Book Reviews

Globalisation, Policy and Shipping: Fordism, Post-Fordism and the European Union Maritime Sector

Evangelia Selkou and Michael Roe
Edward Elgar Publishing
2004, 256 pages
ISBN 1-84376-934-4
$100 £59.95

This book contains nine chapters on a number of interrelated themes covering shipping policies, the European Union (EU), the impact of globalization, cohesion in European shipping policy, the case for tonnage tax, and neo- and post-Fordist developments in shipping policy. In a discussion of the impacts of globalization on the international shipping industry, the authors consider the role and relevance of national shipping policies and international bodies.

The book first examines policy objectives and structures and also illustrates the conflicts that can exist in policymaking. It then focuses on EU shipping policy and the different fiscal regimes applied to shipping, considering that the widespread adoption of tonnage taxation across the EU signifies an appreciation of shipping as a national asset. The final chapters discuss whether the changes in the maritime industry follow the series of structures recognized in other industries. In particular, chapter 8 identifies two partly contradictory tendencies in the industry, namely the neo-Fordist and post-Fordist (comparative advantage versus competitive advantage) dimensions, with close relationships to globalization in shipping.

I found the book to be well written and wide ranging, containing a wealth of references to the literature. It draws together the various strands of arguments, theories, and policies and weaves them into a composite picture that all students of shipping policy should appreciate. As such, this is a very welcome addition to the literature, particulary because it examines some of the core aspects of the globalized shipping arena and the extent to which global tendencies affect the formation of shipping policies. The authors recognize that maritime regulation must be international in nature (an observation that seems to have escaped some policymakers in the past) and illustrate their points with appropriate examples. In the final chapter, the authors point to some key shipping policy lessons.

The authors provide extensive references and one possible critique is that there are too many references (especially to Lloyd's List in chapter 7 which deals with the tonnage tax), but the points made are certainly well documented and justified. Copies of this book should definitely be held by university libraries and it could even be adopted as a textbook for some specialized shipping courses. This book is part of the series in Transport Economics, Management and Policy and it sits well in such company. At a price of £59.95, however, it might prove too expensive for individual students to purchase.

Reviewer address: Peter Marlow, Head, Logistics and Operations Management, Cardiff Business School, Colum Drive, Cardiff CF10 3EUm United Kingdom. Email: marlow@cardiff.ac.uk.

Competition and Ownership in Land Passenger Transport: Selected Refereed Papers from the 8th International Conference (Thredbo 8), Rio de Janeiro, September 2003

D.A. Hensher, editor
Elsevier
2005, 792 pages
ISBN 0-08-044580-2
$180 £110 i 165

This very substantial volume, drawn from the 8th Thredbo conference, provides a wide range of papers dealing both with rail and road modes. The Thredbo series began in 1989 at the Australian mountain resort of that name and has subsequently been held every two years at a different location. It attracts a wide international audience, nowadays somewhat broader than the largely British, Australian, and American group at the first conference. Given the location of the conference, the stronger contribution from South American authors is noteworthy.

Issues such as deregulation and competitive tendering have been a major factor since the initial impacts of local bus deregulation in Britain. A wider range of work, notably econometric studies, is now included. The volume is edited by Professor David Hensher of the University of Sydney, a co-founder of the series along with the late Professor Michael Beesley of the London Business School, to whose memory this volume is dedicated.

Individual papers are grouped into themes such as performance-based contracts, regulatory and planning tools, and performance data and measurement. Each of these served as the basis of a workshop in which intensive discussion took place, the main findings of which are summarized in a separate chapter. Selected papers from each workshop then follow. However, given the size of the volume, it is likely to be used as a reference work rather than read right through: for this purpose, a short abstract of each chapter would have been helpful.

Presentation is generally clear, although use of black and white print only means that some diagrams originally in color do not reproduce very well, and on some occasions references in the text to the color version are inconsistent with the version actually produced (e.g., figure 3.1 in chapter 10).

The issue of performance data and measurement has received greater attention than in previous conferences, being the focus of section 7 in this book. Chapters cover the current ownership structure in Britain (Charles Roberts), Brazilian railway privatization (Hostilio Neto), the Texas Governor's Business Council Performance Indicators for Urban Transport (Wendell Cox), efficiency changes in rail passenger operators since rail privatization in Britain (Jonathan Cowie), and bidding procedures for Brazilian urban bus systems (Alexandre Gomide).

