Econ Geog

1
Econ Geog

• Economic Geography study of flow of goods and
  services across space
• Look at ways in which people provide for
  themselves across the globe
• Geographic patterns of inequality at different
  scales
• Globalization is a MAJOR thread throughout econ
  geog.free trade, intnl trade, international econ
  alliances, etc.

2
Industrial Revolution

• Industry manufacturing goods in a factory
• Industrial Revolution
• GB late 1700s diffused to W. Eur and U.S.
• Technology and mechanization led to unprecedented
  increase in production
• Iron and textiles 1st to industrialize

3
Where is Industry Distributed?

• For 200 yrs industry was limited to
• N. Europe GB, France, Russia, Germany
• E. Asia Japan
• N. America U.S.
• These countries dominated ind production/innovatio
  n until mid 20th C

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Where is Industry Distributed

• In recent yrs shift in geography of
  industrialization
• Major corporations have moved factories to LDCs
  (cheap labor)
• Older industrial countries have shifted to
  service based economies research and
  development, marketing, tourism, sales,
  telecommunications, etc.)
• Service jobs are safer, more pay, less pollution,
  and overall higher satisfaction

5
Where is Industry Distributed?

• BUT service jobs require more education/training
  than factory work
• i.e. difficult transition factory lose jobs as
  factories outsource, must go back to school or
  switch careers in mid life
• Mill towns/factory towns ghost towns or
  reinvent themselves with new econ niche

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Where is Industry Distributed?

• Deindustrialization when industrial factories
  leave an area and take that regions econ base
  with them
• Ex Rust Belt Great Lakes region was home to
  all auto manufacturing but GM and other companies
  have relocated debilitating for the economy of
  the region and the workers there
• Backwash Effect when one regions econ gain is
  anothers loss

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The Rust Belt
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Where are industries distributed and why there?

• All industries seek to maximize profits by
  minimizing production costs
• Critical question Where is the most profitable
  place to locate a factory??
• Alfred Weber Least Cost Theory firms look at
  the following to decide where to locate..

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Least Cost Theory

• 1.) Transportation Costs must move raw
  materials (inputs) to plant and finished product
  to market
• Market Orientation Firms if finished product
  weighs more or is perishable, then locate the
  plant closer to the market than the raw
  materials.4 types of market orientation

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Least Cost Theory Market Oriented Firms

• A.) Bulk Gaining Industry product gains volume
  or weight during production (TV, refrigerator,
  soft drinks)
• B.) Single Market Manufacturer product sold
  mainly in one location
• C. Perishibility fresh fruits, milk, bread,
  newspaper must be near market
• D.Ubiquitious Industry industry distr is in
  direct proportion to the distr of the population
  (i.e. near large metro areas with people labor
  and market) i.e. hospitals, big business

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Least Cost Theory Material/Resource Orientation

• Material/Resource Orientation raw materials
  (inputs) weigh more (or are perishable) than the
  finished product so locate plant closer to raw
  materials than to market. These are called Bulk
  Reducing Industries final product weighs less
  than the inputs
• (i.e. paper mills, steel, copper most mining,
  tomato cannery, etc.)

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Least Cost Theory Other transportation variables

• Footloose firms industries w/ products that are
  lightweight and valuable and can locate anywhere
  (i.e. diamond of computer chips)
• Spatially fixed cost cost of product does not
  change no matter where factory is located
• Spatially Variable cost price of product varies
  depending on where factory is located and where
  product is produced

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Least Cost Theory - Transportation

• Longer distance is cheaper per mile
• Ships best for longest distances
• Air most expensive but fastest
• Break of Bulk Points cost of transport for some
  inputs is cheaper than another type of transport
  so you use multiple methods of transport. BBP
  transfer point (usually a seaport or airport)

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Least Cost Theory - AGGLOMERATION

• Agglomeration when many companies of the same
  industry cluster together in a small area to draw
  from the same set of collective resources (i.e.
  computer companies in Silicon Valley, motion
  picture industry in LA, fashion in Paris)

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Least Cost Theory - AGGLOMERATION

• Multiplier Effect as more firms from same
  industry locate in an area, more resources become
  available and cements that regions specialty
  even more (ex CA became known for high tech
  firms, it attracted more computer experts, which
  attracted more high tech firms, etc.)

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Least Cost Theory - AGGLOMERATION

• Ancillary Activities agglomeration results in
  ancillary activities i.e. the supporting cast.
  Economic activities that surround/support the
  primary industry of the region. These can
  include a range of activities shipping, food
  services, etc.

