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ring packages of incentives. More and more, such incentives cover a wider range than the location benefits linked directly to the production process. For a prime example, we can look across the Atlantic, but Europe is not far behind in catching on to the trend. Economic geography treats locations as production environments, prising all the external conditions that affect the functioning of a firm. Some of these are closely tied to the production process itself, offering the inputs that determine profitability. In the new global service economy, such inputs are widely available: human capital can be created locally, while other inputs can be moved cheaply to any site. Most cities offer a wide range of housing with respect to size, price, type, and amenities. Housing is more than shelter. It also provides the occupants with an opportunity to cultivate a desired lifestyle. Its location determines opportunities for work and access to services and facilities. Many people are sensitive to the physical and social characteristics of a residential environment when they choose a place to live. The neighborhood influences the quality of life and the social status of the residents. Neighborhoods are also important as frameworks for social interaction。 major public investments are needed to create, maintain, and service residential areas. Because of the amount of investment – both direct and indirect – residential construction used to be a preferred area of intervention for Keynesian economists in their efforts to control the economy. In a market constellation, the price of housing is largely determined by its quality. Accordingly, affluent people tend to concentrate in the best residential areas. Good housing attracts highine decisionmakers and professionals. And it is precisely these groups that now oil the wheels of the local economy. When they move to particular places, attracted by the homes and highamenity residential environments, businesses follow close behind. As human capital is a major resource for modern business, this turns the residential environment into a relevant economic location factor. Specifically, it gives more weight to the residential preferences of those whose opinion matters when firms move. As skilled workers and professionals seek to minimize their muting time, firms located nearby have an advantage in attracting and retaining a qualified workforce. Where housing petes with other policy fields for limited resources, housing officials are often called upon to demonstrate the benefits of investment in housing. At present, local authorities seem to be preoccupied with the task of revitalizing and restructuring the local economy. They have less interest in the provision of public goods and investments that serve consumpti