1、 DOI: 10.1007/s10272-010-0342-7Regional DevelopmentThomas Dring,* Eithne Knappitsch* and Birgit Aigner*Municipalities and Regions in LocationalCompetition New Economic ConsiderationsLocational competition has intensied in recent years in the wake of globalisation as well asthe general development to
2、wards a knowledge- and service-based economy. In this context,newer economic analyses point to a shifting of the locational factors considered relevant forsuccess in local and regional competition. With respect to these fundamental changes, it isbecoming increasingly relevant to ask how local and re
3、gional development processes must beconstructed in order for municipalities and regions in modern industrial countries to maintainthe positions they have already achieved.The continued advance of globalisation and structural adjustment, accompanied by an intensi cation of the in-ternational division
4、 of labour as well as changes to the global sourcing of goods, materials, services and -nance, has plunged developed nations into an increas-ingly complex, uncertain and competitive world. Regions are forced to nd their own place in the European and sion that more than 25% of the interviewed busines
5、ses in Western Europe have made locationally relevant deci-sions, moving production to foreign countries in the two years prior to the survey. Austria is one of the countries with the highest business mobility rates, with some 47.7% of all businesses having relocated production to foreign sites in t
6、he years 2007 and 2008. This points to a sig-3global division of labour 1, while the notion of competitive- ni cant location dynamic in modern industrial countries, especially when considering all locationally relevant proc-esses. In addition to the business relocations and new business startups typ
7、ically considered in this context, there are also a multitude of “hidden” locationally relevant processes such as the expansion or shrinkage of exist-ing locations (relative to other locations), the founding and dissolving of local branches, or the decisions of com-panies to remain at a certain loca
8、tion (provided they are confronted with the alternative of a possible relocation).ness has essentially become something of an omnipres-ent given in terms of economic development theory and policy. In addition, new technologies have set the world on a path towards becoming an information economy of k
9、nowledge-based industries, with speci c requirements for new types of highly mobile, highly skilled and exible labour and management. These fundamental changes 2lead to a situation in which municipalities and regions face increased exposure (both domestically and interna-tionally) to heightened comp
10、etition in attracting produc-tion and service providing businesses, as well as a com-plementary labour force. Current economic tendencies, such as the internation-alisation of added value chains, the shortening of prod-uct cycles in the production and service sector, or the increasing importance of
11、company internal real-estate management, result in an even more signi cantly growing dynamic concerning the anticipation of future location-ally relevant business decisions. As regards the locational competition of municipalities and regions, it is vital that the reasons for business-based location
12、decisions are The increasing intensity of local and regional locational competition goes hand in hand with the increased mobil-ity and exibility of businesses and highly skilled labour, which in turn impacts the importance of local and regional factors of location. Economic studies based on surveys
13、of companies in European countries arrive at the conclu-1 2 Cf. M. Keating: Rethinking the region: Culture, Institutions and Eco-nomic Development in Catalonia and Galicia, in: European Urban and Regional Studies, Vol. 8, 2001, pp. 217 ff.Cf. R.J. Stimson, R. Stough, B.H. Brian: Regional Economic De
14、velopment, New York et al. 2006; D. L pple: City and Region in an Age of Globalisation and Digitization, in: German Journal of Urban Studies, Vol. 40, 2001, pp. 177 ff.Cf. for example S. K inkel, B. D achs, B. E bersberger: Produk-tionsverlagerungen und Rckverlagerungen im europischen Ver-gleich, in
15、: Industrie Management, Vol. 23, 2007, pp. 47 ff.* Professor of Economics and Public Finance, Director of the CarinthiaUniversity Research Center for Interregional Studies and InternationalManagement, Villach, Austria.* Senior Lecturer and Scientic Researcher, Carinthia University of Ap-plied Scienc
16、es, School of Management and Economics, Villach, Aus-tria.* Scientic Researcher, Carinthia University of Applied Sciences,School of Management and Economics, Villach, Austria.3 Intereconomics 2010 | 4 239Regional Developmentprimarily of a local and regional nature and are thus loca-4tion dependent.
