Economic Geography Glossary



A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z

- L -


Latin American Free Trade Area (since 1960), reponse to European regionalism, never actually became a free trade area. Was succeeded in 1980 by LAIA (or ALADI in Spanish): Latin American Integration Agreement.

LAN = Local Area Network [Oxford Dictionary]

Launhardt, Wilhelm

[1832-1918] Professor of Engineering in Hanover (Germany). He made important contributions to transportation economics, location theory, market area analysis and price theory. A major concept in Launhardt's analysis is the "funnel" which relates transport costs to distance (= outwardly extending wall of the funnel) around a production location with production costs (= central shaft of funnel). His major work: Mathematische Begründung der Volkswirtschaftslehre. Leipzig: B.G. Teubner, 1885 (Several others are cited in Pinto (1977)

Law of diminishing (marginal) returns

see diminishing returns, or: Healey & Ilbery (H&I), p.223 Goodall, p.128

Law of diminishing marginal utility

As a person increases her consumption of a good or service (other consumption being held constant), the marginal utility of the good or service eventually will tend to decline

Lean manufacturing / lean production

A reference to the transition from a mass production system to a system which emphasizes quality and speedy responses to changing market conditions using new technologies, organizational forms and labor contracts and achieving significant productivity increases. [Klier, Thomas. "How Lean Manufacturing Changes the Way We Understand the Manufacturing Sector", Economic Perspectives, FRBank of Chicago, May/June 1993] Combination of the efficient features of craft production (flexibility, but avoiding the high cost) and mass production (scale economies, but avoiding the rigidities) [Rifkin, End of Work, p.96]


cost reductions resulting from skill improvements based on repetitive (usually production related) experiences.

Learning objective

A learning objective is a written statement describing measurable achievements you hope can be accomplished during your class experience or any other definable learning activity.

Learning organization

"an organization that is continually expanding its capacity to create its future." A learning organization is not merely trying survive, i.e. engage in adaptive learning, but it adds "generative learning". [Senge, Fifth Discipline, p.14] "An organization where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together." (Senge, The Fifth Discipline, p.3)
"Organizations learn through individuals who learn." However, individual learning does not necessarily lead to organizational learning." [Senge, p.139]

Learning Web

An integrated system of Internet-based, hypertextually organized course or program materials, resources, links to resources and communication opportunities designed to facilitate learning environments and processes.

Leontief inverse matrix (& coefficients)

As applied to regional interindustry or inputput-output analysis, the values in this matrix (= Leontief coefficients) represent the total direct and indirect (and, possibly "induced") requirements of any industry j (typically in columns) supplied by other industries (i) within the region in order for industry j to be able to deliver $1 worth of outout to final demand.

Likert Scale

measures the extent to which a person agrees or disagrees with the question in a survey (e.g. 1=strongly disagree, 2=disagree, 3=not sure,4=agree, and 5=strongly agree).

Linear function

  • A function whose graph is a straight line
  • graph (example)
  • A "function" is a relation in which each element in the domain is matched with only one element of the range
  • If y = f(x) we call y the dependent variable and x the independent variable.
  • A function can be specified:
    1. numerically: by means of a table
    2. algebraically: by means of a formula
    3. graphically: by means of a graph
  • "Linear Transport Cost Function"

    A reference to a theoretical, linear mathematical function usually involving the variables (1) (total) transport costs and (2) distance. The function would be linear if it is suggested that the increase in transport cost is proportional to the increase in distance. Linearity may exist with or without terminal (or distance-fixed) cost. The latter would result in a curvi-linear, downward sloping average transport-cost function.
    In general, non-linear total transport costs with declining marginal distance costs would tend to make long-haul transportation relatively inexpensive and might create the incentive to select locations which reduce the number of short-haul links and take advantage of the "distance-economies" of (fewer but) long hauls. [see also: Healey & Ilbery, pp.77-80]

    Little giants

    Reference (initially by Business Week, 1993) to those medium-sized firms which are technologically and organizationally particularly innovative and forward-looking in terms of employee relations. In contrast to corporate giants, such medium-sized firms are more entrepreneurial, less bureaucratic, fewer managerial layers... See also "backbone firms", also: Hayter, pp.246-251.

