Revolution of proximity: new

chance for the Russian economic

geography?

Alexander PelyasovProfessor, Head of Center for the Arctic and Northern economies under the Council for the

Study of Productive Forces (SOPS), Chairman of the Russian section of the ERSA

(European Regional Science Association),

Nadezhda ZamyatinaLeading researcher, Faculty of Geography, Lomonosov Moscow State University

Logic of our lecture

• What is proximity? - Not distance. Not location!

• Predecessors

• Proximity in the contemporary network communicative age

• Why is it so revolutionary?

• Can we measure proximity?

• Types of proximity and its influence on the territorial structure

• Potential of proximity for the development of economic geography

What is proximity?

Proximity=communication + networking space

Two logics of common

geographical studies

(by B. Rodoman)

“Landscape logic”

The interaction of

objects in the same

place

“Subject logic”

The interaction of

objects in different

places

Social, institutional,

organizational, cognitive

proximity

Physical proximity

Binary logic of proximity card:

To enter or not to enter!

To connect or to disconnect!

Predecessor-1: von Thunen

• Proximity from the angle of potential of interaction: the closer to the center, the more intense interaction

• Concentric circles in the agricultural landscape

• Proximity of the town center as the decisive factor in the allocation of land for industrial, commercial, and residential purposes

Distance from the center establishes specialization

The advantages of enterprises of

being close to each other

This benefit gained by proximity originated from the spatial division of labour and from the effects of localized spillovers: industrial districts Black box of

the proximity

externalities

is not open

Predecessor-2: Alfred Marshall (1890)

Agglomeration effect

Predecessor-3: T.Hagerstrand (1967)

proximity relations in the generation of

the new technology, diffusion of

innovation

The conceptual development of proximity (R.Capello, 2014)

Essence of contemporary revolution• Transportation costs are generally declining. It sounds like the role of

distance is diminishing.

• Does this mean the “death of geography”?• ICT technologies create new realities of the “flat world”, when everybody

can connect everybody easily in the virtual world.

• Does this mean the “death of geography”?

• But not! Simultaneously the role of social, cultural, institutional factors (heterogenous assets), that counted “equal” and homogenous before, is increasing. First of all these factors influence human communication, collective learning process.

• Innovation critically depend upon tacit knowledge, and it is connected with personal communication.

• Space and geography matter again but now as the platform of interaction by participants of innovative process. And proximity of all kinds actively influence (+-) this interaction.

• It is owing to proximity that geography does not die under the knowledge era. It again counts in this new space of flows and human interaction. Through proximity geography can keep the position in the mainstream of sciences studying human communication as the key driver of contemporary economic knowledge-based development

Proximity dimensions

French school: Andre

Torre, Frederic Wallet

FIRM

Geographical

(locational) and

organized (deliberately)

proximity

Sources: philosophical

traditions of Foucault,

Derrida, Bourdieu

French theory of

communication

Temporal proximity as

communication-

dependent

Proximity and conflict

resolution

Dutch school: Ron

Boschma, Mark

Thissen

NETWORK

Geographical,

cognitive,

organizational,

institutional, and

social proximity.

Social proximity and

social networks,

reduction of

transaction costs

Stress in shortage

of space

Proximity lens in regional studies• Proximity relations in firms’ strategies in terms of interaction and partnership

strongly vary depending on the size of the firms, the maturity of their

technology or their technological level (from low to high tech), their place in

the value chain, their degree of specialization. (F)

• French biotechnology firms - temporary geographical proximity play an

important role in preventing and resolving conflicts between innovators in

cooperative projects (F)

• Proximity in industrial clusters: more process and less product innovation

(F)

• Proximity helps firms to survive in heterogenous clusters, but not in

homogenous (I)

• All forms of proximity have a positive effect on M&A deals. Geographical

proximity is an important driver of M&A partnering (D)

• Scientific collaboration networks: geographical proximity is more important

for collaboration between academic and non-academic organizations than

for academic collaboration. Geographical proximity is a way of overcoming

institutional differences between organizations (D)

• Geographical versus technological proximity in patent citations (Aus)

THE POLICY CONCEPT: THE “NEW PARADIGM OF EU REGIONAL POLICY”

OR PLACE-BASED POLICY (Fabrizio Barca, 2010) – Proximity-based approach

1. T

he c

ase f

or

EU

co

hesio

n p

oli

cy

Objectives

Unit of intervention

Instruments

Method

• reducing persistent underutilization of potential (inefficiency)

