My suggestion that the economic factors which mainstream theory identifies as the determinants of investment may have little bearing on decisions to invest, presents an obvious challenge to conventional approaches to decision-making and, as I now propose to show, to the economic theory of location outlined in Chapter 8. Acknowledging that location problems will arise when the managers of manufacturing businesses are planning investments, we are in a position to answer the question: what does it mean to ‘choose a location’? After presenting a general critique of the theory of location and a revisionist view of what location decisions are about, I will consider what choosing a location means from the point of view of managers of both large and small firms. Regarding the role of economic factors in location and investment decisions, the middle section of the chapter deals with the basis of the contradiction between the arguments of orthodox theory and those that flow from a hermeneutical approach. In the third section I use the earlier arguments to illustrate the faulty logic behind industrial relocation policies, with the object of adducing why these policies failed to influence the geographic pattern of industrial location. I will begin with a brief recapitulation of the story told by traditional location theory about how firms’ locations, are chosen. This serves both as a reminder of the content of the theory and as a foil for the revisionist view.
What is a location or an investment opportunity? A modernist methodology represents knowledge of the world, and therefore the scheme of things, as a set of elements. The subject matters of the different social sciences are sets of separate things—economic, sociological, psychological—that are observed to exist out there in the world. Locations are some of the economic things that exist out there and are distinguishable as to their qualities. Apparently both the theorist and the agent can—or should be able to—tell a good location from a bad one. The same is true of investment opportunities and firms. Each of these things exists separately out there in the world, as do costs, revenues, and profits.