The Global Knowledge Economy and Regional Concentration of Manufacturing in Australia

Abstract

This paper is concerned with the implications of the knowledge economy for the spatial distribution of economic activity in Australia, and with the role played by foreign direct investment and multinational enterprises (MNEs) in influencing that distribution. There are clearly two antithetical sets of forces in play globally: those working towards greater geographical dispersion of economic activities and those working towards increased geographical concentration of those activities. Globalisation and localisation have therefore become opposite sides of the same coin. That is, at the same time as economic activities, and perhaps particularly those of MNEs, are becoming dispersed around the world they are also being increasingly concentrated in particular regions or 'sticky places'. An important part of this process is the emergence of clusters of asset augmenting activities, whereby MNEs and local firms concentrate many of their activities in small regional areas, inter alia to take advantage of the dynamic externalities associated with the use of intellectual capital.