile all of the seemingly conflicting the evidence by adopting the argument that the global economy simultaneously exhibits trends towards both increasing globalization and localization. Cities are increasingly seen to be the critical context for growth. Using diagrams, we demonstrate that analytically the global economy is becoming even more curved.

Mountains in a flat world: why proximity still matters for the location of economic activity

Rodriguez-Pose, A., Crescenzi, R. — 2008-10-28

Thomas Friedman (2005, The World Is Flat: A Brief History of the Twenty-First Century. New York: Farrar, Straus, and Giroux) argues that the expansion of trade, the internationalization of firms, the galloping process of outsourcing and the possibility of networking are creating a ‘flat world’: a level playing field where individuals are empowered and better off. This paper challenges this view of the world by arguing that not all territories have the same capacity to maximize the benefits and opportunities and minimize the risks linked to globalization. Numerous forces are coalescing in order to provoke the emergence of urban ‘mountains’ where wealth, economic activity and innovative capacity agglomerate. The interactions of these forces in the close geographical proximity of large urban areas give shape to a much more complex geography of the world economy.

Globalization, uneven development and capital: reflections on reading Thomas Friedman's The World Is Flat

Cox, K. R. — 2008-10-28

In his book ‘The World Is Flat’, Thomas Friedman postulates notions of ‘flatness’ that combine to suggest, on the one hand, tendencies towards an equalization of chances of economic development; and on the other, a displacement of vertical forms of organization by more horizontal ones, notably of states by markets. Drawing on historical geographical materialism, it is shown that geographically uneven development is a necessary outcome of the accumulation process; and equally, states are inevitably implicated in this outcome.

It's a big world after all: on the economic impact of location and distance

Brakman, S., van Marrewijk, C. — 2008-10-28

Thomas Friedman, a very influential and widely read journalist (author of The World is Flat), argues that distance is no longer a dominant characteristic of the world economy. Competition is thought to be a race to the bottom, with the lowest wage countries as the big winners. In contrast, using various methods and data sets, we show that many threats of global competition for the position of the traditionally developed (Organization for Economic Cooperation and Development) countries are unwarranted, that distance still dominates all aspects of international trade and that there is little evidence of income convergence.

A rather empty world: the many faces of distance and the persistent resistance to international trade

Linders, G.-J. M., Burger, M. J., van Oort, F. G. — 2008-10-28

Despite the rapid growth of world trade over the past several decades, international trade patterns remain very much affected by high trade costs. In this paper, we emphasize the importance of distance between countries in a proper explanation of the persistent resistance to trade. We find that both formal trade barriers (tariffs, transport costs, etc.) and informal trade barriers (related to cultural and institutional distances) between countries have retained their importance to trade. Not only are these tangible and intangible barriers critical in explaining the volume of trade between countries but they also help to explain the absence of trade between many countries.

The rise of the mega-region

Florida, R., Gulden, T., Mellander, C. — 2008-10-28

This paper develops new data on mega-regions. It takes issue with theories of globalization which argue that global economic activity is being more widely decentralized—‘the world is flat’. We use a global dataset of night-time light emissions to produce an objectively consistent set of mega-regions for the globe. We draw on high-resolution population data to estimate the population of each of these regions. We then process the light data in combination with national gross domestic product (GDP) to produce rough but useful regional estimates of economic activity. We also present estimates of technological and scientific innovation.

Globalization and the rise of mega-cities in the developing world

van der Ploeg, F., Poelhekke, S. — 2008-10-28

Thomas Friedman has argued in The World Is Flat that those who deny rapid globalization will not survive in the global economy. First, we critically discuss Friedman's views and highlight the new globalization driven by outsourcing and vertical specialization. Second, we argue that Friedman pays insufficient attention to the spectacular growth of mega-cities in the developing world. The world is not flat, and the developing world certainly is not. Still, mega-cities tend to become too big. Their growth also goes hand in hand with formation of slums and congestion. We thus argue that there is a role for public policies.

Referees 2007-2008

2008-10-28