ABSTRACT
This chapter offers a critical discussion of the theories of economic geography. It attempts to provide a general estimation of their importance to regional development and spatial economic inequality. Economic geography theories suggest that geographical location has a major effect on regional economic growth and spatial industrial distribution via transportation costs. Gallup et al. study offers cause analysis of coastal proximity as an advantage in stimulating economic growth. Coastal regions with low shipping costs have achieved faster development of foreign trade and economic growth over the past 30 years than landlocked areas. Proximity to large markets also decreases product delivery times and improves the after-sales service to customers. Some scholars argue that the issue of transportation costs will become less important in firms' location decisions. Overall, favourable geographical location can be generally summarized in the comparison between coastal and interior regions, and between core regions located near to the markets and peripheral regions.
