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Zeitschrift für Wirtschaftsgeographie

The German Journal of Economic Geography

Editor-in-Chief: Henn, Sebastian / Thomi, Walter

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Volume 62, Issue 2

Issues

Dynamics in an unequal world

Peter Dannenberg
  • Corresponding author
  • Institute of Geography, University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany
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/ Boris Braun
  • Institute of Geography, University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany
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/ Martina Fuchs
  • Department of Economic and Social Geography, University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany
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/ Javier Revilla Diez
  • Institute of Geography, University of Cologne, Albertus-Magnus-Platz, 50923 Cologne, Germany
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Published Online: 2018-05-05 | DOI: https://doi.org/10.1515/zfw-2018-0009

1 Introduction

Inequality matters. For contemporary democratic states, the equal opportunities of the citizens is not only an ethic mission, often expressed in law, but also a safeguard against social unrest and a prerequisite for a sound and meaningful human togetherness.

Inequality in our understanding means that the possibilities to access economic, social and environmental resources are distributed unevenly. Thus, inequality relates to principles of equal opportunities and social justice (without neglecting forms of achievement orientation which can justify a certain degree of unequal income distribution). It refers to the settings which control the access to the resources needed for decent human life; birth must be a fair starting point for all, independent of ethnicity, gender, residence, etc. (UN 2015). Economic geographers have been particularly interested in inequality in socio-economic spaces on various scales, and its causes, drivers and outcomes.

In this special issue, we aim to outline different areas and spatial scales of unequal development and varied views, explanations and political answers from an economic geography perspective.

2 Concepts and measurement

The debate about spatial inequalities is the key subject of a spectrum of explanations which include the poles of pro-globalisation and anti-globalisation. Furthermore, it can also be found in the debates on urban and regional development concerning social exclusion, rural-urban or centre-periphery divide (e.g. within the European Union or socially fragmented cities; Scholz 2002; Dannenberg/Kulke 2015).

Proponents of globalisation substantiate their argument with the benefits of trade for growth and broadly distributed welfare. Along this line, Friedman (2007) argued in his book “The World Is Flat” that recently inequalities have disappeared because of the fall of the Iron Curtain, the liberalisation policies of various countries, the internet-based dissemination of information, and the internationalisation of supply chains integrating more and more regions worldwide (see Christopherson et al. 2008). Such thoughts of ‘flatness’ suggest that globalisation not only triggers growth but also flattens existing disparities. Other studies indicate that globalisation might lead to a pareto improvement in which inequality remains but all or at least a vast majority of the population benefits (e.g. Richardson 1980).

By contrast, globalisation pessimists argue that globalisation negatively affects those who have already been marginalised before, and stress the increasing assets of the rich and powerful. Globalisation critics often relate to historical materialism and critical theory stating that since capitalism came into being, it has produced and reproduced economic, social and thus spatial inequalities (see Scholz 2003; Arestis et al. 2011). Uneven development is seen as an inevitable outcome of the accumulation process (Cox 2008). The critics argue that the world is not at all flat, given the manifold differences and interdependencies between centres and peripheries at various spatial scales (see van der Ploeg/Poelhekke 2008).

However, besides discussing the positive and negative impacts of globalization, there are further theoretical concepts which look at internal factors for increased inequality. Recently, two approaches were particularly influential in the inequality discourse. Firstly, bad governance by national and local governments is said to impede a more inclusive policy environment. Moreover, political elites in the developing world assist specific societal groups their clients in order to assure their re-election thus perpetuating inequality (e.g. an urban population or farmers, specific ethnicities). Secondly, and very much further digging into the reasons behind bad governance, Acemoglu and Robinson in 2012 stressed the role of inclusive economic institutions. In short, securing property rights, law and order, markets and state support (public services and regulation) for markets, opening up to free entry of new businesses, upholding contracts, granting access to education and opportunity for the great majority of citizens, i.e., creating incentives for investment and innovation and a level playing field. But most societies throughout history and today are ruled by extractive economic institutions – designed by the politically powerful elites to draw resources from the rest of society.

Who is right? The indicators and databases, necessary to substantiate the arguments, are not undisputed, particularly given the lack of reliable data about the winners of globalisation. Only in recent years, the traditional indicators to measure increases in welfare like simple GDP growth rates or per capita income have been criticized because of their inability to show the distribution of wealth within a society. Moreover, until today data on subnational level (federal states, counties) is still lacking in many countries, and different national systems of taxation, pension schemes, etc. making international comparisons difficult. Yet, measurement has been advanced continuously, due to the efforts of international organisations such as United Nations Conference on Trade and Development (UNCTAD), the World Bank, the International Labour Organization (ILO), and also the work of private firms like Credit Suisse. Such organisations offer data related to key indicators of economic inequality, such as Gini coefficients for income and wealth. Besides, these organisations provide various data related to people’s access to economic, social and environmental resources needed for a humane and meaningful life (World Bank Group 2017).

