Geographical Proximity and the Transmission of Tacit Knowledge

Geographical Proximity and the Transmission of Tacit Knowledge Since at least the publication of Pigou's “The Economics of Welfare” (Pigou 1932) and Arrow's seminal article on “Economic Welfare and the Allocation of Resources of Invention” (Arrow 1962), most economic theorists have argued that “knowledge is expensive to produce but cheap to reproduce.” Following Hayek (1948) and Polanyi (1958), scholars working in the tradition of Austrian economists have dissented from that view by pointing out that if a good deal of knowledge, such as the price of gold, can be easily codified and transmitted, much important knowledge is tacit and dependent on the “particular circumstances of time and place.” One line of work that supports the Austrian view can be found in economic geography and neighboring disciplines where the geographic concentration of economic activity is explained, among other factors, by the importance of geographical proximity between individuals in the transmission of tacit knowledge. This paper therefore argues that the spatial agglomeration of economic activities constitutes a powerful vindication of Austrian insights. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Austrian Economics Springer Journals

Geographical Proximity and the Transmission of Tacit Knowledge

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2001 by Kluwer Academic Publishers
Subject
Economics; Public Finance; Political Science; History of Economic Thought/Methodology
ISSN
0889-3047
eISSN
1573-7128
D.O.I.
10.1023/A:1007803520748
Publisher site
See Article on Publisher Site

Abstract

Since at least the publication of Pigou's “The Economics of Welfare” (Pigou 1932) and Arrow's seminal article on “Economic Welfare and the Allocation of Resources of Invention” (Arrow 1962), most economic theorists have argued that “knowledge is expensive to produce but cheap to reproduce.” Following Hayek (1948) and Polanyi (1958), scholars working in the tradition of Austrian economists have dissented from that view by pointing out that if a good deal of knowledge, such as the price of gold, can be easily codified and transmitted, much important knowledge is tacit and dependent on the “particular circumstances of time and place.” One line of work that supports the Austrian view can be found in economic geography and neighboring disciplines where the geographic concentration of economic activity is explained, among other factors, by the importance of geographical proximity between individuals in the transmission of tacit knowledge. This paper therefore argues that the spatial agglomeration of economic activities constitutes a powerful vindication of Austrian insights.

Journal

The Review of Austrian EconomicsSpringer Journals

Published: Oct 9, 2004

References

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