17、This means that the speci c advantages and disadvantages of the respective locations in cities, municipalities, districts or regions are, in the majority of cases, decisive for locational movement.tially in uenced production and distribution costs, which in turn in uenced the prices of their product
18、s and ulti-mately their competitiveness. This explained to some ex-tent the difference between urban and rural regions, as cost differences have resulted in strongly concentrated and lightly dispersed areas. In this context, the most im-portant spatially relevant cost factors were considered to be a
19、cquisition and procurement costs, costs of distri-bution (marketing, selling, etc.) and costs of production. While procurement and distribution costs were thought to be dependent on distance, production costs were seen as dependent on distance as well as on the degree of concentration of businesses
20、(agglomeration bene ts). The spatial distribution of economic activities can itself be subject to agglomeration effects because agglomer-ation bene ts mainly in the form of growing sales and procurement markets, which go hand in hand with cost reducing scale effects can become greater with each incr
21、ease in concentration. A lot of the work on agglomera-tion economies stems from the concept of the industrial district, postulating that agglomerated factors constitute a theoretical link between the spatial structure of an econ-Against this background, an array of relevant questions concerning the
22、appropriate behaviour of municipalities and regions in locational competition can be formulated. It is therefore interesting to consider how local and regional development processes in modern industrial countries must be constructed in order for municipalities to maintain the position they have alre
23、ady attained and enhance this position in the future. It is also necessary to ask the ques-tion as to which locational factors are currently important for the successful economic development of municipali-ties and regions and which will be important in the future. Finally, the political recommendati
24、ons that can be derived from newer theoretical analyses and empirical studies on the relevance of locational factors are also of interest.omy and its growth dynamic.7Similarly, and in line with The Traditional View: Industrial Location Theory the traditional insights of location theory, new economic
25、 geography indicates that agglomeration effects com-bined with transportation costs play an important role in Traditional economic approaches to the analysis of loca-tional competition have focused on the locational advan-tage or disadvantage in terms of the cost effectiveness of a locality or regio
26、n. Explicitly spatial models of the processes by which rms choose where to locate their activities have been developed within (industrial) location theory. This the-ory addresses the question of why economic activities are unevenly distributed across space and also makes refer-ence to the factors th
27、at rms consider in selecting a geo-local and regional development. 8In view of the behaviour of a locality or region within a competitive setting, the implicit message of these tradi-tional economic approaches is that municipalities and regional authorities can be successful when they offer a local
28、environment for businesses that leads to a reduc-tion of costs. Here, affordable access to raw materials, quick accessibility to sales markets, low property prices or an agglomeration of businesses are considered con-ducive to lower costs. The focus of these approaches clearly centres on what are of
29、ten referred to as hard lo-cational factors like transportation infrastructure, local rate of taxes and duties, municipal real estate manage-ment and of ce availability, locationally relevant produc-tion conditions, or even the extent of subsidies provided. Accordingly, the following political recom
30、mendations for successful and competition-oriented organisation of lo-cal and regional economic development can be deduced: municipalities and regions can maintain or even improve graphic location.5Location theory has proposed that rms locate so as to minimise costs and seek locations that maximise
31、their opportunities to reach markets, thus max-imising their pro ts. Much of the emphasis has been put on transport costs, labour costs, other productions costs, scale of operation and agglomeration economics.6The considerations embodied in location theory have contributed to the proposition that th
32、e sites on which businesses settled were determined on the basis of spa-4 5 Cf. L. B lume: Local Economic Policies as Determinants of the Local Business Climate, in: Regional Studies, Vol. 40, 2006, pp. 312 ff.For classical texts on location theory, cf. E.M. Hoover: The loca-tion of economic activit
33、y, New York 1948; M.L. Greenhunt: Plant location in theory and practice the economics of space, Chapel Hill 1956; M. Beckmann: Location theory, New York 1968; D.M. Smith: Industrial Location: an economic geographical analysis, New York 1971.7 The concept was proposed originally by A. M arshall: Prin
