Economic Geography

A research programme
By preference and by design, much of my research on global finance is empiri-
cal. This is because of my own interest in issues of public policy and the intersec-
tion I can see between social welfare and financial markets whether in the
Anglo-American world, continental Europe, or beyond (Clark 2003). This is
most obvious when considering recent work on nation-state pension systems and
the imperatives driving global financial markets. But it can also be found in recent
research on urban economic development and the pricing of economic land-
scapes. In setting-out a research agenda for the future, I have been conscious of
the need to identify themes that have not only an empirical dimension but also
strong and pressing theoretical currents. In the interest of brevity, four themes
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or problems are identified that have, I believe, sufficient scope to last economic
geography for about 25 years!
One of the striking consequences of the TMT bubble and bust was the reali-
zation amongst financial theorists that behaviour is more interesting and more
important than it was ever given credence by those that advocated the efficient
markets hypothesis. Individual and collective behaviour drive financial markets,
providing its random character, its moments of herd instinct and, at times, its
momentum. This is a commonplace observation (although one that now has
credibility when compared to 10 years ago). In terms of research, much of recent
work has been on the intersection between decision-making and cognitive ability –
the extent to which we are able to process information and respond in ways 
that are consistent with our self-interest. Equally important, but understudied, is
the intersection between behaviour and context or what behavioural theorists
sometimes refer to as the ‘environment’. So important is this issue and yet so lack-
ing in depth and theoretical bite that even in a summary description of the issue it
is difficult to give specification to what is the appropriate scale of an ‘environment’
to be studied and how that ‘environment’ affects day-to-day and long-term 
decision-making.
By itself, a research agenda focused upon behaviour and environment would
be one that resonates with all human geography whatever its particular focus.
However, we can take the issue further into the world of political economy.
Whereas much of the finance literature focuses upon the intersection between deci-
sion-making and cognitive ability, governments of all political persuasions are
increasingly shifting responsibility for social welfare to individuals believing that
their exercise of choice is both appropriate to our deference to individual auton-
omy and appropriate in terms of allowing people to seek their level of long-term
welfare. Much has been written about this policy agenda, including those that
see it as yet another instance of neo-liberalism. But it is also an issue of culture
and society in the sense that how choice is framed is necessarily an issue of how
people understand themselves in relation to others and their expectations of what
is proper behaviour and what is not proper behaviour. In this respect, the inter-
action between culture and financial markets is one of the most important
research questions of the coming 25 years.
Thus far, I have suggested that the research agenda for the geography of
finance must take seriously the environment(s) and culture(s) in which people
find themselves and to which they contribute in the sense of building a common
world which we share. It could be argued that these issues are necessarily ‘local’
in the sense that the geographical scale is the lived world of individuals, their
families, and their immediate communities. But this would be misleading or at
least highly idiosyncratic in that people’s everyday lives are being integrated 
from the bottom through to the top of the geographical scale – what we
consume, where we consume, and how we consume (for example) are all part of
a global marketplace for sustenance and social differentiation. In fact, the world
of consumption, to pick just one crosscutting theme important in economic
geography, is undergoing profound economic, social, and cultural globalization.
Setting the agenda
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Culture is neither local nor is it autonomous; it is, like the management of finan-
cial markets across the world, a political project (Clark 2001).
So much of economic geography presumes that the urban landscape 
is properly the responsibility of the state. This is for a variety of reasons, includ-
ing a concern for equity (a commitment to access and use) and efficiency (recog-
nizing the lumpiness of urban infrastructure, for example). Just as importantly,
there are those that believe that the urban landscape is a matter of social and
political responsibility in that it is, after all, the level at which people live and
work. When joined together with theoretical claims about the fixity of the urban
landscape it provides economic geography with a rationale for excluding consid-
eration of financial markets in the provision of urban public goods. While little
studied or recognized as such, specialized financial institutions have entered the
business of pricing the landscape and building the landscape. This is an issue of
risk management in the sense that recognizing the fixity of urban infrastructure
is an issue of designing financial instruments that can simultaneously capture
value while distributing risk. These are very sophisticated financial instruments,
more interesting and far more complicated than simply buying and selling traded
securities on public markets. As the nation-state retreats further from the provi-
sion of public goods in the face of competing claims on limited resources, we
must look more closely at the theory and practice of building cities through
financial markets rather than avoiding financial markets.
This is an issue, of course, that relies upon the development and sophistication
of financial institutions. It is something that has its own geography in that some
of the most sophisticated players in this market are concentrated in just a few
global financial centres such as London, New York, and (curiously) Sydney,
Australia. Implied by this map of expertise is a map of global financial flows.
While it is commonplace to recognize that daily global financial flows are massive
and ever growing, we tend to ignore the origins and destinations of finance.
Over the next 25 years, the vast reservoirs of financial assets in Anglo-American
economies and to a lesser extent continental European economies will be
directed at emerging markets in ways quite unlike the experience of the twenti-
eth century. All this, of course, depends on building a global architecture consis-
tent with insuring the security of those capital flows from origin to destination.
Implied by this new world of finance is a world built upon common platforms
for trading and managing those flows and common expectations about the
nature and quality of disclosure and risk-management. For all the debate about
path dependence and convergence, global finance finds, inevitably, differentia-
tion and distinctions between jurisdictions inefficient.
These four themes or research projects for the future would take us from the
individual to the global separately and, most importantly, together. If Western
governments get their way, individuals will be asked to place bets on whole coun-
tries and the security of global financial flows for their retirement incomes. How
they do that, with respect to the environment and culture in which they make
those decisions, and the consequences of those decisions for urban economic
development near and far, are issues to go to the heart of geography as a discipline
and economic geography as a field of interdisciplinary study.
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