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Least Cost Theory - AGGLOMERATION

• Agglomeration leads to regionalization unique
  specialization from region to region
• Deglomeration opposite of agglomeration when
  a firm leaves an agglomerated region to start up
  in a new place

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Least Cost Theory AgglomerationRegional
Specialization Silicon valley
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Least Cost Theory LABOR

• Labor intensive industry one where the cost of
  labor is a high percentage of production (ex
  textiles)
• Outsourcing move production abroad for cheap
  labor. Youre willing to pay more for
  transportation b/c of cheap labor. Outsourcing
  usually goes to semi-periphery cheap labor,
  decent infrastructure, no environmental regs

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Least Cost Theory LABOR

• Textiles has followed cheap labor originally in
  NE b/c of cheap immigrant labor, late 1800s/early
  1900s moved to SE to avoid unions, post WW II
  moved overseas to LDCs in Asia (50s in Hong Kong
  and Japan, 70s in China and Korea, today in
  Indonesia, Bangladesh

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Least Cost Theory Other things a firm may
consider

• Land
• Factories today usually rural or suburban
• Need large tracts of land (1 story more
  efficient)
• Amenities climate, cost of living, re
  opportunities (i.e. Sun Belt)
• Communities engage in bidding wars zoning, tax
  breaks, environmental conditions, etc. to offer
  most attractive package (i.e. Dell in NC)

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Least Cost Theory Other things a firm may
consider.

• Capital
• Money available to expand or open new factories
• May go to area where banks are willing to make
  high risk loans (i.e. Silicon Valley)

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Factory Work

• Fordism mass production and assembly lines
  (each worker assigned one specific task to
  perform repeatedly). Started by Ford in early
  20th C

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Factory Work

• Post-Fordism more flexible work in teams and
  often master a wide array of tasks

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Webers factors to consider site and situation
factors

• Site Factors land, labor, capital
• Situation Factors transportation costs i.e.
  relative location to inputs/raw materials and to
  market

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Summary of Location Principles

• Access to materials for production
• Adequate supply of cheap labor
• Proximity to shipping and market
• Decrease production costs (cheap land, cheap
  labor, and favorable govnt policies)
• Natural factors, climate
• Firms history and personal inclinations

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Industrial Problems

• Over production global capacity to produce
  manufactured goods has increased more rapidly
  than demand
• Consumption leveled off since 1970s b/c
• No population increase
• Wages have not risen as fast as prices
• Market Saturation everyone already has one (TV,
  cars, microwaves, etc.)
• Higher quality goods last longer

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Industrial Problems in MDCs

• Must protect markets from new competitors
• Trading Blocs industrial competition in MDCs is
  betwn blocs, not countries
• NAFTA, EU, ASEAN
• Cooperation within bloc, competition betwn
• Seek complementary trade within bloc

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Industrial Problems in MDCs

• Transnational Corporations locate aspects of
  production in various countries. i.e. take
  advantage or regional diff in wages, tax laws,
  labor laws, natural resources, etc.
• Ex Nike HQ in Oregon, but factories span the
  globe

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Industrial Problems in MDCs

• Most transnational corp are conglomerate
  corporations firms that consist of many smaller
  firms that serve different functions (ex GM
  many smaller firms that operate all over the
  world, and produce a wide variety of goods and
  services

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Industrial Problems in LDCs

• Distance from markets far from wealthy
  consumers in MDCs
• Poor infrastructure (roads, technology,
  communication, etc.)
• Cheap labor best drawing card for industry.
  Intnl division of labor low paid, low skilled
  work done in LDCs, high skilled work in MDCs

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Industrial Problems in LDCs

• Export Processing Zones zones officially
  designated for manufacturing have accessible
  facilities, lax environmental regs, and tax
  exemptions, cheap labor. Ex Maquiladoras along
  US/MX border. Pros jobs for MX, cheap labor
  for US. Cons often plagues w/ high crime,
  govnt corruption, pollution

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Industry today..

• Outsourcing
• Export processing zones - maquiladoras
• Tourism
• All of these exploit LDCs/periphery.
  Neocolonialism econ and political controls are
  exercised by developed states over the economies
  and societies of independent countries in the
  developing world

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DEVELOPMENT

• Development process of improving material
  conditions of people w/ diffusion of knowledge
  and technology continuous process of trying to
  improve health, living conditions, and prosperity
• Wallersteins World Systems Model
• N/S Divide (see handout)

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Development Varies Across Space

• Dev can be broken into econ, social, or
  demographic factors
• Human Development Index (HDI) created by UN to
  look at all 3
• Life exp, educ (literacy rate and amnt of ed),
  income (GDP)
• Highest possible 1.0 (100)
• Norway highest - .944
• U.S. never first, but always high
• Lowest - sub Sahara Africa (Sierra Leone .275)

