Economic Geography Cheat Sheet

The core ideas of Economic Geography distilled into a single, scannable reference — perfect for review or quick lookup.

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Quick Reference

Agglomeration Economies

The benefits firms gain from locating near other firms, including shared labor pools, specialized suppliers, and knowledge spillovers. Agglomeration explains why industries tend to cluster geographically rather than dispersing evenly.

Comparative Advantage

The ability of a region or country to produce a particular good or service at a lower opportunity cost than another. This principle, originating with David Ricardo, explains patterns of regional specialization and international trade.

Core-Periphery Model

A framework describing how economic activity concentrates in dominant core regions that attract capital and skilled labor, while peripheral regions supply raw materials and cheap labor. The relationship tends to be self-reinforcing.

New Economic Geography

A theoretical framework developed by Paul Krugman that uses mathematical models to explain spatial concentration of economic activity through the interaction of increasing returns to scale, transportation costs, and factor mobility.

Industrial Clusters

Geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field. Clusters boost productivity through competition, cooperation, and knowledge sharing.

Von Thunen Model

An early spatial model (1826) explaining agricultural land use as concentric rings around a central market, where the type of farming at each distance is determined by transportation costs and the perishability of the product.

Spatial Division of Labor

The geographic separation of different stages of production, where high-skill management and R&D functions locate in wealthy regions while routine manufacturing is placed in lower-cost areas.

Central Place Theory

Walter Christaller's model (1933) explaining the size, number, and distribution of settlements as a function of the range and threshold of goods and services, producing a hierarchical pattern of towns and cities.

Commodity Chains

The linked sequence of activities involved in the production of a good, from raw material extraction through processing, manufacturing, distribution, and retail, often spanning multiple countries.

Uneven Development

The observation that capitalist economies produce systematic spatial inequalities, with some regions accumulating wealth while others stagnate or decline. This pattern operates at local, national, and global scales.

Key Terms at a Glance

Agglomeration:The clustering of economic activities in a concentrated geographic area, driven by external economies.

Backward Linkage:The demand a firm creates for inputs from suppliers, stimulating upstream industries in a region.

Central Place:A settlement that provides goods and services to a surrounding hinterland, as described in Christaller's theory.

Commodity Chain:The full sequence of activities involved in producing, processing, distributing, and retailing a commodity.

Comparative Advantage:The ability to produce a good at a lower opportunity cost than trading partners.

Core Region:A dominant economic area that attracts capital, skilled labor, and industry, typically characterized by high wages and advanced technology.

Deindustrialization:The decline in manufacturing employment and output in a region or economy over time.

Economic Rent:Income earned from a factor of production in excess of the minimum needed to keep it in its current use, often tied to locational advantages.

Export Base:The sector of a regional economy that produces goods and services for sale outside the region, driving growth.

Footloose Industry:An industry with no strong locational ties to raw materials or markets, free to locate almost anywhere.

Foreign Direct Investment:Investment by a firm in one country into productive capacity in another country.

Forward Linkage:The supply of outputs from one firm or industry to downstream industries, stimulating further economic activity.

Gentrification:The influx of higher-income residents into a lower-income neighborhood, raising property values and often displacing existing residents.

Gravity Model:A model predicting trade flows between two places based on their economic sizes and the distance between them.

Hinterland:The area surrounding a central place that is served by and economically linked to that settlement.

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