Economic Activity Concentration Quiz

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Questions and Answers

What does the process of economic activity concentration primarily aim to achieve?

Reduced innovation

Increased development (correct)

Lower regional competition

Decreased internal migration

What is a significant barrier to full economic integration across European countries?

Language barriers for migrants (correct)

Lack of natural resources

High ownership rates in Italy

Economic policies favoring small businesses

According to the Pavitt taxonomy, what characterizes scale-intensive industries?

Competition decreases as size decreases

Concentration is unnecessary for production

They benefit from being small and flexible

Efficiency requires a large scale (correct)

What is the primary reason that leads to increased productivity in specialized economic activities?

Increased market size Signup and view all the answers

Which geographic characteristic is highlighted as an advantage for economic growth?

Navigable rivers Signup and view all the answers

How does specialization relate to agglomeration over time?

Increased specialization results in higher agglomeration Signup and view all the answers

What is the effect of positive feedback in economic systems as described in the content?

It can lead to economic stagnation in disadvantaged areas. Signup and view all the answers

What was a notable trend regarding industry concentration following fears of the European Union?

Industry concentration decreased Signup and view all the answers

According to Adam Smith’s analysis, which of the following factors primarily contributes to the economic disparity between Africa and Europe?

Geographic characteristics such as coastlines Signup and view all the answers

What is implied by the term 'agglomeration' in the context of economic concentration?

The clustering of industries in a specific location Signup and view all the answers

What impact does ownership in Italy have on internal migration?

It limits movement to different regions Signup and view all the answers

In Diamond’s hypothesis, what geographic axis is suggested to expedite the spread of agriculture and technology?

East-West Signup and view all the answers

What relationship does the content describe between technology and stratified societies?

There is a mutual positive feedback loop between the two. Signup and view all the answers

What is the main focus when analyzing the phenomenon of industry concentration?

Understanding it at a disaggregated level Signup and view all the answers

How does being landlocked affect a country's economic productivity according to the discussed theories?

It leads to decreased trade and stagnation. Signup and view all the answers

Which of the following concepts describes the idea that advantages in geography lead to diverging economic outcomes?

Positive feedback Signup and view all the answers

What is suggested about the impact of larger markets on specialization?

Larger markets necessitate greater specialization. Signup and view all the answers

Why does the content suggest that countries with geographic advantages become wealthier over time?

They have better access to resources and trade. Signup and view all the answers

What does Zipf’s law suggest about the size distribution of cities?

The larger the city, the fewer cities there are of that size. Signup and view all the answers

What is a consequence of the OLS method regarding Zipf’s law?

It reveals failures of Zipf’s law in urban agglomerations. Signup and view all the answers

What does the term 'inverse proportion' refer to in the context of transportation costs?

As transportation costs increase, economic size decreases. Signup and view all the answers

What shape parameter does the Zipf’s law distribution have?

1 Signup and view all the answers

How do the estimators differ in their rejection of Zipf’s law?

The OLS rejects Zipf's law prediction for urban agglomerations. Signup and view all the answers

What phenomenon does suburbanization contribute to, as indicated by the OLS method findings?

Increasing inequalities among urban agglomerations. Signup and view all the answers

Why are the factors considered imperfect substitutes when deriving from a simple function?

Because they require a multiplicative function. Signup and view all the answers

What does the Pareto distribution often describe in socioeconomic contexts?

Wealth distribution inequalities. Signup and view all the answers

What is the primary driving force behind location decisions in spatial economics?

Minimization of costs Signup and view all the answers

In the context of finding the least cost location, which step involves assessing the transport cost site?

Step 1 Signup and view all the answers

Which concept is integral to the Least Cost Theory proposed by Weber?

Weighted center of mass Signup and view all the answers

The Varignon frame is used to determine what aspect of location decision-making?

Physical analysis for least cost location Signup and view all the answers

What does the minimization expression in location decision-making involve?

The product of transport tariffs and associated costs Signup and view all the answers

To analyze location decisions, what should be considered when moving to a site with cheaper labor?

Agglomerative forces Signup and view all the answers

Which of the following factors is NOT explicitly considered when deciding a least cost location?

Demand variability Signup and view all the answers

What is the role of point-specific weight in determining the least cost location?

To represent material and product importance Signup and view all the answers

What is one of the main reasons firms cluster according to localized sources of supply and demand?

To minimize transport costs Signup and view all the answers

How has communication technology affected the concentration of high-tech industries?

It has enabled research groups to operate remotely. Signup and view all the answers

According to classical location theory, which aspect is considered a secondary factor in the location of firms?