Earlier work on deregulation and privatization used relatively simple performance indicators often aggregated at the whole operator or network level. Given the dramatic changes in productivity and costs—for example, through introducing competitive pricing into monopolistic systems—the outcomes were clear enough for measures such as cost per bus-kilometer run. However, with an increased focus on quality of service, more subtle indicators may have to be used, such as service reliability, patronage, and user attitudes. Even patronage may be measured only in crude terms and is dependent on operator ticketing systems' data. One consequence of deregulation and privatization is increased commercial confidentiality, resulting in detailed absolute figures not being readily available at the local level. Percentage changes may be quoted, such as those for ridership increases on "quality partnership" bus services cited by Roberts, but the absolute base from which such changes occurred is often unclear.

Chapter 13 by Berge, Brathen, Hauge, and Ohr offers useful examples of the wider range of performance measures now being used, in this case from Hordland County in Norway. These in turn are built into the contract mechanism, providing appropriate incentives for operators rather than simple cost minimization.

Contracts may also include other targets for performance, such as the revenue, volume, and accident levels set for the privatized Brazilian rail freight companies (although it can be presumed that the safety level figures are not targets in the same sense, but rather upper limits that companies would hope to fall within).

The sole U.S. contribution (chapter 41 by Wendell Cox) examines data from a wide range of countries for the respective roles of car and public transport. He also addresses the issue of how the greater use of public transport has the potential for avoiding road building to handle increased car flows. Very dramatic differences in urban densities, such as those between Hong Kong and U.S. cities, clearly correlate with different market shares for public transport modes. Cox suggests that the possibilities for modal diversion in expanding low-density U.S. cities are limited (except for some corridors into city centers), given the very high level of public transport services that would be needed. He indicates some limits to the higher density urban development now favored in some quarters, such as the greater volume of vehicle traffic per mile of road (despite the lower share taken by car), which may in turn result in congestion, lower speeds, and hence more pollution per vehicle-mile.

However, one must have reservations about some of the data and analysis presented by Cox. For example, figure 3 in his chapter is described as public transport vehicle-miles per square mile per annum. An average of 0.91 for western Europe seems implausibly low, unless what is meant is route-miles per square mile of area. This appears to be a simple error in stating the units used. He does not show per capita energy use nor pollution, which is generally far lower in high-density cities (as indicated in UITP's Millennium Database ¹) even if rates per vehicle-kilometer are higher. Having said this, given the existing low densities in the cities described (e.g., Houston), the scope for public transport shares on anything like the European level (let alone Asian) is obviously out of the question. However, the findings presented in this chapter may not be transferable to newly developed areas where the possibilities for higher density exist.

There is no doubt that the relevance of the topics covered in this conference series will remain strong, given continued interest in reducing costs and improving service quality in a wide range of countries. As Ian Wallis of Booz Allen and Hamilton (New Zealand) says in his review of developments in the main Australasian cities "...there should be plenty more to report on at Thedbo 9 [to be held shortly in Lisbon] and most likely at T10, T11, T12...."

Overall, this volume is undoubtedly of very great value as a work of reference, although given its size and cost it is likely to be a library acquisition rather than a personal one.

Reviewer address: Peter White, Professor, Transport Studies Group, University of Westminster, 35 Marylebone Road, London NW1 5LS, United Kingdom. Email: whitep1@wmin.ac.uk.

Industrial Location Economics

Philip McCann, editor
Edward Elgar Publishing Company
2002, 293 pages
ISBN 1-84064-672-1
$125 hardback ($50 paperback)

This must-read book will appeal to all students of the economics of location and the urban system including advanced undergraduates and graduate students, and faculty who work in the more general areas of planning and transportation, regional science, regional economic development, and location of economic activity. This is true if for no other reason than the first two chapters, by Phil McCann and John Parr, review the foundations of classical location theory (Weber and Moses; McCann, Losch, and Christaller; and Parr) and present more recent extensions and syntheses of the literature.

While those who teach industrial and firm location theory and practice are aware of most that is presented in these two chapters, others in the more general fields noted above will find these a useful way to update their background and learn about how the major research questions of today are being explored from this perspective. Such questions or topics include globalization, knowledge spillovers, urban and localization economies, agent-based perspectives, and complexity theoretic concepts. Throughout, we find McCann and Parr at their best when demonstrating close reasoning, thoughtful analysis, and reasoned but provocative insights. I have focused heavily on the McCann and Parr chapters here, because these two chapters by themselves make the book worth having in one's library. There is, however, much more of considerable interest and value.

