This paper from Communities and Local Government identifies the economic reasons why place matters.

Drivers of productivity come together in places. Places offer a combination of assets which can boost the productivity of firms and attract the skilled workers they need. Place is becoming increasingly important in a globalising world of mobile investment and people.

Place can and does impact on economic and social outcomes. Market failures may impact differently in different places and government policies can have unintended spatial impacts. The way people interact once concentrated within specific places can undermine life chances and the way place specific factors impact on individuals can impact on quality of life.

There are limits to peoples’ ability to move and commute.The financial and social costs of mobility can act as a barrier to mobility. Where there are market failures that limit people’s mobility, there is an efficiency rationale for policies to increase mobility.

Place enables targeting of concentrated groups. As vulnerable groups have tended to be concentrated in particular places, place can offer a way of targeting and tailoring services to these groups. There is also a need to co-ordinate the way in which policies come together in particular places.

The paper is available from DCLG. http://www.communities.gov.uk/documents/citiesandregions/pdf/whyplacematters