New Horizons in Regional Science series
Edited by André Torre and Frédéric Wallet
Chapter 4: Proximity and regional innovation processes: is there space for new reflections?
That of proximity is one of the founding concepts of regional economics and economic geography, and for this reason it has received particular attention over time. Proximity matters, and it matters for increasing both the static and the dynamic efficiency of local industrial systems. Since Marshall (1920), much work has been done on the advantages of concentrated locations of activities in space, with the emphasis on the crucial role of proximity in explaining the location choices of firms and individuals, the economic performance dynamics of local systems, as well as the innovative performance of industrial systems. The importance of proximity stems from its natural link with agglomeration economies: if interaction (information and transportation) costs were nil, in the absence of scale economies there would be no reason to concentrate activities, because doing so would produce no economies. In this sense, agglomeration economies are 'proximity economies'. Moreover, a concentration of activities in one particular place enables the achievement of demand thresholds, both for input and for output, and facilitates synergies among actors: agglomeration economies are, that is to say, advantages which arise from the interaction (often involuntary) among economic agents made possible by the lesser amount of spatial friction that occurs in concentrated locations. Together with indivisibility and synergy, physical proximity has been identified as one of the three main micro-foundations of the concept of agglomeration economies.
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