This volume, which is comprised of eleven chapters written by twenty-one authors, has three main sections—“Regional Industrialization in Europe,” “Regional Industrialization in Asia,” and “Theories of Regional Industrialization.” The theoretical chapters, which focus on economics but with a nod to political and social dimensions, bookend the volume. Coherence would have improved if all the theory-focused chapters were consolidated at the beginning to offer a fuller theoretical prism to make better sense of the country case studies that follow.Building on the insights of recent theoretical innovations in location theory and empirical techniques that utilize much richer historical databases than were available in the past, the chapters dwell on the much-neglected spatial dimension of industrial development. The central message of the volume is that industrial (manufacturing) development is spatially uneven within countries. In almost every case, except Japan and perhaps the Netherlands, the evidence suggests that industrialization is essentially a regional rather than a national phenomenon.1The short chapters employ a methodology that combines economic theory with seven country case studies drawn from Europe (the U.K., Belgium, Netherlands, Yugoslavia, and Italy) and Asia (China and Japan). Three theories are invoked to explain the importance of location: (1) the Heckscher–Olin–Samuelson Theory, which posits that factor endowments drive industrial location; (2) the Marshallian Theory, which suggests that location is driven by the positive externalities that arise from economies of agglomeration in urban clusters or industrial districts; and (3) Krugman’s New Economic Geography (neg) Theory, which argues that location decisions by firms are driven by low transportation costs, good market access, dense intersectoral linkages, and economies of scale. neg informs the chapters as the most compelling explanation for the observed regional concentration of industries.Also explored are the universality and the contextual varieties of industrial policy. The evidence shows that the implications of the above theories are modified significantly by direct and indirect industrial policies and institutions that are ideally tailored to the imperatives of the various stages of industrialization. Industrialization is a complex process, even when construed too narrowly in economic terms. It is no wonder that we still lack rigorous theories that seek to explain such developments as the onset of industrialization, the drivers of subsequent deindustrialization, the process of industrial upgrading, and the pathways of industrial catch-up across sub-regions and among countries. We do, however, have many of the building blocks for such theories.2 The authors skillfully exploit these ideas to explain the most notable stylized facts: (1) Regional income inequality has an inverted-U pattern; (2) the relationship between national economic integration and regional concentration is also bell-shaped; (3) a poor legacy of industrialization ironically facilitates industrial catch-up and even allows for leapfrogging, with the help of appropriate institutions and policies; and (4) industrialization and deindustrialization may alternate in response to shocks in demand and supply.Quantitative analysis of historical industrial location, based on various indexes of agglomeration and dispersion, must nonetheless contend with endogeneity. The direct and indirect effects of natural advantages, differential access to domestic and foreign markets, varying historical legacies, technological change, and the degrees and forms of state activism are examples of such mutually constitutive or interacting forces. For pioneers and latecomers alike, industrialization involves myriad processes, including spatial agglomeration (clustering), dispersion, scaling up or amplification, diversification (as a shift from labor- or resource-intensive to skill- or capital-intensive manufacturing), and a movement toward services or export markets. Placing all these spatial, sectoral, and temporal effects in a computable general equilibrium framework, ideal as it may seem, leads to intractability. Hence, the authors prudently rely on partial equilibrium shift-share analyses among industries and regions, using various indexes of industrial development (shares of employment, value-added, capital intensity, productivity, and the like). In Chapter 9, Glenn Rayp and Stijn Ronsse cast the challenge in a thoughtful observation: “In empirical research, the question is not that much whether endowment or transportation and local scale matter for the spatial distribution of economic activity, but rather to what extent and moreover, in which period” (221).An over-generalized but still helpful typology of the four industrial revolutions (ir), or phases of industrial transition, informs most of the chapters in their appraisal of the changing significance of location and regional inequality.3 England and Wales, as well as Belgium, were the early industrializers in ir 1(the factory system) from 1750 to 1875. In this phase, differences across regions within a country were more significant than those between countries, at least in Europe and its offshoots. In ir 2 (mass production), from 1875 to 1950, catch-up industrialization began to intensify on the European continent, Russia, Japan, and the areas of European settlement overseas. Economies of scale (as noted by Gerschenkron and Amsden), legacy costs, product homogenization, and an activist (protectionist and subsidizer) state were the differentiating factors.4 In ir 3 (flexible production), from 1950 to 1990, various countries in East Asia and Latin America launched into import-substituting or export-promoting industrialization, focusing on exploiting economies of scale and technological diffusion (rather than innovation). In this phase, prudent industrial policy played a pivotal role.In ir 4 (global value/supply chains and digitization), starting in 1990, global value chains (gvc), which accounted for a remarkable one-half of global trade in 2019, have rendered space less salient because of the revolution in information and communications technology (ict). Among the notable developments of the past thirty years is the remarkable industrialization of China. Industrial policy also began to lose its quintessential national or sub-regional character because of the globalized diffusion of ownership, the disintegration of manufacturing production, and the hyper-integration of foreign direct investment (fdi) and marketing between headquarter firms (like Apple) and their far-flung factory firms. This new phase of off-shoring and re-shoring is still underway. The issues surrounding protectionism, regional deconcentration (as agile firms penetrated export markets and others remained wedded to declining domestic markets), and the deindustrialization of the old core and part of the periphery, all point to the ill-understood churning effect of the new globalization.5The rich country case studies set in this historical context are the hallmark contributions of this insightful volume. Chapter 3 shows that Belgium (the second to industrialize, after England and Wales) was far ahead of the Netherlands. Yet, after the Netherlands caught up, the Belgian deep south and the Dutch north became impoverished. Chapter 4 underscores Yugoslavia’s demographic and historical diversity and highlights Slovenia and Croatia as the most advanced regions. However, the active industrial policy of the Yugoslav market-socialist state favored regional equality, whereas the post-socialist deindustrialization was devastatingly polarizing.Italy was a latecomer, both in terms of political unification (mid-nineteenth century) and industrial catch-up (post-1880). However, much like its European counterparts, Italy experienced a regionally biased industrialization in which manufacturing firms concentrated in the northern industrial triangle (Chapter 5). Some interregional convergence took place much later with the help of an activist state policy, though the support had withered by 1980. While the South was catering mainly to a stagnant domestic market, agile small and medium-sized firms emerged in the industrial districts of “Third Italy” (central and northeastern Italy) to take advantage of export opportunities in a hyper-globalized economy.The Asian case studies are limited to China and Japan—the two industrial powerhouses. South Korea, Taiwan, and Singapore would have merited similar treatment. China’s regionally unbalanced industrialization saw initial and persistent concentration in the eastern seaboard (mainly the northeast and the southeast)—a region that was especially endowed with natural and human resources, as well as public infrastructure and market access (Chapter 6). Post-socialist China managed to develop, pragmatically and experimentally, hybrid institutions and nuanced industrial policies to exploit its built-up human and physical capital to become the world’s leading manufacturer (Chapter 7).The case of Japan is an interesting counter-example to the general global pattern of regional polarization followed by some convergence. Pre-Meiji Japan had widely dispersed proto-industrial activities, which subsequently gave way to a dense concentration of high-productivity manufacturing activity in selected urban centers at the turn of the twentieth century (Tokyo, Osaka, Nagoya, and Fukuoka).However, Japan also saw regional convergence during the six decades of high growth after World War I; the middle-income periphery had little trouble matching the productivity levels of the leading centers of industry. Prefectural differences declined in recent decades due to the convergence of the capital-labor ratio, labor quality, and total-factor-productivity (tfp) levels—thereby avoiding the rust-belt phenomenon observed in the United States and parts of Europe (Chapter 8). Even in the face of deindustrialization and massive outward fdi after 1980, interprefectural polarization remains remarkably small, thanks mainly to inclusive investment in human capital and active industrial policy.This excellent volume provides compelling evidence for the uneven, regionalist nature of industrialization. Unfortunately, however, it does not explore how the current gvc-driven globalization will surely impel a reconsideration of geography’s role by deconstructing manufacturing into distinct tasks to be allocated to various regions and countries (based on an increasingly technology-driven comparative advantage). Regional centers of value chains, such as Poland and Vietnam, have prospered, as have global centers of value chains, such as China and Ireland. Given the digital age’s dramatic reduction of communication and face-to-face costs, the economic significance of space in shaping industrialization, deindustrialization, agglomeration, and dispersion is likely to undergo unforeseeable transformations in the near future.
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Jan 18, 2024
Steven Bond-Smith 
Open Access