• reducing persistent social exclusion

• places or functional regions, set through the policy process

• supply of bundles of integrated public goods and services

• triggering institutional change

• external intervention through conditional grants

• eliciting and aggregating local information and preferences

Rationale = market and government failures

• appropriate institutions fail to be chosen by the local elite

• institutions have a strong inertia

• high uncertainty on efficient agglomeration patterns calls

for verifiable public action

Dialectics in proximityPositive role

• Exchange of tacit

knowledge in innovation

process

• Trust. Transaction cost

reduction

• Source of positive

externalities in urban

agglomerations, clusters,

and industrial districts

• Reduce risks and

uncertainties

Negative role

• Too much proximity can create

lock-ins in innovation process

• Competition for resources

• Spillovers of secret information

What is the advantage of proximity theory?

It allows to measure and compare the strength of different factors

facilitating the interaction of objects

The simple way to measure:

the case of inter-firm connections

in German video game industry

(by R. Boschma, P.-A. Balland and

M. de Vaan)

Different types of proximity factors

facilitating objects to interact

Physical

(sometimes called

“geographical”) proximity:

the short distance

Social proximity:

social networks

Organizational proximity:

the affiliation to the same

company

Institutional proximity:

the operation under the

same laws and traditions

Cognitive proximity:

the operation in the same professional field

Is it difficult to measure?

NO!

Distance, km

The number of

previous contacts

Participation

to the same group

of firms (yes or no)

The location

in the same

country (yes or no)

Product of one

kind

(yes or no)

The most important is organizational

proximity, than cognitive, social and

physical (geographical) proximity

How do we measure proximity in Russia

(the case of migrations from the Arctic cities)

MIG = 10a0 · POPa1 · DISTa2 · 10 3 · REG · 10 4 · CAP ·· 10 a5 · CEN · COST a6 · WAGEa7

POP – population, DIST – distance, REG – belongs to the same region, CEN – is region center or not, CAP – is capital city or not, COST – cost of flats (per m2), WAGE – average wage . Technical details: A. Yashunsky

The workflow:

The base of youth migration was collected

The gravity model was used to explain the migration flows

(MIG = POP1 · POP2/DIST2).

The model was transformed to take economic and administrative factors into the account

The majority of flows are explained by the model

BUT

Some of large flows are not explained!

The excess of the actual migration over estimated is due to the influence of social and organizational proximity

(confirmed by a series of interviews in Arctic cities)

Case 1. The role of social proximity

Why relatively small city of Belgorod (384

thousand residents) became so attractive for

migrants from the Arctic?

GroupSt.-Petersburg

is closer

Moscow

is closer

Total, % 36,2 22,1

Old residents,

%37,1 21,4

New migrants,

%29,0 21,0

Case 2. The role of cultural

proximity

Different cultures have different

systems of proximity forces. Old

Arctic residents in Norilsk feel that

S.-Petersburg is closer.

Newcomers feel differently

Interviews show that this is due to social proximity. A lot

of Ukrainians moved to the North of Russia in searching

of jobs. After some years of Arctic work they move back

to the South but not to their Ukrainian home but to the

NEAREST to the Ukrainian boarder Russian city. So

Belgorod concentrates Ukrainian migrants willing to live

in Russia close to Ukraine

To the Arctic

Settlement of youth migrants from Noyabrsk

From the Arctic

Announcement in Norilsk

What city is closer to Your heart?

How do different types of proximity work?

The case of physical proximity

The localised character of knowledge transmission is

explained by the fact that “knowledge traverses

corridors and streets

more easily than

continents and oceans”

(M. Feldman, 1994).

The most important field to study physical proximity are

the small spatial objects generating innovations: clusters, small

industrials regions (“Becattini regions”), region innovative systems,

urban agglomerations

The differences in city

agglomeration studies:

Soviet/Russian tradition: focus on

transportation and settlement forms

American/European tradition: focus

on economic effects (transaction

costs) for economic subjects located

close to each other (e.g. the effects of

proximity)

Why?

Physical proximity is very

important in tacit knowledge

diffusion. So it became one

of the main factor of

innovation process

Idea of the

differentiation of

codified and tacit

knowledge

(K. Polanyi,

1958)

The result: the role of physical proximity in the modern world

Despite “the death of distance epoch” the knowledge-based industries and creative capital based industries are still organized in closely-located sets within clusters, agglomerations, etc.