The book is organized in three parts. Part I, Analytical Approaches to Industrial Location, in addition to the McCann and Parr chapters also considers location models from the perspective of the new economic geography , in chapter 3, and a review of firm migration literature with an assessment of prospective research for the future in chapter 4. Part II, Cities and Industrial Clusters, examines this topic of current interest in chapters 5 through 8. And Part III, consisting of chapters 9 through 11, examines the location behavior of multinational firms including technology relationships between indigenous and foreign-owned firms (chapter 10).

Part I: Analytical Approaches to Industrial Location

While the McCann and Parr chapters have already been partly assessed, some additional notes will present a more complete picture. McCann observes there are important limitations to the applicability of the Weber-Moses framework. One is that market price or revenue of the output plays no role in the determination of the optimum location of the firm. Another is the strong role played in this analytical framework by transport costs when in fact these costs are for most firms a very small portion of total costs. He shows, however, that both of these limitations can be for the most part reconciled by substituting a total logistics cost variable for distance transport cost. This approach should be of particular interest to transport economists, planners, and practitioners. McCann goes on to show how it is possible to incorporate measures of the economies of distance and scale in the broader logistics reformulation.

The chapter by Parr identifies and deals with missing elements of the Central Place/Loschian urban systems perspective and places emphasis on issues related to innovation and knowledge spillovers in the context of localization, urbanization, and activity complex economies. He also emphasizes the need to develop or create a fuller understanding of how the urban system develops and evolves.

Dirk Stelder begins chapter 3 with the observation that "...a major empirical shortcoming of most NEG (new economic geography) models is their use of very abstract one-dimensional economic spaces like a circle or a horizontal line." By extending the approach to two dimensions Stelder shows that it is possible to produce complex hierarchical city distributions that approach reality to a significant extent. Of applied interest is a simulation of the European urban system that is accurate enough to be provocative. This work directly addresses Parr's concern about expanding our knowledge of the evolution of the urban system.

Chapter 4, by Piet Pellengarg, Leo van Wissen, and Jouke van Dijk, nicely reviews the literature of firm migration (relocation). At the outset, the authors recognize that firm relocation differs from firm location, because in the former case one location is substituted for another. In short, history is likely to influence the relocation decision and thus the outcome is conditional upon this history. This is important because it leads to the adoption of a stage approach to the study of the relocation decision: first the decision to move, then based on that comes the decision to relocate elsewhere. The relocation decision is also seen as different in that the focus is more on push factors rather than pull factors. The chapter provides three theoretical perspectives (neoclassical, behavioral, and institutional) that cover three major time periods: the 1970s, 1980s, and 1990s. The authors conclude that contemporary research focuses more heavily on the institutional nexus but the classical and behavioral approaches remain relevant and important. As a consequence, it is not possible to discuss or even formulate a general theory about the firm relocation decision at this time.

The firm relocation research shows distinct changes in motivation and orientation across the three decades leading up to the millennium. Rather than restate the various patterns of findings by the decade, it is perhaps more important to note here that much of the early literature was dominated by researchers in the United Kingdom. This persisted into the 1970s, because the United Kingdom's regional policy at that time focused on steering manufacturing industry to assisted areas by using such policy instruments as location controls and capital and workforce subsidies. Thus, the firm relocation studies of this era were part of a large bundle of studies aimed at determining the effect of these policy instruments on the economies of assisted areas. In the late 1970s and early 1980s, U.S. research began to appear in the literature along with significant publications from the Netherlands, Germany, France, and Italy.

The number of international firm migration studies decreased considerably in the 1980s. With this, the emphasis of the research changed to more of a focus on the relation of firm migration to urban decay and decline and policies designed to drive renewal, and to hold or attract companies to such areas. Firm relocation research in the 1990s reflects the rise of the information and communications technologies sector and supporting services as emphasis on the policy side of this literature focused increasingly on the creation of innovative environments and new enterprises and industries. The chapter concludes with a discussion of modeling approaches for studying firm migration and how to operationalize various explanatory factors such as those both internal and external (context) to the firm and more specifically site- and situation-related forces. Throughout, the authors emphasize the importance and need for further research to reveal the role that the product life cycle plays in the relocation decision.

Part II: Cities and Industrial Clusters

Considerable interest exists in bringing more clarity to the industrial cluster literature and to the concepts that underlie its magnetism for both scholars and practitioners. And while the chapters in this part of the book certainly add to the debate and provide some clarification, they fall short of providing insight into best practices at both the methodological level and at the level of practice. But this is probably too harsh a view given that all research in this area remains subject to the need for considerable clarification, codification, and extension.

