The Economics of Space: An introduction to a new way of thinking economics
January 25, 2015
I. Introduction to Space in Economics
In traditional economics, there are 5 primary factors of production or inputs, namely, labour, capital, land, technology, and entrepreneurship. I expect disagreement from some people when making such a statement. There are no clearly defined "primary" factors of productions. Some say there are 3, some say there are 4, some say there are 6, and I say 5. However, it strikes me that out of all the factors listed, something is missing. Something that matters and something that deserves more attention. So, today, I present to you, my friends, "SPACE".
Space you say? Yes, space. Space as in the medium that we live in, not the "space space" as in "outer space". Space in economics should be defined as an extension of the term "Land". It is a term that incorporates 3 dimensions. Land has width and length, but what make "Space" special is the new dimension, "height" or "depth". So, length, width, height/depth, these 3 dimensions constitute Space.
This is by far the least discussed topic, and I have not come across an article, scholarly or not, that talks about space in economics. (Maybe it is just me? who knows?)
Why should we care? Because this third dimension can be an indicator of development, and it explains the high density of population, the increase in life-threatening risk during natural disaster, the greater demand for energy, etc. It also helps reduce the burden caused by the scarcity of land. By now, you are probably thinking of sky-high building like the twin towers of Malaysia or the Marina Bay Sands of Singapore as most relevant to the topic of the economics of space. However, while the presence of such buildings is about the employment of space, the absence of them is also as equally important in creating the right balance in the use of space in economics. For example? Think about open space in your local community (like a park) where people can play Frisbee and are not suffocated by skyless top and the lack of air and sunlight.
Space is also a term that transcends the stationary state of land. When people talk about the use of land, they are mostly talking about constructing things on it. The use of space, however, is more ubiquitous, mobile and dynamic. Land is used up when there is a building or a farm on it, for example. However, you wouldn't think of driving a car as using up a piece of land, would you? It probably makes more sense to say that driving a car uses up space (both when it's parked and when it moves). Of course, you can't drive on water, but you know what I mean. Space is a broader concept that covers a wider range of things/activities. People who can use space efficiently, can use land efficiently, but the reverse is not necessarily true.
For this reason, I think it would be quite fascinating to think of "space" in economics, instead of the conventional variable "land".
This is just an introductory to the lengthy discussion we are going to have in our very next part of this article, The Economics of Space. What is the next part going to be about? I am not sure. I will think of something good. For now, I hope the introduction can at least trigger your curiosity and interest in the topic.