    Living wage

    As defined by the "Job Gap Study" (Northwest Policy Center) a wage that allows families to meet their basic needs without resorting to public assistance and provides them some ability to deal with emergencies and plan ahead. "It is not a poverty wage". [NW Job Gap (Supplement to NW Policy Center's "The Changing Northwest")]


    Localization economies (= external economies of localization)

    agglomeration economies (benefits, cost reductions) resulting from the concentration of the same or similar activities: eg. benefits resulting from the local access to a specialized work force or the specialized reputation of a locality (to which some but maybe not all of these specialized activities contribute)

    See also "product localization".

    Location decisions and locational decision-making

    Decisions and behaviors related to locational choices.
    See: Decisions & Decision-Making [Geog 450]

    Location Quotient

    a measure of the relative significance of a phenomenon (e.g. employment in software activities) in a region (Redmond) compared with its significance in a larger ("benchmark") region (Washington State or the country as a whole) [see Goodall, p.276; Hayter, p.434] [Location Quotient Exercise]

    A high location quotient for a specific activity implies specialization and the export of the goods or services produced by the activity. The viability of the "1" (i.e. the hypothetical location quotient of 1 representing selfsufficiency) as a dividing line between regional specialization (exports) and regional deficiency (imports) depends of the "realism" of the assumptions made: homogeneous production and consumption patterns, no cross-hauling, no national exports or imports, etc.
    Literature: Hoover, Ch.8, Bendavid-Val, pp.73ff.; Klosterman, pp.128ff.

    Location rent

    Generally considered a special form of economic (land) rent. Benefits accruing to (factor) land due to the relative or comparative advantage associated with its location. Its treatment in the literature can be traced back to von Thünen (1826) and his "Isolated State" model. The linear rent function takes the form:
    R(i) = Y(p-c) - Yfm
    R = Rent per unit of land for a particular crop "i"
    Y = Yield (of crop i) per unit of land
    p = price per unit of crop i paid at the market
    c = constant average production costs per unit of crop i
    f = freight rate per unit of crop i
    m = distance in miles

    Locational triangle

    The triangle was devised and used by Wilhelm Launhardt and Alfred Weber to construct their basic locational model. This model was used to demonstrate the impact of the forces of attraction of three (in a polygon more) reference locations (originally 2 raw material locations and one market) vis-a-vis the (dependent) optimal (=least-transport-cost) location of a processing plant. Subsequently, the triangle was used by Isard and Moses to demonstrate the impact of substitution between distances and/or materials, and by Beyers and Krumme substitution between products (outputs) on optimal locations.

    Long run cost []

    Long-run supply curve

    Logical omniscience

    An assumption underlying the information facets of most micro-economic models: If an agent has knowledge of a phenomenon, he/she also has perfect knowledge of all its implications.

    Lorenz Curve (developed by Max O. Lorenz]

    A graphical method of contrasting two comparable distributions. In regional economic analysis, the Lorenz curve is used e.g. to identify the extent to which the distribution of employment among different industrial sectors in a region differs from the national benchmark distribution. The cumulative percentage distributions of employment in identical industrial categories are graphed for the two regions. The area between the curves or between the regional curve and the (national benchmark) diagonal line signify the extent of regional deviation from the national (relatively diversified) industrial structure (= extent to which the region is "specialized") [see also: Gini Coefficient and Hayter, Dynamics of Industrial Location, pp.435+437]

    Lowry Model

    a very influential and widely used urban model (developed originally in the 1960s) which combines the economic base multiplier model and the gravity model to accomplish the spatial allocation of the indirect and induced effects of (exogenous) economic stimuli (such as export activities); see (for more) Goodall, p.280

    Loyal opposition firms

    Medium-sized or small firms operating in the shadow of large corporations. These smaller firms try to be competitive in regional or product-oriented niche markets, as subcontractors or even as direct competitors without wanting or be able to challenge the larger firm in any major market. (see also Hayter, pp.196, 259).


    "Locally Unwanted Land Use" [see also BANANA & NIMBY]

    A - B - C - D - E - F - G - H - I - J - K - L - M - N - O - P - Q - R - S - T - U - V - W - X - Y - Z

    Return to Econ & Bus Geog || Glossaries
    1999 []