Industrial Activity and Geographic Location

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Industrial Activity and Geographic Location
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Economic Unit Study Guide Rostows
modernization model (5 stages) Location
Theory/Harold Hotelling Wallersteins
Theory Self sufficiency and the practices of
international trade Compare and contrast the
differences that distinguish the developing from
the developed world Why are there regional
economic difference within a country? Causes of
deindustrialization - tertiary and quatenary
economic sectors Positive and negative effects
of industrialization Globalization and the
effects.
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• Preindustrial World
• Industries did exist before the Ind. Rev. (e.g.
  India carpenters, textiles, silver,)
• Ind. Rev. began in Midlands of North-Central
  England (Black Country coal fields) diffused
  eastward
• Affected production, transportation, and
  communication (steam-engine, locomotive,
  telegraph,)
• The Location Decision
• Primary industries located near raw mat.s
• Secondary industries less dependent on resource
  location

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• Economic models assume
• 1) People will try to maximize their advantages
  over competitors,
• 2) They will want to make as much profit as
  possible,
• 3) They will take into account variable costs
  energy, transportation, labor,
• Friction of distance the increase in time and
  cost that usually comes w/ increasing distance
• Distance decay the impact of a function or
  activity will decline as one moves away from its
  point of origin

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• Key Concepts of Trans. Comm.
• Require a specially designed and constructed
  cultural landscape (roads, TV stations,)
• Cumulative causation e.g. investment is risky
  usually occurs in developed states
• Trans. Comm. systems can be viewed as a surface
  or a network

• 1) Surface Pool table move freely (high
  potential for collisions) move at limited speeds
  
• 2) Network faster movement, but restricted to
  certain paths (fewer collisions)
• We modify systems b/w both

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• Ullmans Conceptual Frame
• Forms a basis for understanding the volume
  timing of the flows of goods b/w locations 3
  main concepts
• 1) Complementarily refers to the needs of one
  region matching the products of another (copper
  from AK to manufacturing cities)

• 2) Intervening opportunity reduces
  attractiveness of more distant locations
• 3) Transferability refers to the ease w/ which
  products can be moved

Kennicott Copper Mine
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• Harold Hotelling Model (Two dimensional)
• Locational interdependence the location of
  industries cant be understood w/o ref. to the
  location of other industries of like kind
• Two vendors located on pts. A C, eventually
  gravitate toward pt. B (moving from this pt. will
  only hurt profitability)
• A third vendor complicates this (spatially)

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• Least Cost Theory (1909)
• Alfred Webers model owners of manufacturing
  plants seek to minimize three costs 1)
  Transportation, 2) labor, and 3) agglomeration
  (too much can lead to high rents wages,
  circulation problems)
• Weight-losing case final product weighs less
  than raw mat.s location source

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• Weight-gaining case final product weighs more
  (or takes more space) than raw mat.s (e.g.
  addition of water) location market

• Some argue Webers model doesnt adequately
  account for variations in costs over time (e.g.
  taxation, consumer demand)
• Substitution principle decreases in certain
  costs can offset increases in others

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• Christallers Central Place Theory Revisited
• Distance affects the marketing strategies of
  enterprises
• Businesses identify one location, possess a
  monopoly

• Hexagons display a nesting pattern Christallers
  theory is not as accurate today (diminishing
  specialization)

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• August Lösch
• Profit-maximization firms will identify a zone
  of profitability (not just a point)
• Other businesses can come in and change the
  configuration of that zone
• Agglomeration can give the entire area a
  competitive advantage

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• Factors of Industrial Location
• Raw Materials-e.g. Japan has few, but grew into
  an ind. giant b/c of skilled labor low wages
• Labor-e.g. 1994 wages in Shanghais Pudong
  dist. 1/40 Japan, 1/30 Taiwan
• Infrastructure-banks, transportation,
  communication, social services,

Open-air laundry in Mumbai, India
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Resources and RegionsThe Global Distributionof
Industry
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• Four Primary Industrial Regions
• Eastern North America (largest)
• Western Central Europe
• Russia Ukraine
• Eastern Asia (fastest growing)
• Industrialization Through WWI
• Britain - enormous comparative advantage
• Industrialization expanded along coal deposits
  N. France Belgium N-C Germany NW
  Czechoslovakia S. Poland
• Colonialism supplied Europe w/ raw mat.s
• Ind. Rev. diffused (exp.) from core regions

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• North America only serious rival to Eur.
• New York great relative location, major
  break-of-bulk (e.g. ship-to-rail) port
• N. Am. benefited from nat. resources, trans.
  networks, capital, and labor
• Most of the rest of the world lagged far behind
  (exceptions Ukraine, Australia,)
• Mid-Twentieth Century Industrialization
• Oil natural gas played a key role (U.S. is very
  dependent on foreign sources today)
• U.S. emerged as the worlds preeminent power
  (escaped destruction of WWI)
• American Manufacturing Belt - NE

