ICT, space and external economies (125)

Theme Track: Sectoral Changes and New Markets - Special Workshop "The Spatial Implicationf of the New Economy"

Authors:
van der Laan, Lambert ; van Oort, Frank

There are two opposite perspectives on the effects of ICT on the spatial economic development: dispersal or concentration. Applications of ICT infrastructures at first sight enable entrepreneurs to become less place bound: a liberalising effect, summarised as the 'death of distance'. In this, physical distance to customers, suppliers, labour market reservoirs and services becomes less crucial for the economic functioning of enterprises. Agglomeration of economic activities is not necessary while this does not lead to a profit from economic externalities. A regional dispersion of economic activities results. This liberalising view stands in contrast to theories on inertia- and agglomeration induced concentrated growth patterns. Urban agglomerations, with their accompanying diversified production structures, labour supply and physical and social infrastructures, create externalities, which determine also the location of ICT-activities. Result is a further agglomeration of economic activities.

The theoretical tension between dispersal and concentration creates empirical questions concerning spatial-economic growth. How and to what extent does ICT induce agglomeration or spatial dispersal of economic activities? And are there still economic reasons to cluster activities in the new digital age? This paper focuses on these questions from an industrial-organisation economic and spatial perspective. Firstly, the role of ICT is related to the type of information the organisation has to exchange with others: standardised versus non-standardised information. The link with the spatial dimension is to be found in the theory of external and particular agglomeration economies. Four kinds of theories related to these economies are relevant: flexible specialisation, urban knowledge economies, knowledge-spillovers and institutional economies.

In using this matrix of types of information and external economies, the spatial development of ICT-related activities in policy-induced, localised residential and work-areas of the Netherlands is analysed. We argue that the 'death of distance' hypothesis of ICT needs to be reformed. ICT potentially enlarges the spatial scale of networks, but agglomeration economies still are essential for the persistence of locally bound networks. Although in terms of effective use of resources, spatial dispersal of economic activities is possible due to ICT, at the same time economic-institutional local networks, in which ICT performs a crucial role, restricts this dispersal. The conclusion is that neither concentration or spreading is at stake, but due to spatial economic shifts, rather a 'reform of distance'. The importance of new agglomeration economies outside the traditional central urban areas implies that spatial dispersion is important but limited in character and that both agglomeration and de-agglomeration processes lead to a new urban synthesis in the form of multinodality.

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