A view of the space economy of development follows from this approach. Idea creation, new business development, and economic change happen in specific places. Differences among places are particuarly important in terms of “knowledge spillovers,” meaning that some of the benefits of new ideas flow to persons or economic actors other than those who create the new knowledge. Spillovers also happen in particular places, with the result that the new growth theory has implications for the geography of economic activity. As we saw in Chapter 2, Alfred Marshall made the connection between knowledge spillovers and local economic development. Noting the agglomerations or clusters of industries in particular locations, Marshall observed that, in addition to the advantages of labor force pooling and access to specialized suppliers, a group of firms in a similar activity in a particular location, like Sheffield’s (U.K.) steel district, meant that knowledge was in the air (Marshall 1920), meaning that it was part of the local culture. Interest in Marshall’s arguments about the external economies of knowledge spillovers increased in the 1980s, following studies of small industrial districts in northern Italy. Dense clusters of small firms, typically located in a single community, competed successfully in international markets by specializing in the production of certain products, like tiles, fashion apparel, and industrial machinery. Studies of the development of these districts stressed the strong networks, social linkages, and information flows among producers (Piore and Sabel 1984). The arrival of sophisticated communications technologies, particularly the Internet, brings the perception that information can be moved instantaneously, without cost, from place to place—hence, the “death of distance” or the “end of geography.” But the counterargument to this disappearance of space is that the revolution in technology does not completely erase the importance of distance to knowledge spillovers. There are two types of knowledge: codifiable knowledge, which can be written down; and tacit knowledge, learned from experience and not easily transmittable from one individual to another (M. Polanyi 1967). Because tacit knowledge is embedded in the minds of individuals and the routines of organizations, it does not move easily from place to place. Similarly, a base of tacit knowledge is frequently a prerequisite for making use of any particular bit of codified knowledge. As well, culture and institutional factors influence knowledge lows among firms located close to one another. So, place still matters in development.