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Economic Factors of Development

• GNP and GDP (omits investments abroad)
• Per capita (divide by population)
• Annual per capita GDP more than 20,000 in MDCs
  and _at_ 1,000 in LDCs this gap is widening

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Economic Factors of Development

• Types of jobs.
• Primary activities w/ land fishing, farming
• Secondary manufacturing, industry
• Tertiary service
• Quaternary research and development
  generating/exchanging knowledge (teaching,
  banking, law, accounting, etc.)
• Quinary high tech scientific research

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Types of Jobs/Econ Activities
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Economic Factors of Development

• All countries have all types of econ activities.
  The higher up you go, the more educ required and
  the better pay. MDCs mostly in tertiary or
  higher. LDCs mostly in primary. Semi-periphery
  mostly in secondary.
• Human Res and productivity increase in MDCs
  (workers produce more w/ less effort).higher
  educ, skilled, machinery and technology

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Economic Factors of Development

• Energy Consumption per capita correlates w/
  technology and dev.
• MDCs 10X more per capita than LDCs
• MDCs consume sign more energy than they produce
• MDCs use coal, natural gas, hydropower
• LDCs use firewood, dung, peat, and domestic fuels
  to cook and keep warm
• Wood 60 of fuel use in LDCs and 90 in poorest
  countries

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Social Indicators of Development

• MDCs use money for schools, hospitals, that
  provide better educ and healthier longer lives
  this is cyclical b/c better educated and
• healthier pop can be more productive and make
  more money

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Social Indicators of Development

• Education MDCs have greater quantity and
  quality of educ
• Student teacher ratio (2X as many students to 1
  teacher in LDC)
• Literacy Rate (over 95 in MDCs, less than 35 in
  LDCs)
• Avg student attends school 10 yrs in MDC and a
  few yrs in LDCs (varies)

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Social Indicators of Development

• Health
• MDCs better ratio of people to hospitals,
  doctors, and nurses
• MDC consume greater calorie consumption. In LDCs
  many get less than daily recommended allowance
• Different problemsMDCs problems w/ obesity,
  elderly population, etc.

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Demographic Indicators of Development

• Life Expectancy avg if yrs a newborn can
  expect to live (early 40s in LDCs, 70s in MDCs)
• Infant Mortality die b/f 1st b-day (less than 1
  in MDCs, 10 in LDCs)
• CBR higher in LDCs but dropping
• Maternal Mortality Rate sign higher in LDCs

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Gender Issues in Development

• Gender inequality exists in every country
• Two composite measures to look at

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GDI Gender Related Development Index

• GDI looks at same measure as HDI but to
  highlight disparity betwn men and women
• Complete equality is 1.0
• Penalized for greater diff betwn men and women
• Highest GDIs in Europe and N. America lowest in
  Sub Sahara Africa
• Even in MDCs womens average income is less than
  mens

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GDI

• In LDCs women less likely to attend school and
  have lower literacy rates (99/100 women to men in
  MDC high school 60/100 in LDC high schools)
• (remember this affect on pop growth)
• Globally women outlive men, but outlive men much
  longer in MDCs than in LDCs (mostly b/c of
  maternal mortality rate)

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Gender Empowerment Measure (GEM)

• Measures econ and political power
• 4 factors.
• Income
• Professional jobs
• Managerial jobs
• Elected positions (no country has a natnl
  Congress w/ majority womenhighest in Eur w/ _at_
  30....U.S. has _at_ 15)

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• Every nation has a higher GDI and lower GEM i.e.
  means women possess a greater share of a nations
  resources than power over allocation of those
  resources
• Even in MDCs womens average income is less than
  mensWHY?

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LDCs Obstacles to Development

• While LDCs have improved, gap betwn MDC and LDC
  has increased.
• WHY? Circular/cumulative causation process
  where tendency for econ growth are
  self-reinforcing.i.e. it takes money and
  development to foster money and development
• Solution? LDCs must dev at a faster rate, but
  how? Two prominent options.