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• Late Twentieth Century and Beyond
• Four Tigers South Korea (Seoul), Taiwan
  (Taipei), Hong Kong, Singapore (industrial
  powers)
• China rapidly growing in influence
• Japan is losing its dominance

Pusan, South Korea
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• N. Hemisphere Ind. Zone U.S. Europe Former
  USSR E. Asia
• Secondary Regions Mexico, Brazil, S. Africa,
  Egypt, India, Australia,

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Concepts of Development
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• Economic Activities (revisited)
• Primary ext. Secondary manufacturing
• Tertiary service (trans., sales, education,)
• Quaternary exchange or application of info.,
  knowledge, or capital (finance, insurance real
  estate (FIRE activities), legal services,)
• Quinary higher order, specialized knowledge or
  skill (scientific research, high management)
• Relationship b/w industrialization and urban
  location changed over time
• First industries were rural (e.g. water-powered)
• Mass production factories of early 1900s were
  urban based (e.g. cheap labor)
• Expansion of tertiary, quaternary, quinary
  activities closely associated w/ growth of
  suburban areas (e.g. malls, edge cities,)

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• Agglomeration (revisited)
• Occurs when certain conditions are met
• 1) When a cluster of activities create enough
  demand for support services
• 2) Activities needing access to information
  control tend to concentrate (e.g. face-to-face is
  better, no matter how rapid other forms of comm.
  are (e-mail, phone,))
• 3) When cultural institutions (schools,
  hospitals,) are attracted to the area
• Deglomeration too many activities (of the wrong
  type) traffic, pollution, capital shortages,
  inc. land prices,

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• GNP (Gross National Product)
• Total value of all goods and services produced by
  a country in a single year (includes domestic
  international)
• Does NOT 1) include informal econ. 2) reflect
  negative spinoffs (e.g. resource depletion,
  pollution, prisons,), 3) illustrate distribution
  of wealth (UAE gt15,000 p.c.)
• Alternative measures 1) Occupational structure,
  2) Productivity per worker, 3) Consumption of
  energy per person, 4) Trans. comm. facilities
  per person, 5) Dependency (young old) ratio, 6)
  social indicator rates (e.g. literacy, inf.
  mortality)

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• Core-Periphery (revisited)
• World Systems Theory(Immanuel Wallerstein)
• Core-periphery link canexist at many scales
  w/in a region (Los Angeles is a core of S. Cal.),
  w/in a country (Johannesburg is a core of S.
  Afr), global (Japan is a core of E. Asia)
• North-South Line (W. German Chancellor Brandt)
  map of economic development in 1960s (1st world
  (US, Eur, Japan) market economies dominating the
  3rd world, w/ 2nd world (USSR China)
  traveling down a state-planned economic path)

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Per Capita GNPs



S. Afr. - 3,310
Haiti - 410
S. Korea - 8,600
Pakistan - 470
U.S. - 29,240
Japan - 32,350
Egypt - 1,290
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• GDP/GNP vs. GNI PPP
• GDP/GNP Gross Domestic/Nat. Product
• GNI PPP Gross National Income w/ purchasing
  power parity (allow cross-country comparisons of
  economic aggregates on the basis of physical
  levels of output, free of price and exchange rate
  distortions)

Country (2000) GDP ( bn) GNI PPP ( bn)
Nepal 5.5 31.6
India 457 2,375
China 1,080 4,951
Japan 4,842 3,436
U.S. 9,837 9,601
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• Models of Development
• Liberal 1) Assume all countries are capable of
  developing economically in the same way, and 2)
  disparities b/w countries regions are the
  result of short-term inefficiencies in local or
  regional markets
• Structuralist Economic disparities are the
  result of historically derived power relations
  w/in the global economic system cannot be
  changed easily (misleading to assume all areas
  will go through the same process of development)

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• Modernization Model (a liberal model)
• Walt Rostow 1960s 5 stages
• 1) The Traditional Society high in agr.
  (subsistence), high of national wealth spent on
  non-productive areas (military, religion)
• 2) Preconditions for Take-Off Educated elite
  influence pop. to invest in tech.
  infrastructure inc. in openness production
• 3) Take-Off Industrial Rev urbanization,
  industrialization, but still some trad. areas
• 4) Drive to Maturity Tech. diffuses, ind.
  specialization, modernization occurs in core
• 5) Age of Mass Consumption high incomes,
  widespread prod., majority in service sector

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Walt Rostows Modernization Model Selected
countries up to 1960
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• Dependency Theory (structuralist)
• Political economic relationships b/w countries
  regions control limit the developmental
  possibilities of less well-off areas (e.g.
  imperialism caused colonies to be dependent
  this helps sustain the prosperity of dominant
  areas poverty of other regions)
• Only at later stages of development does the core
  have a positive impact on the periphery (grants,
  loans, special economic zones,)

