Application Districts: An Emerging Spatial Form in the Computer Software Industry

This paper presents a stylized theory of the geography of the computer software industry. It is timely because countries around the world, and at different stages of development, have targeted that industry for attention because of its growth and stability, and the quality of the jobs it provides. I demonstrate that the software industry is decentralizing away from the centers that were first established in the 1970s, but there is no process of de-concentration underway. Old clusters are losing their share of national employment, but they are being replaced by new clusters, and not by a generalized dispersal of the industry. I explain this pattern in terms of a spatial division of labor emerging in the software industry. This division is not based on a low-skill/high-skill labor dichotomy, as in high tech manufacturing, but on a distinction within high-skilled labor between those working on general-purpose technology and those developing applications for specific uses. I call the new clusters where specialized applications are developed application districts.