Growth and Location of Economic Activity: The Spatial Dynamics of Industries in Canada 1971–2001

Abstract

A growing literature has accumulated that points to the stability of industrial location patterns. Can this be reconciled with spatial dynamics? This article starts with the premise that demonstrable regularities exist in the manner in which individual industries locate (and relocate) over space. For Canada, spatial distributions of employment are examined for seventy-one industries over a thirty-year period (1971-2001). Industry data is organized by "synthetic regions" based on urban size and distance criteria. "Typical" location patterns are identified for industry groupings. Industrial spatial concentrations are then compared over time using correlation analysis, showing a high degree of stability. Stable industrial location patterns are not, the article finds, incompatible with differential regional growth. Five spatial processes are identified, driving change. The chief driving force is the propensity of dynamic industries to start up in large metro areas, setting off a process of diffusion (for services) and crowding out (for manufacturing), offset by the centralizing impact of greater consumer mobility and falling transport costs. These changes do not, however, significantly alter the "relative" spatial distribution of most industries over time. Copyright 2006 Blackwell Publishing.

Stretching the concept of ‘borrowed size’

“…This latter assumption is indeed a critical one: to explore a disconnection between size and function or another performance measure, research should have previously established that such characteristics are or were strongly connected to city size. This is certainly true of the indicators mentioned here (Eaton and Eckstein, 1997;Polèse and Shearmur, 2006;BBSR, 2011), although in a system characterised by borrowed size, this relationship should have grown increasingly unclear. This may partly explain why, for instance, wage differentials are low (Groot et al, 2014) in countries such as the Netherlands.…”

“…However, Polèse and Shearmur (2006) found that employment rates grew substantially faster in the last decades of the previous century in small cities positioned close to large cities than in small peripheral cities. The same holds true for population growth.…”

“…Polèse and Shearmur (2006), for instance, suggest that differences between small cities and surrounding non-urban areas within larger metropolitan areas are growing less distinct.…”

“…The balance between agglomeration benefits and costs varies from place to place (Camagni et al, 2013) and this heavily shapes industry location patterns (Polèse and Shearmur, 2006). Additionally, households weigh up the presence of urban advantages (e.g., amenities) with their sensitivity to agglomeration costs such as congestion, exposure to environmental pollution and social problems such as higher crime rates.…”

“…Smaller cities surrounding larger metropolitan areas are more attractive to industries than equally sized cities without a large neighbour. Such areas may profit from 'crowding out' processes affecting their larger neighbour, causing mid-tech, space-extensive industries that are sensitive to wage and land costs to relocate to smaller cities (Henderson, 1997;Polèse and Shearmur, 2006). Phelps et al (2001) emphasise this complementarity between local advantages (such as lower rents and less congestion) and advantages drawn from nearby settlements through business transactions and interactions (access to sizeable markets, business services and knowledge, larger and more diversified labour markets and consumption amenities in, for instance, culture) as the essence of the borrowed size concept.…”