Major Theoretical Perspectives in Economic Geography
While most geographers today use the key concepts of space, place, and scale, it is important to understand that even these concepts are subject to debate and multiple interpretations within geography.
For example:
Some geographers define space as absolute geographical space (as described earlier),
While others interpret it as relative space or relational space.
This variation in meaning is something students must keep in mind while reading geography texts.
More broadly, economic geography is a vibrant, dynamic, and constantly evolving sub-discipline — it consists of a diverse set of approaches and conceptual traditions.
This richness of thought is one of the reasons why economic geography today draws insights from multiple theoretical schools — and not just from economics.
Four Main Theoretical Perspectives in Economic Geography
1. Neo-classical Location Theory
Location theory became prominent in the 1950s and 1960s.
It was mainly concerned with:
Identifying and explaining patterns in the distribution of economic activities across space.
It was based on:
Neo-classical economic theory,
Followed a model-based approach to studying the location of firms and industries.
This phase in economic geography is known as the ‘quantitative revolution’, which laid the groundwork for:
Regional science,
Geographical economics, and
Spatial economics.
However, over time, many geographers became dissatisfied with this highly abstract and model-driven approach and started exploring alternative perspectives.
In recent times, interest in regional science and geographical economics has been revived — especially due to the influential work of economist Paul Krugman and his theory of ‘New Economic Geography’ (NEG).
2. Behavioural Approach
The behavioural approach emerged in the late 1960s as a response to the limitations of the earlier quantitative revolution.
It challenged the simple assumption of the rational, profit-maximising ‘homo economicus’ used in classical models.
Instead, it sought to:
Explore a wider range of human factors that shape economic decision-making,
Understand how human actors make choices in real-world settings.
However, a key limitation of this approach is that:
It does not sufficiently examine the broader relationship between individual decision-makers and the larger society.
3. Structuralist / Marxist Political Economy Approach
The structuralist or Marxist political economy perspective places social relations at the centre of analysis, with a strong emphasis on class.
From the 1970s onwards, Marxist thought began to significantly influence geography — an influence that continues to shape economic geography today.
Away from merely studying spatial patterns and locational factors,
Towards understanding social relations and economic structures of capitalist economies.
4. Post-structuralist Approaches / New Economic Geography / Cultural Turn
Since the mid-1990s, a new form of economic geography has emerged, heavily influenced by post-structuralist ideas.
This new economic geography emphasizes that:
Economic processes cannot be understood in isolation from their social, cultural, and political contexts.
It argues that:
Social, cultural, and institutional factors are central to the way economies function.
One key difference between this ‘new economic geography’ (as used by geographers) and the ‘new economic geography’ of economists is:
Geographers give greater emphasis to cultural factors — a shift known as the ‘cultural turn’.
The ‘cultural turn’ also led to:
A shift from focusing only on structural (generalised) features,
Towards examining particular and place-specific characteristics of different societies and economies.
Moreover, rather than focusing solely on class (as in Marxist thought), this perspective now explores how economic life is shaped by categories such as:
Gender,
Race,
Age,
Religion, and
Culture.
Difference between the ‘new economic geography’ described by geographers and the ‘New Economic Geography’ (NEG) described by economists
The difference between the ‘new economic geography’ of geographers and NEG of economists reflects a fundamental difference in how each discipline understands the purpose and scope of economic geography.
‘New Economic Geography’ (NEG) described by economists:
According to Paul Krugman, the chief architect of NEG:
Economic geography is about “the location of production in space”.
In his view, it is a branch of economics that examines where economic activities happen and how their locations relate to one another.
To analyse patterns of production and location, Krugman employs:
Complex economic models rooted in neo-classical economic theory,
Where geography — usually reduced to transport costs — is treated as a key factor influencing location.
Thus, Krugman’s NEG shares much with the neo-classical location theory, which was developed during the earlier quantitative revolution in geography.
‘new economic geography’ described by geographers:
In contrast, the ‘new economic geography’ emerging among geographers during the cultural turn of the mid-1990s:
Is not built on a single, unified theory.
Represents a diverse set of approaches to understanding economic geography.
More importantly, this geographers’ new economic geography offers a dramatically different perspective on:
How economies function, and
How economic geographies should be conceptualized and studied.
This approach emphasises that economic processes are:
Deeply embedded in social, cultural, institutional, and political contexts,
Not merely driven by market forces or transport costs.
It focuses on how:
Social relations,
Culture,
Identity factors (such as class, gender, race), and
Local histories shape economic activities in space.
Although efforts have been made to bridge the gap between:
Geographers’ and economists’ versions of new economic geography (e.g. through journals like Journal of Economic Geography or edited volumes like Clark et al., 2003),
The differences between the two traditions remain substantial and noticeable.
