Mountains in a flat world: why proximity still matters for the location of economic activity

Abstract

Thomas Friedman (2005, The World Is Flat: A Brief History of the Twenty-First Century. New York: Farrar, Straus, and Giroux) argues that the expansion of trade, the internationalization of firms, the galloping process of outsourcing and the possibility of networking are creating a ‘flat world’: a level playing field where individuals are empowered and better off. This paper challenges this view of the world by arguing that not all territories have the same capacity to maximize the benefits and opportunities and minimize the risks linked to globalization. Numerous forces are coalescing in order to provoke the emergence of urban ‘mountains’ where wealth, economic activity and innovative capacity agglomerate. The interactions of these forces in the close geographical proximity of large urban areas give shape to a much more complex geography of the world economy.