These patterns can be classified into four basic stages: localization, clustering, dispersal, and shifting centers. In the early stage of a new industry’s development, due to the strong competition it enjoys, firms are unhinged by neither the location specification nor the location capabilities of the sites they can settle on. They are fully capable of creating or attracting their own labor, resource inputs and inter-industrial linkages. However, this open location window cannot last forever. Certain growth centers would at some point gain competitive advantage over smaller clusters and consolidate their advantage with even more productivity. This productivity increase occurs twofold: through horizontal integration of production activities within the internal economies, or through expanding social division of labor in the external economies. Both horizontal and vertical expansion favors spatial agglomeration in an increasing roundaboutness to lower the cost of transaction. Once these clusters are established, they closed the locational window of opportunity to other areas. These lost out areas are thus out-competed, with only very large firms with existing inter-industrial linkage surviving. Meanwhile, firms from established clusters often move to new peripheries as condition for growth changes. It can be of various reasons, from capturing new markets to restructuring an industry with …show more content…
This Atlantic hurricane season, Puerto Rico was ravaged by Hurricane Maria, a Category 5 hurricane no less. While many news media focus on the catastrophic devastation it left behind and political spectacles on display, some commentators had pointed out that Puerto Rico’s economic health were already in tatters before the storm hits shore. On May 3, 2017, the government of Puerto Rico filed for bankruptcy, with a debt of $74 billion it dwarfed Detroit’s previous record of $18 billion (Walsh 2017). Fox attributed the demise of Puerto Rico to its years of failed economic policies (Fox 2017). Shortly after World War II, in a bid to industrialize Puerto Rico’s economy, the US government began Operation Bootstrap. With the expressed objective to develop Puerto Rico’s location specification and transform it into an attractive proposition of external capital investment, importation of raw materials and exportation of the finished product. The government pledged to endow Puerto Rico with a location capability that is conductive to the manufacturing: cheap labor, access to US market without import duties and the possibility to transfer profits to the mainland free from federal taxation. As a result, the manufacturing sector has shifted from labor-intensive industries to capital-intensive industries. After decades of growth, the pharmaceuticals industry had grown into a prominent force on the island, it employed