How does the work: physical proximitywhy the majority of Altai bio-pharmaceutical cluster

are concentrated in Biysk?

The result of sphysical proximity

The advantages derived from the physical proximity factors for the new firm

Physical proximity to the old industrial platform

1. The opportunity to rent/buy special facilities, equipment2. The opportunity to use the common networks of suppliers

Availability of profes-sionals having experience in the relevant field

1. Access to tacit knowledge (innovations "in the heads" by M. Feldman) which simplifying the usage of non-standard, innovative technologies 2. Simplification of staff recruitment

Physical proximity to the university

1. The opportunity to use the scientific potential of the university2. Social capital (alumni)

Altai bio-pharmaceutical clustertotal number of firms

Non-manufacturing organizations

Industrial enterprises founded before 1991

Industrial enterprises in or laterfounded 1991

The usage of material and technical base of the parent firm

Flow of staff from the firmparent

Alumni

ОАО ФНПЦ «Алтай»

Бийский технологический

институт

НП Алтайский биофарма-цевтическийкластер

Financing

Администрация города Бийска

The connections between the firms of Altai bio-pharmaceutical cluster

located in the city of Biysk

НПК «Алтай»

ЗАО «Алтайвитамины»

ИПХЭТСО РАН

ЗАО «Эвалар»

ОАО «Востоквит»

ООО«АЛМА»

Contracts

ЗАО «Бальзам»

ООО «ПКФ Две линии »“ ”

ООО «Алтэя»

Family connections

Patent

ООО«КиТ»

ЗАО«Бахташ»

ООО «Пантопроект» 1991

ООО«ТММ»

ООО «Алтамар»

ФПКБийскийолеумный завод

1965

ООО«Алтай Селигор»

ООО«Специалист»

2326

28

35 35 35 35 36

2008 2009 2010 2011 2012 2013 2014 2015

The number of firms locatedin the city of Biysk - 21

The city of Biysk

How do the social proximity works?

1. For emigrants

Due to social proximity with the

partners in their former homelands

Chinese or Indian residents of Silicon

valley

could enter the markets in China and

India easier than American-born

people

2. For former homelands

Due to social proximity to emigrants in

Silicon Valley China and India get:

-Capitals

-New technologies

The size of bubbles corresponds to the proportion of

business relationships established by Silicon Valley-

based immigrant entrepreneurs in the region

Advantages derived

from proximity

Cognitive proximity vs physical proximity:

Which distance matters?

How to measure knowledge flows?

Papers “Paper trails” (citations)

Internet sites Hyperlinks

Original method of Thelwall, Mike. A Research and Institutional Size Based Model for National University Web Site

Interlinking // Journal of Documentation. 2002, № 58(6). Pp 683-694.

The core of the outlink network between EU

universities (G. Heimeriks, P. Van den

Besselaar)The two-way meaningful connections between Internet-

sites of Russian universities (N. Zamyatina, P. Utkov)

MSU

The hyperlinks to the MSU sites are the

most important for many Russian

university sites. But…

usu.ru/urfu.ru/

tsu.rutpu.ru

nsu.ru

susu.aca.ru sfu-kras.ru

istu.eduisu.ru

sfedu.ru

vsu.ru

bsu.edu

mai.ru

ssau.ru

Cognitive proximity vs physical proximity:

Which distance matters?

How to measure knowledge flows?

Papers “Paper trails” (citations)

Internet sites Hyperlinks

Original method of Thelwall, Mike. A Research and Institutional Size Based Model for National University Web Site

Interlinking // Journal of Documentation. 2002, № 58(6). Pp 683-694.

The core of the outlink network between EU

universities (G. Heimeriks, P. Van den

Besselaar)The two-way meaningful connections between Internet-

sites of Russian universities (N. Zamyatina, P. Utkov)

… there are also the two-way

meaningful connections

Proximity processes need new

instruments of region analysis:

the traditional for economic

geography tools of regional

statistics could not catch them

Proximity-based approach and contemporary

research in economic geography

• Endogenous regional economic growth and

proximity

• Economic clusters, local industrial systems and

proximity (F2F communication)

• New industrial districts and proximity relations

• Social networks and proximity

• Place-based policy and proximity

• Innovation process, tacit knowledge, and

proximity

• Project-based approach and temporary proximity

“The distance is big but our hearts are close”

Thank You!