Economic Geography Glossary



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"The Manufacturing sector comprises establishments engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products. The assembling of component parts of manufactured products is considered manufacturing, except in cases where the activity is appropriately classified in Sector 23, Construction." (= official U.S. Census definition)


Export processing zones in Mexico along the U.S. border; associated with poor working, living and environmental conditions.

Marginal analysis

the analytical approach (in microeconomics) which stresses the importance of the margins of an activity: what happens to the costs, benefits (utility, profits) or combination of substitutable facets or activities as incremental changes are made to an independent variable e.g. in search of an equilibrium (a maximum, minimum or optimum).

Marginal cost

the addition to total cost resulting from the addition of the last unit of output (to the total quantity of output) || More! || graph!

Marginal Principle

To maximize net benefits, the stratigic or action variable should be increased until MB = MC, i.e. marginal benefits equal marginal costs [Marginal Principle]

Marginal rate of substitution

generally referring to either
  1. the rate at which the consumer is willing to substitute one good for another (without loss or gain of satisfaction, see also "indifference curve"); or
  2. the rate at which factor inputs can be exchanged in a production process without a change in the production (output) level. (see also "isoquant")

Market forces

refer to the stimuli and influences affecting the supply and demand of goods and services and thereby determine the allocation of resources and the relative prices of goods, services, and assets in a market economy.



"Analysis, planning, implementation, and control of carefully formulated programs designed to bring about voluntary exchanges of values with target markets for the purpose of achieving organizational objectives." (Philip Kotler)
"A management process directed at satisfying customer needs and wants through an exchange process." (Smith, Bucklin & Associates)

Markov Equation; Markov Process Markov Diagrams and Transition Matrices

Alfred Marshall [1842-1924] More Marshall [International Encyclopedia of the Social Sciences]

"Material Index" (in Alfred Weber's Theory of Industrial Location)

Ratio between the sum of the weights of the localized materials and the weight of the final product. A material index which is larger than one signifies a "material orientation" of the location of production; see also "weight-loss ratio" [Goodall, p.294; Hayter, p.114]

Matrix multiplications

The multiplication of matrices or vectors is "commutative", i.e. the order of the multiplicand and the multiplier cannot be reversed as is the case in regular multiplications. The process of multiplication of matrices proceeds by multiplying (more exactly: "post-multiplying") horizontal vectors by vertical vectors. The sum of the products of this multiplication of corresponding numbers of the respective vectors results in a number which is placed in the position of the resulting matrix (or vector) where the two vectors would intersect (overlap).


horizontal vector x vertical vector= a number
vertical vector x horizontal vector = matrix
matrix x vertical vector = vertical vector
horizontal vector x matrix = horizontal vector
matrix A x matrix B = matrix C
matrix B x matrix A = matrix D

See also:
Matrix Multiplication [Wicks, Finite Mathematics]

Maximin / Minimax strategy

See Uncertainty or Game Theory

Maximization of profits || graph

Mental Models

One of Senge's five learning disciplines for the learning organization: "reflecting upon, and continually clarifying, and improving our internal pictures of the world, and seeing how they shape our actions and decisions." (Senge et al., Fieldbook, p.6)


The Common Market of the South (MERCOSUR) is an ambitious economic integration project involving Argentina, Brazil, Paraguay and Uruguay (=MERCOSUR 4). Since 1997: also Bolivia and Chile (=MERCOSUR 6)..
History: In the 1970s, Uruguay strengthened its commercial relationship with Brazil by way of the Commercial Expansion Protocol (PEC), and with Argentina by way of the Argentine-Uruguayan Economic Cooperation Agreement (CAUCE).

Between 1984 and 1989 Argentina and Brazil signed twenty-four bilateral protocols with the purpose of improving trade.

Integration efforts date back to 1985 when the Foz de Iguazz Declaration was signed creating the High Level Bilateral Commission for the integration of Argentina and Brazil.

