GEOG 3404 Economic Geography

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GEOG 3404Economic Geography
LECTURE 1 Globalisation and the Factors of
Production

• Dr. Zachary Klaas
• Department of Geography and Environmental Studies
• Carleton University

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Economic Geography the subject matter of the
discipline

• The words economic and geography have their
  roots in the Greek language
• Economic comes from the Greek word oikos,
  meaning home.
• The implication here is that economic matters
  are matters of tending to the requirements of
  ones household of taking care of oneself and
  ones family.
• Note the implication here that one is concerned
  with something local.
• Geographic comes from the Greek word geos
  meaning earth.
• The implication here is that geographic matters
  deal with land and terrestrial space.
• Note the implication here that one is concerned
  with something of decidedly broader scope than
  the local the regional, national or global.

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Theorising in Economic Geography The Factors of
Production

• Economics concerns itself with production, which
  is the provision of items for people either to
  consume (consumption) or to keep as valuable
  property (wealth).
• There are three factors of production, which
  account for all possible forms of productive
  economic activity
• Land / Natural Resources any commodity which
  is provided by the earth (e.g., a forest/the wood
  found there)
• Labour the work one does, taken as a commodity
  (e.g., lumberjacking)
• Capital any commodity which may be in turn
  used in further production (e.g., a paper
  factory)
• Economic geography is concerned with the
  tracking of production in geographic space.

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Economic Geography How do we come to understand
it? What are our models?

• The normal science modeling process
• Inductive models Models based in our
  experience models describing what we see in
  practice.
• Deductive models Models based on mechanisms
  which are rationally or inherently related
  theoretical models.
• Ideas about scientific modeling from Thomas
  Kuhns 1962 philosophy of science text The
  Structure of Scientific Revolutions
• Paradigms Models with general applicability
  which attempt to describe reality as science
  understands it.
• Anomalies Elements of reality unexplained by
  scientific models.

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The Paradigm of a Globalising World Economic
Geography in the 1990s and 2000s.

• There is little doubt that the world of the
  decades of the 1990s and 2000s saw the assertive
  rise of globalisation as a paradigm to explain
  great economic changes that were taking place.
• The death of distance many of the specific
  observed changes dealt with dramatic improvements
  to transportation and communication, which
  lowered the cost of doing business across great
  distances.
• The internet and ETF (electronic transfer of
  funds) in particular made it possible for
  business relationships to be essentially
  unhindered by a distance factor. The rise of
  E-commerce was thus a large component of a
  globalisation paradigm.

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Convergence the home of economics closes in
on the earth of geography

• The communications theorist Marshall McLuhan
  famously referred to the earth as a global
  village. If the claims of the globalisation
  theory are true, we are witnessing a rapid
  convergence of our local lives with a new
  global culture.
• Note that, as we initially observed, the very
  word economics comes from a Greek root
  referencing the local or that which pertains to
  home, while the word geography comes from the
  Greek root referencing the global or that which
  pertains to the earth.
• In that sense, globalism would be a very
  significant development in the history of
  economic geography, in that it implies a
  convergence of scales of analysis in economic
  geography.

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The Mobility of CapitalTrans-National
Corporations (TNCs)

• This death of distance factor led, in turn, to
  capital being more mobile corporations with
  assets in one country, in other words, would have
  the ability to liquidate them quickly and
  transfer them to other countries.
• Trans-National Corporations (TNCs) could
  therefore much more easily leave countries they
  deemed unfavourable to their business needs and
  set up shop in other countries.
• The realities of globalisation in this sense,
  is a sort of shorthand reference for the need to
  ensure that TNCs will find ones own country
  sufficient to provide for their business needs,
  as they can quite easily relocate elsewhere. To
  adapt to the realities of globalisation, thus,
  is taken to be shorthand for accepting the
  heightened power of the TNCs in a globalised
  world.

