However, in the 1980s, the Internet appeared and the business-related costs of business travel, communications, transportation, and research suddenly collapsed. The Web was the “death of the distance”, a concept that became known in 1997 through the book of the same name by Frances Cairncross.
A recent essay by the New Oxford Handbook of Economic Geography questions this notion or deepens the argument. Although the digital revolution has somehow reduced the importance of distance, it has developed it for others. As the authors note: “If information technology, for example, can be an effective means of coordinating ongoing projects and collaborations, they may be less effective at building new partnerships or collaborative relationships, and thus increased offline communication could increase the value of online communication, which suggests a complementarity between face-to-face communication and digital communication. ”
The chapter of the book “How Geography shapes and shapes the Internet” was written by Chris Forman, Avi Goldfarb and Shane Greenstein. The paper attempts to answer the question “what impact does the spread of the internet have on the geographical location of economic activity”.
Harvard Business School Working Knowledge has asked Greenstein to develop some points in this essay. He is Professor of Business Administration Martin Marshall and Co-Chair of Harvard Business School’s Digital Initiative.
“The geographic concentration of the invention in the United States has been decided on the western coast, not just in electronics, computer and communications technology, but in many fields.”
Sean Silverthorne: In the essay, you and your co-authors suggest that the idea that the Internet is the “death of distance” is overestimated. Could you talk a bit about how the Internet / Web reduces geography as a drag point for your business?
Shane Greenstein: Three interrelated site-level friction plays a role: communication costs, transportation costs, and search costs. Communication costs on the Internet are lower because communication with other people in the same building or around the world is cost-effective. The transport costs have dropped in two ways. First, the distribution of goods that can be digitized is almost free. Second, online interactions reduce the need to travel. The reduction in Internet search costs is directly attributable to other, lower costs. As communication and transportation costs decrease, it’s easier to compare choices before you make a choice.
Virtually everyone benefits from the lowest cost, but these gains are not experienced equally. The answer is subtle, not easy or intuitive. The Internet has benefited relatively well from areas that have already developed well. It is important to emphasize the “comparative” aspect.
The Internet has enabled all regions to access the wealth of electronic commerce and data media. Technological growth has enabled rich regions to earn more than others, even though they all grew – mainly because they already had a skilled workforce and advanced infrastructure to take advantage of the new technology. Rich areas have moved away from less affluent areas and exacerbated regional inequalities. As we sometimes just say, the Internet has made it easy for Midwestern farmers to reach Manhattan stockbrokers, and vice versa, and both have won. However, most evidence suggests that the latter has become much richer than the first one.
Silverthorne: To put a question in your own title, how does the Internet shape geography?
Greenstein: To appreciate the subtleties, each one of us has to take a step back and compare the experiences of many users. This gives a new perspective.
The search resulted in many variants of the same topic: The experience of the commercial Internet depends on where you are. It manifests in a surprising number of dimensions. For example, the quality and price of Internet access (wired and wireless broadband) vary considerably from place to place, especially when comparing locations in low-density cities, even when comparing one city to another.
On the other hand, the types of jobs associated with the introduction of cross-border Internet services and operations vary from country to country, as the two sites differ in their ability to carry the border, even through their default agglomeration. Different industries use different aspects of the Internet, and in some regions, industries are agglomerating rather than others. The Internet has completely changed the efficiency of the automotive assembly supply chains that shaped Detroit, while the price of airline tickets has changed, severely affecting the headquarters of major airlines such as Chicago, Dallas and Atlanta. By way of another example, the geographic concentration of the invention in the United States shifted to the West Coast. Not only in the fields of electronics, information and communication, but also in many other areas.
Let me summarize: Although Internet technology seems to have been broadcast everywhere, it has not been experienced as the same technology everywhere.
Silverthorne: Which industries or locations are likely to be more affected by internet technology than they are today?
Greenstein: There is an old Danish saying that it is difficult to make predictions, especially about the future. So take that with a grain of salt. To answer this question, you must first work with industries and then translate them into locations.
Some technologies on the horizon seem to have the ability to restructure certain industries. This includes the use of new artificial intelligence (AI) applications, such as neural networks. Others are big data applications for distribution and operation, 5G for wireless data transfer, Virtual Reality / Augmented Reality (VR / AR) for a variety of applications, support services for many “new autonomous services”, and a range of complementary activities. around all this.
Transport and warehousing seem particularly willing to restructure these technologies. This affects many parts of the country, in particular US transport centers such as Denver, New York, Los Angeles, Chicago and Dallas. It is no secret that we share the responsibility for the transformation of many media, which has a big impact on many companies in New York and Los Angeles.
That said, this is not mentioned in our chapter, but the most important change in the short term is the demographics: baby boomers will reach old age. This will more than double the number of Alzheimer’s cases and increase the demand for medical services for the elderly. These requirements will increase especially in hot spots, especially in Florida and Arizona. These services tend to be differentiated in two ways: the high-end area includes many information technologies managed by highly skilled staff, while the low-end system replaces many computers. These changes will probably be just as important as the ones mentioned above.