Around the end of 1990, Argentina and Brazil signed, and registered with , an Agreement on Economic Cooperation (Acuerdo de Complementacisn Econsmica) that systematized and deepened pre-existing bilateral commercial agreements. Around mid-1990, representatives of both countries met with authorities of Uruguay and Paraguay. It was then that these two countries expressed their wish to participate in the bilateral process already underway.

On March 26, 1991 the Treaty of Asuncisn was signed by the four countries. This Treaty should not be seen as the final creation treaty of the Common Market of the South, but as an instrument, of international character, intended to make the implementation of the Common Market possible.

The Treaty of Asuncisn is an economic integration agreement, which remains open to other ALADI members.

By virtue of what is established in Article 10 of Annex I of the Treaty of Asuncisn, on November 29, 1991, the four countries signed an Agreement of Economic Cooperation under the legal framework of ALADI.


Metropolitan (Statistical) Areas (U.S.) [Definitions of MSA, PMSA & CMSA]

concerned with the "study of what goes on inside the black box" (i.e. the artifact of classical micro-economic theory of the firm). See Leibenstein, Journ. of Econ.Lit. June 1979, p.478.

Subprojects into which a project is broken up (to be able to monitor development progress and adhere to deadlines.
milestone stabilizations: while there may be some freedom to make changes to the design of an evolving product, there is a need to adhere to intermittent milestone deadlines. [see Cusumano & Selby, p.415)


Used by economic geographers in a variety of contexts to refer to the particular local or regional business or entrepreneurial climate or innovate atmosphere. "The milieu is essentially a context for development, which empowers and guides innovative agents to be able to innovate and coordinate with other innovative agents. The milieu is something like a territorial version of what (...) Gronnavetter labelled the 'embeddedness' of social and economic processes." [M.Storper "The Resurgence of Regional Economies, Ten Years Later" in: European Urban and Regional Studies, 1995]

Mobile and immobile factors of production ("factor mobility")

Strictly speaking factor mobility does not only refer to spatial mobility, but mobility between different uses or occupations of factors of production (Land, labor, Capital etc.). As such "land" may be mobile in the sense that its use may change; labor may be "mobile" (or immobile) in the sense that it can (or cannot) move between occupations. Our interest as geographers would typically focus on the often implied spatial nature of such mobility; of course, you are right if you suggest that land is not mobile spatially. See Goodall, p.166


Explanatory & Analytical Models


A majority-owned foreign affiliate (e.g. of a U.S. multinational firm)


A market structure characterized by the presence of only one supplier (a "monopolist") who exerts (or can potentially exert) power over the market and can control the setting of prices or the parameters for other actions.

Monopoly power

"... is the power to control prices or exclude competition." [See United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956)]

[See also: United States of America v. Microsoft Corporation, C.A. 98-1232 State of New York, ex rel. Eliot Spitzer, et al., v. Microsoft Corporation, C.A. 98-1233 | Conclusions of Law and Order April 3, 2000]


A market structure characterized by the presence of only one actor who expresses a demand for a product or service ("a monopoly on the demand sizde"). "Monopsony power" is equivalent to "monopoly power".

.. occurs when the actions of agents cannot be perfectly observed or contracted for directly. In a narrow sense, moral hazard has referred to possible effects which insurance contracts may have on the behavior of the insured persons. More general, economic terminology refers to moral hazard to imply the lack of observability of contingencies and the consequence of hidden, unverifiable action within contractual relationships.
[In the finance-, agency and
transaction cost literature, often referred to as part of (or overlapping with) "post-contractual opportunism", another part being "holdup", see, e.g., Alchian & Woodward in: JEL March 88, p.68]
moral hazard in insurenace context



"Musts" and "Wants"

A conceptual distinction between (e.g. location) requirements which cannot be compromised or substituted (musts) and factors which are open to bargaining or substitution (wants). In Kepner-Tregoe's The Rational Manager, the "wants" are ranked and weighted before entering the development of alternative action paths. (See also: Hayter, Dynamics of Industrial Location, p.153)

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