Beggar-thy-neighbor economic development: A note on the effect of geographic interdependencies in rural retail markets

Abstract

Mushinski and Weiler (2002) updated a vein of rural economic geography literature by estimating empirically the importance for retail development of geographic interdependencies between places and their neighboring areas. This note extends interpretation of their empirical results by considering the influence of neighboring areas and establishments on retail thresholds in a place, and the policy and economic development implications of their results. This note discusses the nature of spatial competition and considers how retail establishments might act as regional base industries, absorbing shopping flows from outlying residents in a fashion similar to traditional export industries. Moreover, it signals that understanding geographic interdependencies is important for economic development planning, and suggests there may be merit in more regional coordination of retail firm recruitment in relatively small and/or isolated rural areas.