In chapter 5, Gilles Duranton and Diego Puga examine the concepts of diversity and specialization in cities. Probably the most important contribution of this chapter is the presentation of a set of stylized facts about the subject: for example, "specialized and diversified cities coexist," "larger cities tend to be more diversified," "the distribution of many urban system parameters such as relative city sizes are stable over time," "cities are increasingly specialized by function," and so on. These facts are useful in two ways. In their own right they offer a set of working hypotheses that already enjoy a fair amount of support. But they also create a template for assessing various urban theories from both static and dynamic perspectives and for advising policy. From a policy perspective, this leads to conclusions like: "...the link between innovation and diversity seems fairly robust...thus highly innovative clusters cannot be bred in previously highly specialized environments." Such observations if not fully vetted at least formalize patterns that many of us who have worked in this arena recognize and thus begin to lay the foundation for methodological and, perhaps, a more conceptual synthesis.

In chapter 6, Ian Gordon examines the issues of global cities, internationalization, and urban systems. He begins by observing that there has been a progressive internationalization of relationships at all levels and the revaluation of the advantages of urban agglomeration, especially core cities. Gordon also recognizes there is a good bit of "fuzziness" in the use of the concept of world or global cities, while effectively avoiding getting bogged down in an extended assessment to confirm this claim. He simply moves on to the main concern of the chapter— globalcity-ization and its relation to location, transportation, and trade functions within urban systems. Further analysis results in a conclusion that undue emphasis has been placed on the notion that global or world cities play an inordinate role as dominant nodes in the development and operation of the global networked economy. He suggests that an "...overstrong focus on the significance of the global city role can obscure the responsibility of other (often more traditional or older) factors for positive and negative developments in the city." He also argues that emphasis on the global city role "...reflects one particular set of interests from within a diverse economy, exaggerating the extent to which these are crucial to the wider economy." As such, this chapter presents an argument that is at odds with the prevailing notion of the importance of global cities in the operation of national urban systems and, therefore, national and global economic systems.

In chapter 7, Michael Steiner presents an institutional dynamics view of innovation and regional development as a framework for arguing the necessity of industrial clusters in new market economies and developing countries, especially those that have adopted institution-liberalizing policies. Yet these countries are often limited in their ability to guarantee the conditions required to fulfill the process of transformation and thus to use spontaneous market responses as strong or dominant drivers of development. Steiner extends this conclusion to apply as well to the use of spontaneous cluster development as a driver. In short, a stronger regulatory or interventionist policy is necessary for steering industrial cluster development in the ascending and developing countries. He concludes that membership in the European Union (EU) and similar multinational organizations could serve as a guarantor in the external institutional building process and thus a way to dampen the need for strong intervention.

The final chapter of Part II, written by Edward Feser and Stuart Sweeney, assesses theory and methods used for comparing cross metropolitan business clustering. They recognize that the urban system is always in a state of flux, and this will impact dispersal or concentration tendencies in different ways in different industries and thus affect clustering behavior. In response, they develop a new analytical methodology for cluster analysis based on point process models that utilizes data for establishments by location. They go on to apply the methodology to 14 U.S. metropolitan areas and find considerable variation in clustering among the industries of a common value chain (cluster of related industries)—manufacturing. They, for example, find that the strongest intra-regional clustering occurs in "...paper and publishing and textiles/apparel...value...chains, and to a lesser extent electronics and computers, aerospace, canned goods and grain mill products." Clustering is weak for wood products and furniture, vehicle manufacturing, and chemicals. This interesting research is of considerable value in that it offers a direction for addressing an issue mentioned earlier in the review, namely the need for creating synthesis and agreement on methods and concepts that underlie the industrial cluster research agenda.

Part III: Multinational Firms and Location

Chapter 9 contains an essay by Ram Mudambi on location decisions of multinational enterprises (MNEs). He notes that such decisions have for the most part been considered in the context of the eclectic paradigm after Dunning, which provides a unifying framework for "...determining the extent and pattern of foreign-owned activities." He continues with the conclusion that three sets of forces or advantages drive MNE activities. These have to do with ownership of the enterprise, location of operations, and the internalization of advantages, or OLI. The ownership advantages come from the resource base owned or controlled by the firm, while the location advantages come from resources, networks, institutional structures, and so forth to a geographic entity that are immovable. Internalization brings activities that create transaction costs inside the structure of the firm.

