35. Geographical Economics and Policy

This chapter is concerned with the process by which geographical economics influences policy. It considers a number of barriers that limit this influence focusing specifically on the availability of data, the limitations of spatial analysis, and the role of the evaluation of government policy. It considers why these problems present such significant barriers and proposes some solutions. In terms of the availability of data, the chapter explains why problems concerning the correct unit of analysis and measurement error may be particularly acute for spatial data (especially at smaller spatial scales). Resulting concerns about the representativeness of data and the mismatch between functional and administrative units may further hamper interaction with policy makers. For spatial analysis, the major problem concerns the extent to which empirical work identifies the causal factors driving spatial economic phenomena. It is suggested that greater focus on evaluating the impact of policies may provide one solution to this general identification problem.