5. Economy AND proximity

5. Economy AND proximity

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Globalisation is a fabric of interactions that we can understand from localized sites” (Marc Abélès in Anthropology of globalisation, 2008)

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The urban revolution, the deindustrialization of our developed economies, the impact of digital revolution on our service industry, are repositioning proximity as a crucial issue while protectionism is rising up.

Spatial proximity has always been an important element for economic dynamics and growth.

How to grasp this notion of proximity?

One could say that proximity is both :

  • a specific area to elaborate and implement local economic development policies (for instance, urban or regional),
  • a cluster of economic stakeholders which decide to coordinate their activities at local level (production, business and export development, communication, business intelligence, innovation, human resources, training, bulk purchases)
  • a mode to organise economy around a direct relationship between providers and their final clients,
  • a development strategy based on “glocalization” (products or services customised according to the local or regional specificities),
  • a vector to create new services, for instance using geolocation tools,
  • an economic reality (a third of B2B local trade, more than 3/4 of public procurement local trade and 70% of active labour force),

Indeed, the agglomeration of many stakeholders involved in business dynamics means efficiency, mainly in the field of innovation, in all its forms.

“The productivity of knowledge workers rises exponentially when they are in close proximity. Their interaction stimulates creativity and innovation – new and different ideas – which in turn drives productivity in the knowledge economy.” (Deloitte, Australia).

Based on geography, proximity organises economy throughout direct and fast relationships between stakeholders. But it’s not enough to guarantee efficiency, especially in a moving technological and global environment.

Proximity means to set up mechanisms of coordination, funded on sharing and different kind of business relationship networks, including distant ones. As well, it needs a kind of institutional proximity that refers to identity links.

Even economic stakeholders want somewhere to belong, where their individual need for community can be nourished and nurtured, and where they feel controlling over the things that matter to them. It’s for that reason so many success entrepreneurs decided to stay in their “land” and support it in different ways.

Embracing this belonging shape behaviours, a kind of economic community whose main interest is to develop business inner and outer city.

Numerous surveys show that the key success factor for a territory is at the crossroad between these three types of proximity.

“Reconsidering the purpose of place – how place drives prosperity – can help to unlock the potential of place.vWe identify four dynamic forces that interact to catalyse ourishing in place:

  • People – people are the basic ingredient of prosperity in place and need to be present in appropriate numbers and with appropriate skills, experience and outlook
  • Community – people gathered together need to feel they are more than just a crowd, that they belong to a community with a shared sense of identity, purpose and values
  • Technology – technology can help people live more comfortably in close proximity, can aid a sense of connectedness in crowds and can partially substitute for physical proximity
  • Governance – good governance strikes a balance between individual and collective decision making so that government occurs with the consent of the governed.Acting in concert, these dynamic forces can unlock the potential of place and spark a virtuous circle of prosperity.” (Deloitte – The purpose of place reconsidered)”

Mastering proximity lies on smart governance which can orchestrate the local economic development. And, it’s not always easy when plenty of stakeholders are involved in the economic development processes.

The success of cluster or competitiveness hub (see the example of France with the “Pôles de compétitivité” ou “pôles d’excellence rurale”) might be explained by the intense production of social and human relationship.

But, our relationship with proximity is blurred today :
  • by changing our lifestyles and ways of transportation,
  • by the explosion of Internet and the fantastic growing of professional social networks.

Because of Internet and the tools provided by digital industry, our perception of proximity seems to have changed. Henceforth, social media allow us to build new proximities of thought, interest and sharing. But a close observation also confirms our natural trend to recreate spatial proximities.

Besides, the Internet industry leaders are “glocalizing” their strategy (see Facebook with Market Place or Alibaba with food delivering urban service). And other start-up are positioning proximity at the core of their business model and value proposal (nextdoor.com, instacart.com, taskrabbit.com, …) or use geolocation to provide new kind of services, especially via smartphones.

Finally, technology can substitute for physical proximity, but never perfectly.

Getting places to flourish rather than languish is a collaborative effort. It needs people, communities, businesses and governments to work together – like an ecosystem. (Deloitte, op. cit.)

Networking, collaboration and sharing are merging as powerful disruptors of traditional ways of doing business, even at local level.

Manavao – Toulouse, 7 novembre 2016

6. New ways of doing business at local level 

P.S : we want to thank Deloitte Australia’s team for its report on this topic called : “The purpose of place : Reconsidered. Building the lucky country #5 (2015) whose we get inspired to shape our thought. 

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