51
Self Sufficiency/Balanced Growth Approach China
and India

• Country should invest across all sectors of the
  economy and all regions
• Limit imports (tariffs)
• Internal businesses encouraged to produce for own
  people not export

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Problems w/ Self-Sufficiency Model

• Protects inefficient businesses in own country
  (protect from international competition, but has
  little incentive to improve quality or lower
  price)
• HUGE govnt bureaucracy to manage econ leads to
  abuse and corruption Govnt red tape

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Option Two International Trade Model

• Develop through international trade (look
  outward). Look outward. Identify a unique econ
  asset and export globally. Use funds and profit
  to finance other development
• Done in Arabian peninsula and E/SE Asia

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W.W. Rostow Dev Model

• Rostow advocated intnl trade approach with a 5
  step model towards development. He created the
  model in the 1950s and based it on the pathway
  the U.S. and Eur followed
• Stage 1 Traditional Society country dominated
  by primary econ activities low prod, low tech,
  low per capita income

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Rostow Intnl Trade

• Stage 2 Preconditions to Takeoff preconditions
  to econ dev are commercialization of AG and
  exploitation of raw materials
• Stage 3 Takeoff foreign investment jump starts
  econ. Rapid growth in a limited number of
  sectors other sectors still dominated by tradntl
  methods. Country uses profits to pour into
  infrastructure (roads, canals, etc.)

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Rostow Intnl Trade

• Stage 4 Drive to Maturity Dev and modern tech
  diffuse to wider variety of the econ. Workers
  become more skilled and specialized
• Stage 5 high levels of mass consumption and per
  capita income. Shift from heavy industry to
  services and producing consumer goods.

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Criticisms of Rostow

• Not all countries will pass through stages
  consecutively
• Model doesnt account for.
• Global politics
• Colonialism
• Physical geog
• War
• Culture
• Ethnic conflict
• All of these may affect progression and cause
  different pathway

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Example of INtnl Trade Model

• 4 Asian Tigers/Dragons S. Korea, Singapore,
  Taiwan, Hong Kong
• all poor in natural resources
• Promoted dev by focusing on a handful of econ
  goods (esp clothing and electronics). i.e. find
  comparative advantage produce item for which
  you have the greatest advantages in comparison to
  other countries
• Low labor allowed them to sell products cheaply
  in MDCs

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Map Asia -

• India China initially self/sufficiency and
  balanced growth model
• 4 Asian Tigers International Trade Model

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4 ASIAN TIGERS

• South Korea
• Taiwan
• Hong Kong
• Singapore

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Problems w/ Intnl Trade Model

• May hinder other LDCs from following this path.
• 1.) Uneven resource distr many country's niche
  faced lower price on world market (ex Zambia and
  copper world prices for copper have been
  dropping)
• 2.) Market stagnation market for consumer goods
  slowing down in general

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Problems w/ Intnl Trade Model

• 3.) Increased dependence on MDCs takeoff
  industries force LDCs to decrease production of
  food, clothing, or other necessities for own
  people
• Conclusion.intntl trade model is widely accepted
  alternative to self-sufficiency model

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Statistics

• World Bank since 1990 per capita GDP has
  increased more than 4 annually in countries w/
  intnl trade model and less than 1 in countries
  w/ self-sufficiency model

64
Statistics..

• 1960-1990..
• Indias GDP increased by 4/year on self
  sufficiency model
• Thailands by 8/year (intnl trade)
• Taiwans by 8/year (intnl trade)
• S. Koreas by 9 /year (intnl trade)
• Since 1990s India switched to intnl trade and GDP
  has increased by 6/year

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WTO World Trade Organization

• Est in 1995 promotes intnl trade model. Works
  to decrease barriers to intnl trade by.
• Eliminating restriction on trade (no tariffs, no
  quotas on imports, no subsidies on exports)
• Enforcing trade agreements (rules on arguments
  and accusations)

66
WTO

• Liberal critics say WTO is anti-democratic and
  promotes interests of large, wealthy,
  transnational corp
• Conservative critics says WTO compromises gov
  of countries b/c it can order changes in
  subsidies, taxes, etc.
• ALWAYS protestors outside WTO mtgs

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WTO
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for Development??

• 1.) Loans usually from World Bank or
  International Monetary Fund (both controlled by
  MDCs)
• Together loan _at_ 50 billion/year
• Idea borrow to improve infrastructure to
  attract businesses/investment
• Many infrastructure projects fail dont work,
  dont pay off, or businesses still do not come

69
for Development?

• (Loans)
• Debt is greater than annual income in 30
  countries
• Many LDCs cannot even pay interest on loans, much
  less the principal
• Result.many MDCs becoming more hesitant to
  grant loans

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for Development??

• 2.) Foreign Direct Investment Transnational
  Corporations flow of money and investment from
  one country to another through private
  corporations (increasing trend in late 20th C)
• BUT only ¼ of foreign investment went from MDC to
  LDC (most goes from MDC to MDC)
• Of all money from MDC to LDC, ½ of that goes to
  Brazil, China, MX