2.1 Introduction
The objective of this study is to examine the relationship between different forms of spatial economy emerging at the sub-national scale and to understand the practices which
integrate or fragment interests at this scale. Governance of the economy has seen a shift to increasingly focus on the sub-national in the wake of tendencies toward economic
globalisation and deregulation, with particular spaces at this scale considered to represent the most appropriate for the development and implementation of economic policy. Critical to this has been the need to build on understandings of how the global and the sub-national continue to integrate.
During the past 30 years, increasingly spaces of economic production have become less embedded in singular national or sub-national spaces. Instead the distribution of
production, the opening up of new markets, and the transfer of key knowledge resources have become a highly dispersed phenomenon. This has seen a move toward interpreting the economy as a networked concept as opposed to one bounded and nationally regulated.
Against this change, spaces of economic governance have turned to sub-national
articulations in various forms, progressing through regions to city-regions to Functional Economic Areas, in pursuit of a scalar fix for the shifting demands of contemporary capitalism.
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Within this literature review, I argue that for both spaces of economic production and economic governance, an integral factor has been a move toward the economy as a
relational construct. The production of space, through the expansion of economic interests and the condensing of governance units, is heavily reliant on a set of critical relationships surrounding sub-nationally situated actors. This occurs both spatially and functionally.
Whilst clearly demarcated spaces of state governance persist, these are integrated into varying broader spatial articulations through embedded and institutional scalar
relationships with critical state and market actors.
This review will build an understanding of the key theoretical debates examining the construction of spatial economy through the relational phenomenon, the principal factors driving relationality and its impact on the integration of spatial interests, and the potential gaps in the debate for this study to address. It consolidates a range of literatures covering local and regional development theory, the determinants of economic and cultural advantage, and the governance and coordination of space and of economic actors in the development and delivery of sub-national economic policy. Commencing with literatures from the neo-regionalist and critical regionalist school, it examines the concept of
relationality and how this is reconciled with the practical division of space into bounded sub-national units. It progresses to consider the manifestation of the relational, examining how this occurs and is embedded within sub-national units through the interaction of sectors, firms, and a defined set of sub-national resources. It then moves to examine how state spatiality has been reconstructed to incorporate the demands of the relational economy, and the spatial and functional implications of this restructuring. It concludes
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setting out the theoretical grounding for the study and the key lines of inquiry and gaps in existing debates it will progress.
2.2 Territories of production in a relational era
The formal articulation of space and its construction via economic processes covers a broad literature. Whilst conventionally interpreted through political boundaries and units such as the nation state and more recently the region, the role of relationality in
constructing space and its dynamic and fluid nature have been of increasing interest in both academic and policy circles (Goodwin, 2013; Harrison, 2010a; Jonas, 2012; Massey, 2004). This section considers current debates in the production and interpretation of space, its relational articulation, and how this has been translated into a spatial concept.
2.2.1 ‘Thinking space relationally’: the relational turn and spatial economy Recent academic debates have seen a renewed interest in the relational viewpoint,
challenging orthodox conceptions of place and region through a tendency toward the role of networks, flows and interspatial relations (Goodwin, 2013; Jessop et al, 2008; Jonas, 2012; Jones, 2009; MacLeod & Jones, 2007; Massey, 2004). In contrast to the singularity of the neo-regionalist position (Agnew, 2013), this relational turn has sought to understand the effects of globalisation and neo-liberalism on space, incorporating a juxtaposition emerging through multiple connections into multiple spaces (Amin, 2004). In place of interpretations of a nested hierarchy of scales, this has tended toward a more fragmented understanding of spatial economy detached from predefined political spaces as part of a
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more complex ‘quilt’ of scaled networks (Allen et al, 1998) or field of potential (Andersson & Karlsson, 2004).
Critical to the relational turn has been a transition in practices of production toward a space of flows over a space of place (Castells, 1996). This has enabled a shift in the spatial manifestation of the interaction and knowledge transfer amongst industries, firms, and individuals through enhanced communications and reduced regulation (Arndt &
Kierzkowski, 2001; Dicken, 2007; Henderson et al, 2002; Markusen et al, 1999). Whereas this had previously been a highly bounded phenomenon aligned with predefined
administrative areas, networked tendencies have challenged such singular spatiality. This has emerged in three distinct forms of spatial disruption to such singularity: new spaces of economic transaction, representing the space of exchanges found amongst indigenous firms, new spaces of economic transition, representing the impact of this on historic and cultural interpretations of place-based production, and new spaces of economic regulation, defined through the temporal effects of endogenous and exogenous changes.
First, new spaces of economic transaction have disrupted orthodox conceptions of regionally-focussed production systems (Florida, 2002; 2008; Krugman, 1991a; Storper, 1997) through integration as part of a global economic system which encourages new production patterns and non-local embeddedness (Arndt & Kierzkowski, 2001; Dicken, 2007; Markusen et al, 1999). Complex relationships between firms and their integrated forward and backward linkages have progressed beyond standardised understandings of both organisational and administrative boundary (Henderson et al, 2002; Piccaluga, 2004).
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As a result, the spatial manifestation of these chains is as likely to be dispersed as it is concentrated (Gereffi et al, 2005) with an emphasis on inter-firm networks over any formal spatial distinction (Sturgeon et al, 2008) driven by ‘search and adapt’ strategies to maintain and enhance firm performance (Nelson & Winter, 1982; Taylor & Thrift, 1983).
Secondly, new spaces of economic transition have emerged through the formation of a new spatial articulation of production, underwritten by evolving historically and culturally subjective distinctions (Allen et al, 1998; Hudson, 2004; Paasi, 1996). Across the diversity of sectors situated within any sub-national space, various forms of industrial territory will be created through firm’s continually refined products, services and practices (Hayter et al, 1999). As spaces develop this is further layered through the introduction of new sets of firms and the evolution of established industries via network relationships and historical processes of embedding (Plummer & Taylor, 2001). Changes in products, services, and the location of markets as influenced by development trajectories, planning policies, and market forces, create multiple and dynamic versions of territory (Brenner, 2004). Here, the formal spatial economy at a given point in time is as likely a result of this process as the starting point to understanding it (Andersson & Karlsson, 2006).
Finally, new spaces of economic regulation have been introduced through changes to both industrial and administrative interpretations of place. This is fundamentally bound into a complex and integrated dynamic between localised institutions and industries and forces of social and economic change manifesting at multiple scales (Hayter et al, 2003; Scott &
Storper, 1985). Space is an evolving organism with its own shifting form (Jones, 2009;
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Paasi, 1996) unravelled through an ongoing dialogue between bounded and dispersed social, economic and political interests, manifesting via state-market and inter-market dialogues (Bennett & Ramsden, 2007; Clark, 2014; Maennig & Olschlager, 2011;
Markusen, 1994) and through these mobilised at different scales (Allen & Cochrane, 2007). Spatial relationships, dependencies, and through these articulations, are therefore dynamic, influenced by factors such as regional-industrial path dependence (Martin &
Sunley, 2006), extra-regional disruption (Allen et al, 1998), structural transformation (Markusen, 1999; Parr, 2001) and the exertion of dominant internal interests at broader scales (Christopherson & Clark, 2007) (Fig. 2.1).
Figure 2.1: Relational disruption of spatial singularity
Source: Author