The chapter presents literature on OLI in the context of a view that the multinational location decision can be modeled as a two-person game between the MNE and the host government. The analysis begins with the literature on the MNE location decision from 1945 to about 1980, a period dominated by market-oriented advantages that occurred under the "suspicious eye" of host governments. However, as globalization unfolded in the 1980s and subsequent liberalized approaches to development were more commonly adopted, a more interactive perspective between the MNE and the host government occurred. Then subsidiaries became much more linked to the MNE's international network, especially for mature MNEs. In this later period, life cycle effects of the firm became more important. This is viewed as mutually advantageous to both the MNE and the host government, because knowledge and technology spillovers within the firm and to other indigenous firms become more likely where such mature multinationals operate.

This issue of technology spillovers is central to the substance of chapter 10 by John Cantwell and Simona Iammarino. They observe that MNEs derive technology complementarities between related paths of innovation or corporate learning in distinct geographic or country settings. In this fashion, it is possible to spread the resulting competence base of the firm across its subsidiaries and, thus, more efficiently spread its technology assets. From this fact of MNE operations, the literature has considered the hypothesis that indigenous firms in the host country thus benefit from so-called technology spillovers of the MNE locations there. The authors next focus on the EU context arguing that the high level of cross national institutional congruence provides the most likely or strongest context for this hypothesis to thrive. Some support is found and a discussion of the barriers to generalizing the findings ensues.

The final chapter, by Tomokazu Arita and Philip McCann, examines the relationship between the spatial and hierarchical organization of multiplant firms through consideration of the global semiconductor industry. They observe that the phenomena of Silicon Valley and other renowned regional technology centers like Cambridge (England), Austin (Texas), Bangalore (India), and so on are only a small piece of the semiconductor industry and the small innovative nature of the economic structure of those economies can be and are misleading.

To examine this seemingly provocative hypothesis, Arita and McCann undertake an analysis of the structure of the semiconductor industries in Japan and the United States. They find that, like most industries, this industry with its forward and backward linkages is organized oligopolistically or nearly so. In Japan, the organizational structure is strongly vertical in nature and in a keiretsu style fashion, and nearly all of the R&D and semiconductor production, including basic and intermediate inputs, is located in Japan. In the United States, only a few major firms are producing semiconductors, but the supply chain is more diverse with significant outsourcing used to feed semiconductor production in plants based in the United States and elsewhere. Getting back to the point of the analysis, the authors conclude that the semiconductor industry is organized much like other intermediate to mature industries. Furthermore, only a small part tends to be organized in a network of small- to medium-sized enterprises (SMEs) like that found in Silicon Valley and the other regional technology centers cited above. While one might argue that this may be viewed as mixing oranges and apples, it focuses attention on the fact that the information technology industry is more than just the businesses of technology-intense regional economies. In fact, its backbone is organized much the same as other industries at the intermediate to mature stage of the life cycle.

Conclusions

This is an excellent book and for an edited volume it does a nice job of staying on message. The book's strong point is the several literature review-type chapters. These include chapters 2 and 3 on classical location theory, extensions, synthesis, and directions for future research, which are gems. Chapter 4 on firm migration or relocation does a nice job of covering the essentials of the literature in an historical context and provides an excellent guide to pressing research questions.

While Part II on cities and industrial clusters does not provide a literature review of either urban research or industrial clusters, it presents much insight into the thinking on localization and urban economies, concepts underlying the renewed interest in industrial cluster analysis and in particular in an urban context. Finally, chapter 9 provides a good assessment of the literature on the MNE location decision and the role of foreign direct investment. This review also provides historical perspective in addressing the major research questions and leaves the reader with a good sense of the engaging contemporary research questions.

Beyond the review-type essays, the book offers an introduction to interesting topics and to the frontiers of related research. For example, chapter 3 extends the classical perspectives on industrial location to agent-based modeling in the context of the new economic geography. All four chapters in Part II on cities and industrial clustering are of considerable interest ranging from Ian Gordon's examination of the idea that global cities play a superior nodal role in the global economic system to Feser and Sweeney's new methodological approach to the cross metropolitan comparison of industrial clusters.

In sum, the book makes a considerable contribution to the literature on industrial location economics. It comes at a time when many classical perspectives are both under attack and have undergone recent modification. Thus the review essays are very timely and the special topic chapters add flavor and perspective.

Reviewer address: Roger R. Stough, NOVA Endowed Chair and Professor of Public Policy, Associate Dean for Research, Development, and External Relations, George Mason School of Public Policy, 4400 University Drive, MS 3C6, Fairfax, VA 22030-4444, USA. Email: rstough@gmu.edu.

1. The International Union of Public Transport (UITP), based in Brussels, compiles an extensive database of 100 large world cities. See http://www.uitp.com.