Understanding the interplay of geography, trade and economics, as well as its effects on global prosperity is essential knowledge for anyone concerned about the future of our world. The World Bank’s World Development Report 2009: Reshaping Economic Geography provided important insights into how the global economy functions, and how strategic policy interventions can improve economic outcomes for people in both developed and developing countries.
In this report, the World Bank outlined how agglomeration, migration, and specialization can drive economic growth in economically disparate regions, and provide pathways for success for people everywhere. By reshaping economic geography—the ways in which people, production, and capital are distributed throughout regions—countries can achieve greater development and prosperity.
The Concept of Economic Geography
Economic geography is the study of how the physical and cultural environments affect economic activities and outcomes. It encompasses an expansive range of factors, including land use and production, the economics of labor and capital, and the impact of the natural environment on economic activity. By studying these factors, economists can gain a better understanding of the complex interplay between geography, economics, and policy.
Economic geography can be divided into two primary facets. The first is structural economic geography, which examines how economic activities and outcomes are structured by geography. This includes analyzing the spatial formation of economic systems, such as industrial clusters and business networks, and understanding how economic processes such as specialization, transportation, and migration shape economic development.
The second facet of economic geography is the economics of place and the dynamics of how economic growth is spatially distributed. This includes the disparities between cities and rural areas, the impact of infrastructure and economic connectivity, and the development of physical and social capital.
The World Bank’s Reshaping Economic Geography Report
The World Bank’s Reshaping Economic Geography report argued for policies that focused on reshaping economic geography rather than “spreading out” existing economic activity. The report highlighted the need for targeted policies that encouraged local investment and infrastructure, as well as the streamlining of regulations to facilitate the mobility of capital and labor. It also emphasized the importance of communication networks and the spatial organization of production, as well as the role of international integration in creating pathways to prosperity.
The report argued that understanding the link between geography and economic outcomes is essential in order to drive long-term growth. By creating policies that recognize the importance of place and local economies in driving growth, countries could develop strategies that bridge the urban-rural divide and support the most promising areas of the economy. By addressing this spatial dimensions of economic growth and development, countries could create the conditions for greater global prosperity.
Five Steps to Unlocking Global Prosperity
The World Bank report provided a framework for nations to follow in order to reshape economic geography and unlock global prosperity. The following five steps are recommended for countries looking to develop and implement successful economic geography policies.
Step 1: Increase connectivity
Reduce economic isolation by investing in infrastructure and communication networks. Connecting both urban and rural economies will increase access to new markets, facilitate increased economic exchange, and provide greater opportunities for economic growth and development.
Step 2: Encourage movement
Promote the mobility of labor, capital, and goods. Remove barriers to labor movement by streamlining regulations and providing job training and education programs. Develop policies to facilitate capital movements and the flow of goods, which will result in an increase in productivity and greater economic opportunities.
Step 3: Implement targeted assistance
Recognizing that some regions are more economically advanced than others, implement targeted policies to assist economically disadvantaged areas. These can include targeted investments in infrastructure, training and education programs, development of physical and social capital, and more.
Step 4: Encourage Innovation
Create the conditions for innovation and entrepreneurship to flourish. Develop policies that will encourage the development of new businesses and promote the diffusion of innovation throughout the region.
Step 5: Promote global integration
Make global integrations easier and less costly to facilitate the exchange of information, goods and services. Strengthen voluntary agreements to promote the free flow of resources and create economies of scale.
Conclusion
The World Bank’s Reshaping Economic Geography report articulated the importance of recognizing the spatial dimensions of economic growth and development. By reshaping economic geography, countries can bridge the urban-rural divide and create the conditions for global prosperity. Through targeted investments in infrastructure, communication networks, physical and social capital, and policies that facilitate capital and labor movements, countries can unlock the pathways to prosperity for their citizens.