Still, statistical analysis is often incoherent and contradictory. This is also due to underlying and highly contested assumptions. Analysts’ attitude to (and politicians’ activities directed to) inequality ties not only on a century-old debates about how much inequality (i.e. accumulation of particular resources) is needed to spur competition and innovations how much inequality can be tolerated for constant economic growth, and to what extent economic growth contributes to inequalities.

While no one will completely deny that serious inequalities should be substantially reduced, the simple assertion that inequalities increase inevitably and everywhere is of not much use and not true either. For example, in many emerging economies, the middle class is expanding (Kharas 2010), while in many traditional industrial countries the middle class is under pressure (e.g. Florida 2017).

As poverty and inequality are highly emotional topics, the measures taken against them are often rather erratic activism instead of effective long-term actions. Governments who claim to establish egalitarian states often fail, as the source of inequality is often clientelism and corruption. A key issue to better understand inequality, and how it relates to growth, requires distinguishing different spatial scales, regions and places.

3 Scales

3.1 Inequality on a global scale

On average, wealth has increased worldwide. The boom of emerging economies has powerfully contributed to such growth dynamics (OECD 2017, UNCTAD 2017; World Bank Group 2017). After the early tiger states such as South Korea, Taiwan, Singapore and Hong Kong (see Yeung 2016) large economies like China and India have also shown considerable growth in recent years which led hundreds of millions of people out of poverty. Still, at the same time, the span between the assets owned by the rich and those available for the poor has seemingly widened (estimations of Credit Suisse 2016; UNCTAD 2016).

Beyond the emerging economies, unequal terms of trade and imbalanced exchange relationships still contribute to limited growth opportunities in many countries of the Global South (Galbraith 2011). More recently, new patterns of global production networks have developed (e.g. Coe and Yeung 2015). Particularly since the early 2000s, emerging economies participate in upgraded manufacturing and knowledge-oriented production, and build up considerable R&D capacities which has led to a greater share of value capture of the production process for these countries. However, a large part of work is still precarious in emerging economies, and in other countries of the Global South (Fuchs 2014).

3.2 Inequality on a national scale

Intra-national inequalities are those between different regions within a country (e.g. North-South, East-West, central and peripheral areas). Serious inequalities often result from the dynamics of capital cities and other metropolitan areas. Within the Global South, such urban areas are very often megacities which tend to dominate the urban hierarchy (so-called primate cities). While in general cities indeed can work as growth poles and innovation hubs, such dominating primate cities can also detract crucial resources from the peripheries (e.g. skilled workforce and/or capital).

To soften such patterns, many countries of the Global South are trying to strengthen secondary cities and establish growth corridors. Still, the latter are often archipelagos which hardly contribute to socially inclusive and environmentally sustainable development (Fuchs 2014; Dannenberg et al. 2018).

In the Global North and emerging economies, global cities have been established as centres of decision-making and control (Sassen 2001; Parnreiter 2012). As decision centres, they however often tend to exclude people without the appropriate skill set. This is true for many people living within such cities, particularly the poorest of the poor (Sassen 2001) as well as for people in far-off regions. With regard to issues of inequalities within metropolitan areas, economic geographers’ interest is attracted e.g. by topics of ethnic segregation (Ezcurra/Rodríguez-Pose 2017), labour market segmentation (Fuchs 2001) and digitization as potential drivers of inequality (Rabari/Storper 2015; Krone et al. 2016).

Further the relationships between global cities and peripheral areas have shifted into focus. The issue was passionately discussed on the panel “Inequality, Globalization, Nationalism and the State of Economic Geography” of the Congress of the Association of American Geographers (AAG) in Boston in April 2017. The contributors highlighted that the recently appearing populist and nationalist trends can at least partially be explained by “the periphery strikes back”. For example, in many non-metropolitan regions of the UK and the US, the majority of people voted against globalisation and market integration (and in the UK thereby mainly contributed to Brexit vote), while voters within the metropolitan areas rather stood for liberal positions and for cosmopolitan openness. Hence, peripheral regions seem to require more analytical interest than they attract today.

4 About the contributions to the special issue

4.1 Views from the German-speaking community of economic geographers

This special issue comprises contributions of the German-speaking economic geographers’ community. The special occasion is the 5th Global Conference on Economic Geography (GCEG), with the topic of “Dynamics in an Unequal World” held in Cologne from 24 to 28 July, 2018. As hosts, we had the idea to offer further insights into how German-speaking economic geographers discuss the conference motto with respect to their specific fields of expertise. Clearly, the contributions and research fields presented here are selective. It is impossible to cover all the interests of the entire community of German-speaking economic geographers in one special issue. Moreover, as German-speaking geographers have been working in international networks for decades, there is anything but a clear distinction to the Anglophone and international debate.

