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Critical Discussion of Regional Resources in Industry

Info: 1744 words (7 pages) Essay
Published: 12th Oct 2021 in Economics

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'Industries create regional resources and not the other way around' (Storper and Walker, 1989). Critically discuss this statement and support your answer with an appropriate conceptual framework.

1. Introduction (139 words):

Storper and Walker (1989) attest that it is 'industries that create regional resources and not the other way around'. Such statement depicts that locational patterns of industry, regional growth and development are the product of capitalist industrialisation and its intrinsic processes, rather than the 'natural' placement of resources. This essay aims to critically discuss such statement through the framework of Regional Development Theory and the formation of clusters. This will be explored through Weberian locational theory and its role in resource creation and its effects on regional development. Before moving to to a discussion advocating for the aforementioned statement, exploring the Motor Sport Valley cluster in England and its role in knowledge creation. Which will culminate in a point examining the reality, exploring the idea that whilst the process of regional resource creation (and regional development) is ultimately delivered by the industry, the region or place has a role in facilitating it.

2. Weberian Location theory

A theory that contradicts Storper and Walker's statement, is Weberian Location theory. According to Weber (1969), regional resources dictate the location of industries, clusters and subsequent regional development. This is a result of three main factors. These factors are the cost of product transport, the cost of labour and potential agglomeration economies. Weber explores the factors influencing the locational distribution of industry though a least cost model which seemed fitting during a period where the dominant industries were locating close to energy sources, raw material sources and the transportation networks, such as docks, and major canal systems. Weber and Weberian locational theorists suggest that former industrial centres such as Manchester and Liverpool were partly conceived and developed due to the prior regional resources. Weber argued that manufacturing plants and industry were located where transport costs were minimised, suggesting that industries cluster around regional advantages, rather than industries producing regional resources. Transportation costs were shaped by two factors

- the weight of material to be shipped and the distance it was to travel, producing a locational triangle, which was fundamental in Weber's formation of the industrial location problem

Storper (1997) argues that this model functions on an unsubstantiated interface, removed from reality. This wrongly assumes that industry leaders and firms have an all encompassing knowledge and use that to act in a completely logical manner. Weber's theory, argues Storper (1997), ignores the inputs from an industry into a region, which are extremely powerful in the creation of regional resources and developing the region. Such inputs consist of the product and the process, as well as organisational innovation, which in turn generates a competitive advantage, dynamic economy, and high rates of accumulation. Not forgetting the sheer injection of capital. All of which ultimately create regional resources and development. That being said, industrial location is undeniably shaped by a trade-off between varying production costs, which has significant contemporary relevance, particularly in regards to the new international division of labour.

3. Industries create regional resources.

In contrast to Weber, Storper and Walker (1989) argue that 'industries create regional resources' which manifest in clusters. This argument suggests that the driving force of regional resource creation is not prior resource endowment and 'natural' advantageous properties in the location, but geographical industrialisation and the location of firms as a process of resource creation. Patterns of resource creation and regional development are produced by capitalist industrialisation and its endogenous activity, resulting in an economic clustering, rather than the exogenous location of resources. In sum, industries produce economic space and regional resources.

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Of course, locational factors are important, but they are insufficient in generating regional growth, particularly in an era in which competition is increasingly global. It is apparent that a region must posses economies of scale and scope for regional development and resource creation to accrue. Storper (1997) argues that these are derived from the 'Holy Trinity of technology-organisation-territory'. Highly localised clusters based on a niche of specific knowledge, skills and expertise form economies of scale. This concentration of advantages held by the actors located in specific regions creates an exploitable economy of scale. If these regions are able to utilise the benefits of learning and embed into the collaborative environment in these agglomeration, Economies of scope can exist and the 'spillover effect' can be reproduced. This will now be examined through the knowledge cluster of Motor Sport Valley, England.

The Motor Sport Valley cluster in the South of England, is a region that can be thought of not as a space within boundaries, but as a porous territory that benefits from a broad range of network connections (Amin 2002). Porter (1998) defines a cluster as a concentration of connected firms, specialising suppliers, service providers and institutions. There is a dynamic 'strategic coupling' of firms and regional assets, in the form of a knowledge economy. Motor Sport Valley is a region that has experienced an industry creating regional resources, through the formation of a knowledge-based cluster. There are many benefits to clustering, and the regional resource can take the form of untraded interdependencies. Here there is a dense agglomeration of motorsport activity which has created an economy of specialist knowledge which circulates between the firms that make up the cluster.

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The regional resource of knowledge is spread in 6 interacting ways (Pinch and Henry 1999). The first form of knowledge creation and distribution is the high levels of staff change. In this industry, staff such as engineers, designers, mechanics and drivers are often subject to various firm changes, moving around different Motor Sport companies. The persistent circulation of employees means that critical information about technology, methods, tactics and strategy is transferred and shared across the cluster. The second is shared suppliers. This acts as a regional resource through the linkages between the teams. Whilst they are contracted to silence, the numerous component and service suppliers still leak knowledge and information, adding to the clusters knowledge economy. The high number of firm births and deaths also creates an opportunity for staff to mix and diffuse knowledge, as they change employer. Informal collaboration is just one more industry created regional resource in the Motor Sport cluster. Whilst this is a competitive cluster, regulated working groups are in place. They are tightly regulated and necessitate interaction and involvement, with collective discussion, providing another mode of inter-firm knowledge transfer and regional resource. Informal industry gossip is just another regional resource created by the industries clustering. There is a lot of networking in the Valley, and this crosses firms and teams, often facilitating staff recruitment and advice as well as knowledge acquisition. The final knowledge transfer is observation on the trackside. When technology is tested on the track, imitation can occur.

It is clear that the decision for firms and the industry to cluster here has created regional resources, which are extremely valuable to the high-tech, design centred, Motor Sport Industry.

4. Is it both?

It could be argued that Storper and Walker's 1989 argument is misleading, emphasising a complete reduction of the role of geography and distance. Suggesting that the hyper mobile nature of capital is leading to the complete deterritorialisation of production. This is not the case. It is vital to consider that whilst industries ultimately create regional resources, place remains fundamental, with every component of the production network being quite literally grounded. This grounding is both physical in terms of physical investments and less observable in terms of localised relationships and knowledge transfer. Globalisation presents a paradox. There is a continued significance of 'regions' in the establishment of sub-national regions of foci for economic activity, which suggests that while industries feed regional resources (in terms of growth) the regional resource must firstly exist, or in some capacity must be there for initiation.

5. Conclusion:

This essay hopes to have critically discussed the statement that 'industries create regional resources and not the other way round'. This statement is mostly reflective of the truth.

It is true, industries are the key producer of regional resources. Inputs from an industry into a region are extremely powerful in the creation of regional resources and developing the region. Such inputs create the product, process and organisational innovation. It is the industry and its firms that create a competitive advantage, dynamic economy and high rates of accumulation, particularly in the 21st century manufacturing industry, as well as service and knowledge based industries. Industries cluster and it is in this locational process that regional resources are created. Their inputs are invaluable. Nonetheless, it is important to consider that place remains fundamental to the location of industries but it it is ultimately the industry that unleashes the potential of a region through regional resource creation.

 

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