34、ciples of Economics, London 1920; for an overview, cf. G. Maier: History, spa-tial structure, and regional growth: lessons for policy making, in: B. Jo-hansson et al. (eds.): Theories of endogenous regional growth, Hei-delberg et al. 2001, pp. 111 ff.; E.J. Feser: Agglomeration, enterprise size and
35、productivity. In: B. Johansson et al., op. cit., pp. 231 ff.Cf. P. Krugman: Geography and Trade, Cambridge (MA) 1991; G. Ottaviano, J.-F. Thisse: Agglomeration and Economic Geogra-phy, CEPR Discussion Paper No. 3838, London 2003.6 For a summary, cf. R.J. S timson, R. S tough, B.H. B rian, op. cit.;
36、E. E dwards: Regional and Urban Economics and Economic Devel-opment Theory and Methods, New York 2007.8 Intereconomics 2010 | 4240Regional Developmenttheir position in terms of locational competition by bind-ing businesses to their locations via low municipal taxes and duties, the provision of subsi
37、dies, investments in lo-cal transportation infrastructure, and through successful industrial real estate management.as an endogenous effect within the process of economic 11development. Furthermore, other economists have pos-tulated that technology, innovation and knowledge are the primary drivers i
38、n local and regional economic develop-ment.Against this background, the concept of innovative mi-lieus was formulated in an effort to explain the emer-gence of a new technology generation: connecting the importance of agglomeration and localisation econo-mies, thus leading to the development of new
39、industrial Modern Economic ApproachesClassic location theory and the related political recom-mendations promising success for local and regional ac-tors within locational competition has been called into question in recent years. On the one hand, mere experi-ence has contributed to a conclusion quit
40、e contrary to what was postulated by location theory. The agglom-eration of businesses in space and the associated eco-nomic growth at local and regional levels were at their highest where the cost of living and of ce costs were high, industrial real estate reserves were low, subsidies were either m
41、inimal or not offered at all, and the burden of local taxes and duties was comparatively high. This experience can be explained by the fact that modern economies are increasingly developing into service and knowledge economies, in which factors formerly con-sidered relevant like raw materials or the
42、 sales market orientation of businesses are becoming less and less spaces. Furthermore, some authors have suggested, 12 13that in addition to economic factors, value and cultural factors (including social capital and trust) are also im-portant in the rise of knowledge-based agglomerations. Furthermo
43、re, collaboration among small and medium-sized enterprises through cooperative networks is be-lieved to forge a powerful entrepreneurial business cli-mate.More speci cally, these insights into a technology and knowledge-based explanation of local economic devel-opment become the doctrine of agglomer
44、ation bene ts through a regional economic reinterpretation. Agglomer-ation of businesses in space is rst and foremost a fac-tor that increases productivity.important. 9 In contrast to what was emphasised in location theory, it is less the direct production and distribution costs that play a decisive
45、 role, but rather the positive scale effects brought about by mutual learning and technology spillo-vers. Learning and innovation, the ability of businesses to create new products, new production procedures, and new forms of organisation on the basis of knowl-edge and spatial knowledge spillovers, b
46、ecome critical success factors for local and regional economic devel-opment.On the other hand, insights from new economic growth and modern regional economic approaches have led to a change in the economic assessment of locational com-petition and relevant locational factors. From a growth theory pe
47、rspective, being adequately equipped and pro-vided with (cheap) capital and labour is not considered ultimately decisive for the successful development of a locality or region, especially within industrial countries. A signi cant economic growth rate, one which is enduring and innovation-based, is a
48、ttributed to the production fac-tors “technology” and “knowledge” (in the latter case, for example, in the form of the accumulation of human capi-tal). New growth theory models developed by several the-11 Cf. M.D. Thomas: Growth pole theory, technological change and regional economic growth, in: Pap
49、ers of the Regional Science Asso-ciation, Vol. 34, 1975, pp. 3 ff.; J. R ees: State technology programs and industry experience in the USA, in: Review of Urban and Regional Development Studies, Vol. 3, 1979, pp. 39 ff.; R.A. E rickson: Tech-nology, industrial restructuring and regional development, in: Growth and Change, Vol. 25, 1994, pp. 353 ff.orists10allow for technological progress to be considered 12