Industrialization and Economic Development

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Industrialization and Economic Development

• Unit VI

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Intro

• Economic geographers study the locations and
  reasons for economic patterns in the worlds
  human landscape
• Fast Fact
• Almost half of the people in the world live on
  the equivalent of less than 2 a day, and about
  20 live on less than 1 a day
• People in the 20 richest countries on average
  earn 37 times more than people in the 20 poorest
  countries

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Economic Classifications

• ECONOMY
• The system of production, consumption, and
  distribution
• PRIMARY SECTOR
• SECONDARY SECTOR
• TERTIARY SECTOR
• QUATERNARY SECTOR
• Assemble, assemble, and process information
• Ex. University research and investment analysis
• QUINARY SECTOR
• Highest levels of decision making
• Ex. Legislature or presidential cabinet

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Industrialization

• The growth of manufacturing activity in the
  economy or a region
• Usually occurs alongside a decrease in the number
  of primary economic activities
• Fast fact
• The amount of world trade since 1950 has
  increased 20 fold, from 320 billion to 6.8
  trillion
• This increase in the trade of manufactured goods
  is three time larger than the increase in the
  rate of the production of those goods

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The Industrial Revolution

• Began in England in the 1760s
• Later diffuses to other parts of western Europe
• During this period machines replaced human labor
  and new energy sources emerged (Coal)
• At beginning it was textile focused industry

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Cont

• Englands Industrial Revolution defined by the
  rise of assembly line manufacturing
• Industries powered by coal so they clustered
  around coal fields
• Led to development of a clear industrial
  landscape and working class housing area
• Along with industrial growth transportation
  infrastructure grew to allow improved shipping
  supplies to urban factories

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Cont

• Farming also mechanized
• COMMODIFICATION
• Factory owners looking at their human labor as
  commodities (objects for trade) with price tags
  per hour
• As opposed to seeing them as people

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In the beginning

• Factory like labor first started in households
• Growth of factories initially by water sources
  which supplied the energy
• Then factories grew near coal and could move
  farther away from water
• Away from water, factories could build out rather
  than up
• By the 1960s, oil replaced coal
• US, Russia, Venezuela were big oil suppliers
  prior to the 60s
• Middle east emerged in the 60s

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Diffusion of Industrialization

• By 1825 the technology had diffused to N. America
  and Western Europe
• Thrived in places with coal deposits
• Ex. Ohio and Pennsylvannia
• By the 1920s production breaks down into
  differentiated processes
• FORD PRODUCTION METHOD (FORDIST)
• Build out rather than up
• Only one floor so the product could by
  transported throughout the assembly line without
  problems

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WEBERS LEAST COST THEORY

• ALFRED WEBER
• Predicted where industries would locate based on
  the places that would be the lowest cost to them

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Assumptions of Webers model

• Assumes the cost of transportation is determined
  by the weight of goods being shipped and the
  distance to the market
• The heavier the good and/or the longer the
  distance, the more expensive it is to ship
• Assumes industries try to minimize costs
• Assumes markets are in fixed locations
• Assumes labor is in fixed locations
• Like Von Thunen assumed soil and
  political/cultural landscape is uniform

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Four factors of model

• Industry location driven by
• Transportation
• Labor
• Agglomeration
• Deglomeration

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Transportation and Distance

• Must consider weight and distance
• Not just distance to market but from raw
  materials or energy sources to the industry
• During Industrial revolution, factories locate
  near coal (energy), after invention of
  electricity they were no longer tied down to the
  energy source
• Also had to locate near raw materials

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Cont

• SPATIALLY VARIABLE COSTS
• Costs that varied or changed based on location
• Ex. Using heavy raw materials you might build
  closer to the raw material
• WEIGHT LOSING PROCESSES
• Ex. Paper production
• MATERIAL ORIENTATION

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Cont

• WEIGHT GAINING PROCESSES
• Locates near market
• Ex. Soda Industry
• MARKET ORIENTATION

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Cont

• SPATIALLY FIXED COSTS
• Some industries maintain the same costs no matter
  where they are
• Usually light products with high value
• Ex. Computer chips
• May be called FOOTLOOSE INDUSTRIES

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Labor Costs

• Not only human costs but machinery and money to
  purchase tools
• SUBSTITUTION PRINCIPLE
• When an industry substitutes labor costs for
  transportation costs
• Labor costs decrease Transportation costs
  increase in the long run they will save

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Agglomeration

• Industries that clump together for mutual
  advantage
• Can share costs
• AGGLOMERATION ECONOMICS
• Saving money for both industries and consumers
• HIGH TECH CORRIDOR
• TECHNOPOLE
• BACKWASH EFFECT
• When other regions suffer a drain of resources
  and talent
• LOCATIONAL INTERDEPENDENCE
• Industries choose locations based on where the
  competitors are located
• Ex. Off highway exits Gas stations AGGLOMERATE
  based on LOCATIONAL INTERDEPENDENCE
• Allows them to share the market

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Deglomeration

• When an agglomeration becomes too clustered/too
  crowded in negatively affect the industry so
  they split up for more space
• unclumping of industry

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Criticisms of Webers Model

• Does not identify the fact that markets and labor
  are often mobile
• Labor force varies by
• Skill
• Age
• Gender
• Language
• Etc
• Some transportation costs are not necessarily
  proportional to distance

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Contemporary Patterns and Impacts of
Industrialization and Development
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Development

