Dynamics of Industrial Location

Mobile and Immobile External Economies

The idea of external economies is an extremely important one in industrial geography and is typically used to help account for concentrations of industrial activity. Your text provides a brief definition of external economies on page 91 and there are numerous other references to this concept. As noted (page 91), a basic distinction is between urbanization and localization economies. Another distinction, not discussed in your text, is between mobile and immobile external economies of scale economies. This distinction can be traced at least as far back as Robinson (1931).

In his revised (1958, pages 124-6)) edition, Robinson discusses immobile external economies as those 'which you must go and fetch for yourself'. Immobile externalities require firms to be in close proximity to one another for them to be realized; in effect, what geographers normally think of as external economies of scale, especially localization economies, are what Robinson calls 'immobile'. Robinson, however, also notes that there are external economies of scale which are available to firms located well beyond the territory in which they are provided. Such economies are 'mobile'.

To illustrate mobile economies, Robinson cites (remember, originally writing in the 1930s) the example of the Liverpool cotton exchange which could be used by firms around the world, as well as in the local area, by firms. The exchange itself was an 'external economy' made possible by the collective demands of many firms. Probably, the exchange was located in Liverpool originally because of the nearby demands of hundreds of textile firms. But once established, 'a mill owner in Central India ... can and does share the advantage of the Liverpool cotton market (Robinson 1951: 124). In this sense, the Liverpool cotton exchange became a globally available (that is mobile) external economy.

It is interesting to note, in light of contemporary debates on tendencies towards industrial concentration versus tendencies towards dispersal that Robinson (in the 1930s), considered mobile economies to be increasing in importance. Indeed, he concluded that the advantages of large-scale industries concentrating in one country were declining as the importance of mobile economies were increasing.

Another example of mobile economies is provided by Hayter and Edgington in their analysis of wood exports from the Pacific Northwest (PNW) States of the US and British Columbia (BC), Canada to Japan. For example, a leading industrial association in BC, itself an external economy serving the collective interests of many local firms, has long sought, on behalf of its member firms, to improve access to the Japanese market by increasing market knowledge and by acceptance of common standards. These benefits, however, have 'spilled over' to some extent to the PNW to provide advantages to US-based firms. Similarly, the US government's trade negotiations, on behalf of US forest product firms, to encourage Japan to lower tariff and non-tariff barriers have benefited Canadian firms to some extent.

Recently, Maskell et al, Maskell and Malmberg, and Maskell have provided fascinating discussions of the idea of 'ubiquitification' defined as the tendency of location factors to become generally available. The idea of mobile externalities is relevant to this discussion.
R Hayter and D W Edgington, forthcoming, Getting 'tough' and 'getting smart': Politics of the North American-Japan Wood Products Trade, Environment and Planning C
P Maskell, H Eskelinen, I Hannibalsson, A Malmberg, and E Vatne 1996 Competitiveness, localised learning and regional development. Specialization and prosperity in small open economies. London: Routledge
P Maskell and A Malmberg 1999 The competitiveness of firms and regions: 'ubiquitification' and the importance of of localised learning. European Urban and Regional Studies, vol. 6 (in press)
P. Maskell 1999 Globalisation and industrial competitiveness: the processes and consequences of ubiquitification. In E. J. Malecki and P. Oinas (eds.) Making Connections, Aldershot: Ashgate