Labor availability Signup and view all the answers

What was the primary aim of the classical location theory developed during the Nazi period in Germany?

Minimizing transport costs Signup and view all the answers

What trend is observed in the high-tech industry regarding spatial separation?

It results in a decrease of concentration. Signup and view all the answers

Who contributed to the survival of classical location theory after the Nazi period?

Walter Isak Signup and view all the answers

What is a characteristic feature of firms' efficiency in relation to their concentration?

Efficiency increases with concentration. Signup and view all the answers

What is the significance of geographical and institutional factors in the classical location theory?

They are minor considerations in location choices. Signup and view all the answers

What happens if an industry is distributed uniformly across regions in comparison to total manufacturing?

The broken line will coincide with the 45º line. Signup and view all the answers

How does the Gini Coefficient relate to industrial inequality in a specific area?

It increases as the concentration of industry becomes more pronounced. Signup and view all the answers

What does a positive difference in the Krugman-Gini calculation imply?

There is a higher concentration of industry in specific areas. Signup and view all the answers

Which term describes the distribution of shares of an industry in total manufacturing in a specific region?

Regional Specialization Signup and view all the answers

What does the concept of geographic industrial concentration refer to?

The distribution of shares of regions in a specific industry. Signup and view all the answers

How can specialization be evaluated in a region?

By analyzing the share of an industry in total exports. Signup and view all the answers

What does a highly specialized production structure indicate about a region?

Only a few industries dominate the production landscape. Signup and view all the answers

Which statement is true regarding specialization and concentration?

They are positively correlated. Signup and view all the answers

What does it mean if the first term in the Krugman-Gini calculation is equal to the second term?

The distribution is perfectly uniform. Signup and view all the answers

What is indicated when the area under consideration for an industry's distribution is tiny or equal to 0?

There is no disparity compared to total manufacturing. Signup and view all the answers

Study Notes

Economic Geography

Economic geography studies the location, distribution, and spatial organization of economic activities globally.
It's a traditional subfield of geography and economists also approach it using economic principles.
Approaches include: industry location, economies of agglomeration, transportation, international trade, development, real estate, gentrification, ethnic economies, and the relationship between the environment and economy.
Development is unevenly distributed geographically.

Course Content

What is economic geography?
Issues and methods
Why economic geography matters
Stylized facts: location patterns of economic activity, agglomeration/specialization, international/interregional flows
Classical Location Theory
New Economic Geography
Path dependence and Evolutionary Geography
Empirical evidence
Policy implications

Adam Smith

Division of labor is limited by the extent of the market.
African rivers are too far apart for significant inland navigation, hindering trade and economic growth.
Africa's large size and landlocked nature limit economic activity compared to countries with extensive coastlines.
Greater access to maritime commerce in Europe and Asia facilitated larger economic development compared to Africa.

Diamond's Hypothesis

Eurasia's east-west axis allowed for faster spread of agricultural species and ideas compared to the north-south axis of Africa and the Americas.
This facilitated the development of larger, denser, and stratified societies in Eurasia.

The Gravity Model

The gravity model describes the trade or exports between countries.
Trade between countries a and b are a function of:
Economic size of country a
Economic size of country b
Distance between the two countries
The larger the countries' GDP and the smaller the distance, the stronger the trade relationship (attraction).

Clustering

Clustering is the grouping of economic activity (ex. firms) in a specific region.
Various factors can lead to clustering: agglomeration economies and competition.
Locations of firms are affected by clustering, avoidance, and independence (random distribution).
Spatial patterns of distribution of events need to be analyzed against random distribution.

Measures of Spatial Inequality

Two main inequality measures are used
Spatial coefficient of variation
Gini Coefficient (commonly used to measure income inequality)

Absolute Measures vs Relative Measures

The size of a region can influence results with absolute measures, potentially overestimating concentration in larger regions. Absolute measures focus on the sheer quantity.
Relative measures, such as location quotients, which factor in total regional (or national) industry size, help correct for the potential bias of size. Relative measures focus on the proportion or relative share.

Additional Models

Weber's least-cost theory considers cost of transporting raw materials and finished goods, and the location of labor to produce the minimum total costs.
Lösch's demand-side theory focuses on maximizing market areas for firms dealing with price competition and transportation costs.
Central place theory describes hierarchy of settlements and services provided in a given geographic region.

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Description

Test your knowledge on economic activity concentration and its goals. This quiz covers key concepts such as economic integration, specialization, and agglomeration, along with historical trends in industry concentration across Europe. Perfect for students of economics and related fields.