But are language-centred sub-communities completely irrelevant in today’s global scientific community? We think otherwise. The German-speaking community still has a certain self-identification with particular “styles of reasoning” (Barnes 2006, 27, or “Denkstile”, Schamp 2007, 238). This sense of self-identification is perceived at regularly held symposiums and in various national conferences, workshops, informal meetings, and national professional associations. Journals like Zeitschrift für Wirtschaftsgeographie or Geographische Zeitschrift offer the opportunity to publish in English or German, and thus offer a platform for issues which are sensitive to particular hermeneutic contexts and thus critical of being “lost in translation” (Barnes 2006, 25). The same is true for many planning-oriented journals or journals which are oriented towards school geography and practitioners in the public services or in private companies.

Besides, the German-speaking community of human and economic geographers shares an almost ‘mythical’ collective memory related to the shift from the idiographic and descriptive ‘Länderkunde’ to an analytical discipline, which occurred at the German congress of Geography in Kiel 1969 (Schamp 2007, 242). Among the new approaches at that time, spatial analysis (raumwissenschaftlicher Ansatz) became predominant for the next decades (see Schamp 2007, 239–242). While Marxist thinking has substantially contributed to Anglophone economic geography, many German economic geographers have long been more reserved and cautious about these approaches. The work on dependency theory in a “Third World” context was an exception; however, soon the dominant interest shifted towards emerging economies which offered case studies for approaches based in modernisation theory (Schamp 2007, 243). Today German-speaking geographers contribute a broad variety of different approaches and perspectives and engage in critical debates in the global community and among themselves. This is particularly true for explaining and dealing with unequal development. Following the outlined agenda of this special issue, the following articles provide different explanations for unequal development and discuss current instruments to reduce inequalities in different areas and at different scales:

Klagge and Zademach outline the key role of financial systems and capital flows for economic development and growth. Whereas in various other countries, these markets have attracted large amounts of investment capital for domestic companies, especially in Sub-Saharan Africa this has not been the case due to institutional weaknesses and a lack of financial and other capacities. By analyzing the UN-supported Sustainable Stock Exchanges Initiative (SSEI), Klagge and Zademach identify options and instruments for supporting existing stock markets and transforming them into functioning facilitators of new investment opportunities for international and institutional investors and instruments for supporting sustainable development. In critically following the development-through-stock-exchanges argument they however also outline various related challenges for the stock exchanges involved and their local stakeholders.

Inequality is not only based on data detected in indices like the Gini-coefficient but is socially constructed and perceived. In particular, different national and ethnic backgrounds and origins (e.g. between Global North and Global South) can create prejudices whereby the one side looks down on the other side. This Othering (Kitzinger/Wilkinson 1996) is discussed by Franz et al. in their paper on South-North Firm Acquisitions where they outline othering practices towards new firm owners from the Global South in Germany.

Despite its large presence in the societal debate, its recognition in other fields of inquiry and its explanatory power environmental inequality has only been reluctantly taken up by economic geographers so far. Environmental inequalities can be seen on the global scale, for example, when environmental burdens from the Global North are shifted to the Global South but also on the local level where the provision of environmental amenities and the exposure to pollution often differs heavily e.g. between different neighborhoods and communities within the same city. The relation between economic dynamics and environmental inequality both on the local as well as on the global level are discussed by Braun et al. by looking at examples from Europe and South Asia.

In their contribution on modern growth corridors in Sub-Saharan Africa and South East Asia, Dannenberg et al. discuss to what extend such modernisation-oriented spatial development initiatives can actually contribute to their envisaged targets of growth and employment in less “developed” peripheral regions through their integration into international markets and value chains. While critically discussing the corridor approach in the context of global value chains/global production networks and public-private partnerships, they identify high potential for growth and employment. But there are also major limitations e.g. for regional value capture and the participation and integration of local communities as well as serious challenges like external dependencies and power asymmetries between the partners involved in the development process as well as related unsustainable resource exploitation.

Based on an extensive review of work produced by the German-speaking community, Fromhold-Eisebith finally outlines the importance of innovation and technology for regional economic development. In this context, she presents and discusses the works of the German-speaking economic geography community in this area of research as one of its core competences. Here the community has significantly contributed both to the conceptual as well as to the political debate but has also left regional and conceptual blind spots.

5 Conclusions: positions of Economic Geography

A first step to overcome existing inequalities is their analysis. Thus, a better understanding of the dynamics in an unequal world is needed, with a space-sensitive view and a critique of over-simplified assumptions. Today, populist parties use the public discontent about existing or assumed inequalities. Demagogy of extreme right-wing and left-wing activists is getting louder. Even if such agitators do not succeed in overcoming existing inequalities, they address simple psychical mechanisms of their voters and supporters, as the simple lines of inclusion and exclusion. Hence, such insights are relevant not only in academia but particularly to generate effective policies. This special issue is intended as an input to these debates.

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About the article

Published Online: 2018-05-05

Published in Print: 2018-05-25


Citation Information: Zeitschrift für Wirtschaftsgeographie, Volume 62, Issue 2, Pages 87–91, ISSN (Online) 2365-7693, ISSN (Print) 0044-3751, DOI: https://doi.org/10.1515/zfw-2018-0009.

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