Location theory
While others should get some credit for earlier work (e.g., Richard Cantillon, Etienne Bonnot de Condillac, David Hume, Sir James D. Steuart, and David Ricardo), it was not until the publication of Johann Heinrich von Thünen's first volume of Der Isolierte Staat in 1826 that location theory can be said to have really gotten underway.
[1][2] Indeed, the prominent regional scientist Walter Isard has called von Thünen "the father of location theorists.
"[3] In Der Isolierte Staat, von Thünen notes that the costs of transporting goods consumes some of Ricardo's economic rent.
He notes that because these transportation costs and, of course, economic rents, vary across goods, different land uses and use intensities will result with increased distance from the marketplace.
However, the discussion was criticized since Johann Heinrich von Thünen oversimplified the problem with his assumptions of, for example, isolated states or single cities.
An especially notable contribution was made by Alfred Weber, who published Über den Standort der Industrien in 1909.
[5] Working from a model akin to a physical frame adapted from some ideas by Pierre Varignon (a Varignon frame), Weber applies freight rates of resources and finished goods, along with the finished good's production function, to develop an algorithm that identifies the optimal location for manufacturing plant.
This suggests that Launhardt was ahead of his time and not readily understood by many of his contemporaries, for instance he showed that railways cannot be fully developed by private capital alone.
Weber was most certainly influenced by others, most notably Wilhelm Roscher and Albert Schäffle, who seem likely to have read Launhardt's work.
The Swedish economist Tord Palander completed a 1935 PhD, Contributions to Location Theory, which considered the market area division of two competing firms.
[7] The American economist William Henry Dean, Jr. completed his Harvard PhD in 1938, The theory of the geographic location of economic activities.
[8][9] Literature on site selection theory used to look until recent years at the various issues only from a national point of view.
In his book “The Location of Economic Activity”, Hoover compiled crucial criteria of industrial site selection as early as 1948 that still apply today.
Even though since the 1990s it has no longer been only major corporations that expand abroad, and any foreign direct investment results in a site selection, there are still very few well-researched studies on this topic.
Many current and more recent publications either review site decisions made by individual corporations or analyze them as reference cases.
Other publications focus on a cost-specific approach largely driven by site relocations in the context of cost structure optimization within major corporations.
Theodor Sabathil's 1969 dissertation is considered one of the early in-depth studies in the area of international site selection.
