Economic Geography of the movie industry

Hollywood signFor the following year, I’ve decided to pick among other modules the module of Economic Geography. After I’ve already studied a few, I feel more and more passionate to learn more about this field of study and I find myself already trying to identify key concepts of this area of study and correlate them to my everyday life.

Economic Geography as it is indicated in the subject guide, the field of study that tries to explain and investigate economic activities through a geographic approach. However, Economic Geography is different to Geographical Economics. The latter is mostly concerned with economic cost and puts aside other significant issues as the location and the specific characteristics of different regions.

In Economic Geography (or economic-geographical approach) it is crucial to understand the concept of globalization and most importantly the correlations between different regions, within a country or within different countries altogether, that globalization is causing. In this field of study, there are different theoretical concepts which are explained differently (the neo-classical approach, the Marxist approach, and the institutional approach). I am not going to analyze them in here, in respect of time and space. However, I will try to put the movie industry into that world. Indeed, every commodity can fit into this world. By commodity, we mean everything that has a price tag and is available to purchase (even war is commodified by the creation of private army). Economic Geography is also very interested in the cultural effects that a corporation, service or even a firm has on a region it is located in, or the effect that the culture of the region has on the established firm (especially in cases of foreign firms).

The movie industry – apart from a political institution as I have presented in a previous article of mine – is a very highly profitable industry. In Economic Geography, we are shown that an industry, in capitalism, can gain profits either by the labour value an employee is producing and adding to a product or by relocating to areas with prospects of innovation and labour efficient supply in lawful wages. As we can easily see, the movie industry is neither exploiting actors (we have seen that actors are very highly paid, and we can hardly categorise them as an exploited workforce) nor production firms are relocated to less developed areas. Unlikely that Hollywood, the kingdom of the movie industry, is being a place that agglomeration process takes place. “Agglomeration is when many industries are concentrated in specific regions”. The reason is that, in there, already exists a pool of talented young actors, dance and acting schools, distribution companies, and governmental/union building that improve the start of a movie production. However, films are not only filmed in L.A but also, in the different parts of the country, or in fact, the world. So, we have highly expensive movies with highly paid actors and directors and location sets. How, do film industry still gains profits?

Earth StructureWell, in order for a movie to be filmed, we need to relocate to a different place, state or country. In that case, local actors engage in the production of the film. For example, a Hollywood movie, filmed in the UK requires the relocation of actors, director and cast in the UK. In there, hotels, makeup artists, maybe a fee payment to the London local authorities for closing a street for filming are paid. In that case, the local economy is also contributing to the production of a foreign commodity, in our case the film per se.

Also, we can see products of multiple origins being advertised in a movie. For example, the brand of a Mexican beer was very profoundly shown in the Fast and Furious movies, boosting sales. So, money paid by this beer to the production firm is helpful for the production chain of the firm and vice-versa the advertisement of the beer is helpful in the further production of the same beer.

The distribution companies have very important role in the movie industry. The production company will sell the movie to them and after that, the distribution companies (internationally!) will sell them to the cinemas. Cinema is an industry and the process of filmmaking is indeed a production chain process starting from the scenario, to cast, filming and distributing.

Thus, we can very clearly see, how Economic Geography can pretty much fit in every aspect of our daily life. We can buy our beer in the cinema that is originated from Mexico, to see an American movie and then have dinner at a Chinese restaurant with products imported from China.

To sum up, it is now clear, I hope, that nowadays the globalization in terms of global cooperation and trade has taken the enormous meaning to common people like us and that the origin of even “homemade” products may indeed not be that homemade but internationally made.

Eleni is studying the BSc Economics and Politics by distance learning in Greece.

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