Cities Matter by Charles-Albert Ramsay

Author:Charles-Albert Ramsay
Language: eng
Format: epub
Publisher: Baraka Books

Instabilities include:

Technical change in product delivery and source

National currency

Foreign demand variation of hinterland production.

Policy prescriptions:

Encourage import-replacement, and manufac­turing

Invest in cost-cutting process innovation.

CHAPTER 10

The Supply Region

Many Supply Regions—also known as resource economies—are quite wealthy, as they are usually endowed with a highly demanded natural resource.

However, Jacobs argues they are inherently fragile, and lack a capacity to adapt to changes in trade patterns. She qualifies them as being “backward” economies, along with Transplant Regions and Backward Cities.

An example of a Supply Region near Detroit is the Ohio iron ore region, which saw the rise of the Cleveland Cliffs mining company. Naturally endowed with a key mineral for making steel, widely used in making automobiles, the rise of the Detroit economy created what Jacobs calls a solvent market for Ohio’s iron ore, and steel foundered in Cleveland. The mining area of Cleveland Cliffs is not a densely populated area, and its economy is highly concentrated in iron ore mining. Without the iron ore, one can wonder how much economic activity would take place there.

The mining industry is typically consolidated, made up of a few large companies. They are content with supplying other regions and do not engage in import-replacement. Generally, they are not known for product innovation.

Supply regions are therefore focused on reduc­ing production costs and improving processes. The job market can grow at first, but usually is very stable or declining as labour-reducing technology is introduced.

Prices can be high as most consumer goods need to be imported. However, in this case, Ohio mines are relatively close to important cities such as Detroit and Cleveland, so prices here would be relatively low.

Migrants would be attracted to the area when the mines are being constructed, but immigration would be halted after their normal operations level off.

Supply regions that are struggling often find a way to receive funds from wealthier supply regions, or from wealthier forward cities.1 These capital injections may not be economically productive, as they can generate a disposition of dependence toward wealthy areas. Politically, the transfers may be argued to be moral, but many economists believe these transfers contribute to keep poor regions in poverty.

Another structural problem that supply regions may face is being part of a currency union with other supply regions specialized in different industries.2 The exchange rate will follow the trends of the industries with the largest trade volume, and these patterns may not help the smaller supply regions.

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