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Globalisation A Key Model in Economic Geography

• Is this model inductive? Does it accord with
  our experience to say that we live in a world in
  which economic activities are integrated across
  large distances? Or is this sometimes not true?
• Is this model deductive? Are there identifiable
  mechanisms by which this integration necessarily
  takes place? Or are there countervailing
  mechanisms which tend against integration rather
  than toward it?
• Is globalisation an exclusive paradigm? (TINA
  There Is No Alternative.) Are people who deny
  globalisation denying reality, purely and simply?
• Or, are there anomalies? Are there things that
  shouldnt be happening if the globalisation
  model is accurate?

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Perspectives on the paradigm is globalisation
real? Some views discussed in Peter Dickens
Global Shift.

• Perspective 1 Yes, and we ignore it at our
  peril because we will be left behind by the
  power of the TNCs if we do, and we must adapt to
  the fact that they can relocate and transfer
  their assets so easily. (Peter Dicken calls this
  view hyperglobalism.)
• Perspective 2 Yes, and we ignore it at our
  peril because TNCs are being allowed
  unprecedented power over the worlds peoples,
  which must be resisted actively. (Peter Dicken
  refers to this as anti-globalism or
  hyperglobalism of the left.)
• Perspective 3 Yes, but the economy has been
  globalised to varying degrees for centuries
  now, and may have even been more globalised
  before than it is now. (Peter Dicken refers to
  this as sceptical internationalism.)

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Perspectives on the paradigm is globalisation
real? Some views discussed in Peter Dickens
Global Shift.

• Perspective 4 Not always, there are important
  national-level, regional-level and local-level
  forms of economic integration which run contrary
  to the presumed trend to more global forms of
  integration. (This is the view put forward by
  Dicken himself. It implies that globalisation
  is a useful generalisation or ideal type which
  may not prove adequate as a description of things
  in all cases.)
• This last view takes issue with the paradigm, as
  opposed to the other three, which do not break
  from it. It posits that globalisation is a
  rational explanation for observable economic
  trends, but not necessarily the explanation. If
  it were the only possible explanation, then there
  would be no anomalies left unexplained by the
  theory.

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The Mechanisms of the World Economy How can we
measure economic relationships across geographic
space?

• As you can see, one question we will be very
  concerned with in this course is to what extent
  we really do have a world economy and to what
  extent economies are local, regional or national
  in scope.
• In order to know this, we must be concerned with
  measuring elements relevant to the functioning of
  a world economy the mechanisms of the world
  economy.
• The factors of production are the logical thing
  to measure as the mechanisms of the world
  economy it is land, labour and capital, and
  movements in space related to these mechanistic
  elements, that will help us evaluate theories
  about the world economy such as the
  globalisation paradigm.

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Relationships of the Factors of Production to
Geographic Space

• Land Plots of land are generally fixed in
  space, but ownership can be more distributed.
  Some nations forbid or restrict foreign ownership
  of land, others permit foreign ownership to a
  greater degree or completely.
• Natural Resources These can generally be moved
  and shipped through space. Often there is some
  savings to processing natural resources near the
  source from which they exist in nature, but it is
  also possible they may be shipped to be processed
  into a product elsewhere. Some nations
  nationalise their natural resources so that
  profits from their sale benefit the state.

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Relationships of the Factors of Production to
Geographic Space

• Labour Immigration law generally forbids
  labour from moving across national boundaries,
  but within nations and in liberalised trade areas
  and regional blocs (e.g., the European Union)
  labour can move great distances for work
  opportunities.
• Capital Physical capital can either be easily
  moved (like office supplies) or moved with more
  difficulty (like factories or heavy machinery),
  but the liquid form of capital (money) is quite
  easily moved, especially with advances in the
  electronic transfer of funds for international
  transactions.

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Is there a death of distance?

• One of the primary assumptions of the
  globalisation paradigm is that geographic
  distance is diminished in our modern world to the
  point of being a negligible influence on the
  world economy. But is this true?
• The preceding discussion of the extent to which
  we observe the factors of production as rooted in
  space or freely moving through space does not
  establish that distance has completely ceased to
  be a factor in our modern world.
• Instances where distances continue to reflect
  real costs are anomalous for the globalisation
  paradigm.