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• Conditions for Core Development
• Core regions w/ concentrations of employment,
  capital economic control develops w/
  agglomeration
• Attract new investment through
• Backward linkages supply firms w/ components
  services
• Forward linkages help firms find uses markets
  for their products
• Ancillary industries firms providing services
  for other corporations
• Investment into infrastructure technology

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Images of New York City
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• Conditions in the Periphery (revisited)
• High rates of birth, death, infant mortality,
  illiteracy, malnutrition, incidence of disease,
  rural populations, overcrowding in urban areas
• Womens workloads are often heavier than mens,
  landholdings are often fragmented (w/ poor
  harvesting tech.), soil erosion is commonplace,
  families often in debt,
• A countrys core may illustrate progress, but
  often differs greatly w/ most areas

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Images of Lagos, Nigeria
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Deindustrialization and the Rise of the Service
Sector
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Deindustrialization and the Rise of the Service
Sector
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• New International Division of Labor
• Periphery regions are dependent on core for
  manufacturing jobs, likewise
• Core TNCs are dependent on periphery for cheap
  labor, fewer environmental regulations, and
  expanding markets

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• New International Division of Labor
• Periphery regions are dependent on core for
  manufacturing jobs, likewise
• Core TNCs are dependent on periphery for cheap
  labor, fewer environmental regulations, and
  expanding markets

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• Deindustrialization
• Regions with high labor costs old technology
  may experience deind. (core countries,
  Rustbelt) as new tech. can be more cheaply
  appropriated elsewere
• US Sunbelt drew investment away from NE b/c of
  lower rates of unionization, higher amenity
  values (i.e. place), govt contracts,

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• Deindustrialization
• Regions with high labor costs old technology
  may experience deind. (core countries,
  Rustbelt) as new tech. can be more cheaply
  appropriated elsewere
• US Sunbelt drew investment away from NE b/c of
  lower rates of unionization, higher amenity
  values (i.e. place), govt contracts,

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• Specialized Economic Zones area w/in a country
  in which tax incentives fewer enviro.
  regulations attract foreign business/investment
• Manufacturing export zone periphery favorable
  tax, regulatory trade arrangements
• High technology corridors core network of
  research, development tech. enterprises

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A maquiladora in Mexico
A technopole Silicon Valley
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• OECD - Organisation for Economic Co-operation and
  Development
• Forum where govts work together to address
  economic, social and environmental challenges
• Born after World War II to coordinate the
  Marshall Plan today has 30 member countries
  (which produce gt 2/3 worlds goods services),
  w/ more than 70 developing and transition
  economies working w/ them
• Membership is limited only by a country's
  commitment to 1) a market economy, and 2) a
  pluralistic democracy

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OECD Member Countries
Countries/Economies Engaged in Working
Relationships with the OECD

• OECD Sometimes accused of neo-colonialism
  (entrenchment of the colonial order (trade
  investment) under a new (non-pol.) guise) some
  countries have a high of their GNP being
  allocated to payment of interest on accumulated
  foreign debts

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• World Cities John Friedmann (1980s)
• Dominant in terms of their global-political
  economy centers of control of the world economy,
  not the largest in terms of pop. or ind.
• Examples N.Y.C., London, Tokyo, Sao Paolo,

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• Tourism A Service Industry Giant
• Some countries have made agriculture their main
  priority, others industry, and others,
• Tourism travel 11 of all global jobs, and
  11 of global GNP (4 trillion/yr.)
• Investment by host country is huge i.e.
  building hotels diverts money that could be used
  for housing, education,
• Many hotels are owned by MNCs, NOT the host
  country, affects local economy little
• A fast-growing industry as people are traveling
  more, however congestion at tourist sites is a
  rising problem (i.e. usually need a reservation
  for a campsite in Yellowstone in the summer)

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• Tourism A Service Industry Giant
• Some countries have made agriculture their main
  priority, others industry, and others,
• Tourism travel 11 of all global jobs, and
  11 of global GNP (4 trillion/yr.)
• Investment by host country is huge i.e.
  building hotels diverts money that could be used
  for housing, education,
• Many hotels are owned by MNCs, NOT the host
  country, affects local economy little
• A fast-growing industry as people are traveling
  more, however congestion at tourist sites is a
  rising problem (i.e. usually need a reservation
  for a campsite in Yellowstone in the summer)

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• Time-Space Compression
• Refers to the social and psychological effects of
  living in a technologically advanced world
• Time-space convergence refers to the greatly
  accelerated movement of goods, ideas, and
  information during the 20th c. made possible by
  tech. innovations in in transportation
  communication
• Transition from Fordist ind. system to a faster,
  more flexible system that has opened new markets
  brought places closer together
• World Wide Web - no accurate estimates of its
  economic impact, but it is growing