• Process of improving the material condition of
  people through the growth and diffusion of
  technology and knowledge
• MDCs vs. LDCs
• On an economic spectrum
• Not just wealthmay have additional social,
  economic, demographic factors involved

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UN Human Development Index

• HDI
• Used to compare various development regions
• Three factors
• Life expectancy
• Average educational levels
• Standard of Living
• On a score from 0-1
• Norway tops at .965
• US around 8th place 0.91
• Democratic Republic of the Congo in last at .286

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Economic component of HDI

• Gross Domestic Product (GDP)
• The value of total outputs of goods and services
  produced in a country usually over 1 year
• Per capita per person
• In US GDP per capita is around 35,000 or 10-15
  an hour vs. 0.50 in LDCs

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PPP

• Purchasing Power Parity
• Calculating the exchange rates required for each
  currency to buy an equal amount of goods
• BIG MAC INDEX
• Apples to Apples

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In comparison

• IN US rich about 15 times more wealthy
• IN Guatemala rich about 75 times more wealthy
  that the poorest 10

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Informal Sector

• Data not reported
• They are off the books
• Not included in GDP
• May limit the usefulness of GDP

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Development Gap

• The widening gap between MDCs and LDCs
• GDP tripled in MDCs within the last decade
• GDP only double in LDCs within the last decade
• Rate of Natural Increase (RNI) dropped 85 in
  MDCs in the last decade only 5 in LDCs
• NORTH SOUTH GAP
• Northern Hemisphere is more developed

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Structuralist Reasons for the Development Gap

• Argue LDCs are locked into a vicious cycle of
  entrenched underdevelopment by the global
  economic system
• DEPENDENCY THEORY
• Says political and economic relations among
  countries limit the ability of LDCs to modernize
  and develop
• Countries are INTERDEPENDENT
• IMMANUEL WALLERSTEINS THEORY
• WORLD SYSTEMS ANALYSIS
• CORE, PERIPHERY, SEMIPERIPHERY
• Core depends on the Periphery
• If there is a core there is a periphery
• The core exploits the periphery
• Ex. Europe and Africa

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Liberal theories of Development ROSTOWS
MODERNIZATION MODEL

• LIBERAL THEORIES
• Says all countries can develop
• MODERNIZATION MODEL
• ladder of development

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Criticisms of Rostows Model

• Based on Anglo American and Western European
  Development
• Does not account for roadblocks to development
  like neocolonalism
• Considers each country independent rather than
  interdependent

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Reducing the Development Gap The
self-sufficiency approach

• The ability to provide for its own people,
  independent from foreign economies
• Investments should be spread over the entire
  economy
• Ex. China, India, E. Europe, Africa all tried it
  didnt work
• Corruption and inefficiency limited gains
• India never improved products
• Governments paid failing businesses to stay open

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Reducing the Development Gap International Trade

• Pushes a country to identify its unique set of
  strengths in the world and to channel investment
  toward building on those strengths
• COMPARATIVE ADVANTAGE
• Japan and High tech products

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Globalization

• The increasing sense of interconnectedness and
  spatial interaction among governments, cultures,
  and economies
• Originally just used to describe economics now
  it is more broad
• Ex. Spread of MTV
• May lead to resentment
• Disneyification McDonoadlization

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Multinational Corporations

• MNCs
• Or Transnational Corps TNCs
• Headquarters in one country and production
  facilities in others
• CONGLOMERATE
• One massive company that owns and operates
  smaller companies
• Ex. A soda company also owns the bottling company
  and food coloring company

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Outsourcing

• Practice of an MNC to relocate a piece or all of
  its manufacturing in other countries

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Newly Industrialized Countries

• NICs
• Asian Tigers
• Taiwan, S. Korea, Hong Kong, Singapore
• Make up the Pacific Rim economic region

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Foreign Direct Investment

• Investment in LDCs
• SPECIAL ECONOMIC ZONES
• EXPORT PROCESSING ZONES
• FREE TRADE ZONES

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Maquiladoras

• Special economic zones in Mexico along the US
  border
• Part of NAFTA
• Used to create jobs

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New International Division of Labor

• Breaks up manufacturing process among many
  countries

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Free trade vs. Fair Trade
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Structural Adjustment and Privatization

• Structural Adjustment
• Stipulations that require the country receiving a
  loan to make economic changes in order to use the
  loan
• Privatization
• The selling of publicly operated industries to
  market driven corporations

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Non governmental organizations

• To assist in boosting economic development and
  human rights throughout the worlds peripheral
  regions
• NGOs supply resources and money

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Globalization and the Environment

• Resources are being depleted
• Travel has increased
• ECOTOURISM
• Costa Rica has turned a huge percentage of its
  land into protected areas that can be used for
  ecotourism
• Jungle Swing
• Only damage to environment is the guidewires

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Cont

• Sustainable development
• A rate of growth and resource-consumption that
  can be maintained from one generation to another
• UN called for conservation and careful use of
  resources
• Avoid overfishing
• Care for the soil
• Preserve forests
• Protect species from extinction
• Reduce air pollution
• Recycle
• Use alternative fuels

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Greenhouse effect

• Caused by CFC, CO2, Methane
• Causes world temp to rise
• Kinda like what happens in a car on a hot day
• Related to OZONE LAYER DEPLETION
• Global Warming
• May cause sea levels to rise