perjantai 12. kesäkuuta 2015

Typology of economic flows

One of the most challenging aspects of making sense of Flow Paradigm is to identify the relevant types of economic flows. To start with, it is worth stressing that the flows between hubs are difficult to identify and quantify (see e.g. Salisbury & Barnett, 1999, 35; Pain & Hall, 2008; Limtanakool et al., 2009). Some simple dichotomies have some relevance in this respect, such as frictionless vs. frictional flows. ‘Frictionless’ flows - what Castells (1996) has referred to as a whole as the 'space of flows' - that are generally transferable as electronic or digital flows are characteristically production factor flows (technology flows, capital flows, and information flows), whereas ‘frictional’ flows or physical flows are basically of three kinds: (i) freight and material flows; (ii) client flows, such as tourists, conference visitors and students; and (iii) productive actor flows, such as relocating firms, inflow of skilled and creative people and professionals as well as low-skilled immigrants (cf. Kostiainen, 1999). These flows make up two primary realms, both of which are expedited by technological development. Digitalisation changes symbolic, information, and monetary flows, whereas improvements in mobility and logistics do the same to material and client flows (see e.g. Williams & Balàz, 2009; see also Anttiroiko, 2014b).

To make sense of the field of flows, we may consider the fundamental economic roles of people in terms of consumption and production, the classic typology of markets (factor and product markets) and the city as an economic spatio-temporal locus that combines these elements through investment, production, distribution and consumption functions. Such a robust model of the main aspects of economic flow analysis is presented in Figure 1.

Figure 1. Illustration of city as the integrator of different types of flows. (Anttiroiko, 2015).

Some of the typologies of flows are based on contextual analysis, such as Appadurai’s (2003) five ‘flowscapes’ – people, technologies, finance, media and ideologies – as the landscape of late modernity. Yet, to achieve a scheme that is relevant for local economic development policy, such a typology should be accurate and provide a synthesised approach to flows. An example of the generic typology of flows that fulfils this criterion is proposed by Williams and Balàz (2009, 679-680). It is built on four major categories related to regional development: (1) trade, (2) labour migration, (3) capital and (4) knowledge. Similarly, in McKinsey Global Institute’s report on global flows the main flow categories analysed were goods, services, finance, people, and data (Manyika et al., 2014). In DHL Global Connectedness Index 2014 global connectedness of a country or macro-region was defined as their participation in international flows of trade, capital, information and people. These four pillars were further divided into following components (Ghemawat & Altman, 2014):

- Merchandise trade
- Services trade
- FDI stocks
- FDI flows
- Portfolio equity stocks
- Portfolio equity flows
- International Internet bandwidth
- Telephone call minutes
- Trade in printed publications
- Migrants (foreign born population)
- Tourists (departures and arrivals)
- International students

To summarise, it seems that the four most frequently included categories of flow analysis are capital, trade, information and people.

These form a good starting point for identifying different flows that have a critical role in local economic development. Yet, they show also clearly the differences in the clarity and availability of relevant data. As a rule, any flow that can be expressed in units, such as money or number of items or people, are fairly easy to define, even if the availability of data may be occasionally a problem. Yet, categories like information or knowledge are obviously difficult to operationalise not to speak of the difficulty of obtaining relevant data. The problem in the latter case concerns both ambiguity and uncertainty (Daft & Lengel, 1986). This explains the use of surrogate data, which leads sometimes obvious methodological problems. To illustrate the complexity of this setting, let us combine various flows in a rudimentary model, presented in Figure 2.

Figure 2. Illustration of economic flow analysis. (Adopted from Anttiroiko, 2014a).

This kind of analysis helps to make sense of the nature of local economy in an increasingly 'fluid' economy. Increasing share of our wealth is created at the hubs of flows, which should be taken into account in local economic development policy. It urges us to learn more about how to attract flows from the space of frictionless and frictional flows, how to process such flows within a local 'dissipative structure' (i.e. open city), and how to create products and services that meet the demand in global markets.


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Anttiroiko, A.-V. (2014b). The Political Economy of City Branding. London and New York: Routledge.

Anttiroiko, A.-V. (2015). New Urban Management: Attracting Value Flows to Branded Hubs. Basingstoke: Palgrave Macmillan.

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Limtanakool, N. & Schwanen, T. & Dijst, M. (2009). Developments in the Dutch Urban System on the Basis of Flows. Regional Studies, 43(2), 179-196.

Manyika, J., Bughin, J., Lund, S., Nottebohm, O., Poulter, D., Jauch, S. & Ramaswamy, S. (2014). Global flows in a digital age: How trade, finance, people, and data connect the world economy. April 2014. McKinsey Global Institute. Retrieved February 20, 2015, from

Pain, K. & Hall, P. (2008). Informational Quantity versus Informational Quality: The Perils of Navigating the Space of Flows. Regional Studies, 42(8), 1065-1077.

Salisbury, J.G.T. & Barnett, G.A. (1999). The World System of International Monetary Flows: A Network Analysis. The Information Society, 15, 31-49.

Williams, A.M. & Baláz, V. (2009). Low-Cost Carriers, Economies of Flows and Regional Externalities. Regional Studies, 43(5), 677-691.

City of Tampere, Finland

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