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Abstract

The location of industry is determined by the complex interaction of many factors, so it is useful to abstract from reality and focus on the main forces. In this paper I suggest it is useful to organise the various causes into three main categories. The first concerns physical geography, so-called first-nature geography. The second is the balance of economic agglomeration forces and dispersion forces—so-called second-nature geography. Most of these causes can be manipulated by policies such as production subsidies, trade liberalisation, and taxation. I also suggest that there is an important "in between" category, namely causes that adjust more slowly than industrial clusters but faster than coastlines. In this "1.5 geography" I would include transport networks and factor endowments, both of which are malleable to government policy.

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