Chapter 12

Service and Settlements

Service/Settlement Introduction

• Call centers are some of the fastest growing services in global economy.

• MDC tertiary sector- service any activity that fulfills a human want or need and returns $ to those who provide it

• Services are located in settlements-– permanent collections of buildings where people reside, work,

obtain services – Under 1% of the earths surface are settlements; important

because people rarely live in isolation1 locational factor is important for geographers- PROXIMITY TO MARKET. Industry- site/situation factorsService- customers! “location, location, location”

Where are services located? …Outsourcing

• http://www.youtube.com/watch?v=0G_p6oO8yAw&app=desktop

3 types of service• Customer

– Provide services to individual customers who desire them and can afford to pay for them

– Retail/wholesale, education, health/social, leisure/hospitality* ½ all jobs in USA are consumer services (ILP income search)

• Business– Facilitate the activities of other businesses– Professional (law accounting architecture)– Financial– Transportation/information*1/4 all jobs in the USA are business service

• Public– Provide security and protection for citizens and businesses

Checkpoint!

• Which sectors of the economy do your family members work in?

• If they are in the service sector, in which types of services are those jobs in?

The rise and fall of service…• Impacted most by 2008 recession• Employment

– 1972-2010 USA all growth in the services sector– Primary/secondary sectors activities decline– Business service grew, slow in finance/transportation due to development and improved

efficiency (i.e. less ppl to answer phones)– Consumer- rapid in healthcare/education/entertainment– Retail steady- more stores but not as many employees needed

• Recession– Service sector was the trigger 2008!– Real estate prices rise- sell higher quickly “flip”– High risk loans for mortgages– Investors bought/sold risky assets expecting value to continue to rise– Reduce/eliminated govt regulations of financial institutes– Unwillingness financial institutes to loan once recession started*rapidly affected every region of the world but varied based on region/locality

• Result: decline GNI 1st time since Great Depression

Checkpoint!

• What are the 3 types of services?• The fastest growing consumer service is…• T/F The fastest growing business service is

professional.

• Consumer, business, public• Health• True

Where are Consumer Services Distributed?

• Central Place Theory- helps explain how the most profitable locations can be identified (location= profitable Walter Christaller 1930s)

• Market area– Area surrounding a service from which customs are attracted– Nodal region- core- where characteristics are most intense– Periphery- may get products from another node– USA Hinterlands- surrounding largest urban settlements*Google: Naturally occurring hexagons” Why are human economic activities created in hexagonal patterns?

• Range– Maximum distance people are willing to travel to use a service (everyday 3

miles; other 60+ miles)– Ppl often answer in time rather than in distance (vary with road conditions)– Threshold: minimum # ppl to support the service (census data) must know

cliental- ex. Movies- young mall 50,000 ppl+

Different size settlements

• Small market area, small threshold, short range

• Nesting of services/settlements- central place hexagons unless there is a physical barrier (hamlet, village, town, city)

• Rank/size distribution- countries nth largest settlement 1/n the population of the largest settlement

• In plain english…2nd largest settlement is ½ largest size…forms a straight line; otherwise not rank/size rule

• Google “Most populous cities in Peru.” Do they follow the rank/size rule?

• Primate City rule- largest settlements more than twice as many ppl as second ranking settlement

• Primate city- largest city• Ex. Mexico- Mexico city 5x larger Guadalajara-

not enough wealth in society to pay for full variety of services…so…travel long distances to reach urban area (LDC)

• Rank/Size rule better in MDC

Find the optimal location for service

• Central place theory tells where to open/expand facility or in economic downturn where to close

• “location, location, location” proximity to customers• Best location for factory- region of world• Best location service provider= corner vs. another corner same

location

• Location profitability– Range- survey…willing to travel?– Dept store- 250,000 ppl 15 minute radius– Justify location; if competition nearby need a larger threshold* GIS used to figure out…1 layer characteristics of people, average income, trade area, etc.

Gravity model

• predicts optimal location of a service that s directly related to the distance ppl must travel to access it– Consumer behavior– More ppl = more consumer possibility– Close you are; more likely you are to visit

Periodic Markets

• Collection of individual vendors who come together to offer goods/services in a location on specific days

• Sparse populations, low incomes, purchasing power is low because there are no full time shops

Muslim countries 1x/week No fridays- religious rest

Rural China- 3 city 10 day cycle- lunar month no work on the 10th dayKorea- 2-15 day market cycles- lunar monthAfrica- 3- 7 day cycles varied by ethnicity

Checkpoint

• Central Place Theory helps determine the most profitable location for a consumer service.

• A central place is surrounded by a market area that has a range and threshold.

• Market areas of varying sites nest and overlap• Regular patterns of settlements that provide

consumer services can be observed, especially in developed countries

Business Services Distribution

• Hierarchy of Business services

• “global cities” information and capital (banking, law, insurance)– HQ of large corporations

and stock exchanges in G. C.

– Ad agencies, lawyers, accountants for HQ

– Banks

• Alpha• Beta• Gamma

Level of classifications

Factors for classificationsEconomic- HQ multinationalPolitical- International/Heads of statesCultural- media, sports, educational institutesinfrastructure – airport, healthcare, communication

Global Cities cont.

• Modern technology- allowed for decentralized manufacturing; transportation/communication reinforces global cities in the world economy: busy harbors/airports @ rail/highway junctions

• Consumer/Public Services in Global Cities– High % wealth live in global cities due to luxury/specialized

products– Entertainment and museums/libraries– Centers of National/International political power– National capitals offices for govt, mansions, etc.– New York home of the United Nations– Brussels- Most important center for EU

Business services

• Two types of business services in LDC’s are offshore and back office. – Supportive laws– Weak regulations– Low wage workers

Offshore financial services

• Islands/microstates• Taxes- tax free status– USA loses $70billion in taxes offshore

• Privacy- evade disclosure in home country, protect assets from lawsuit/divorce/creditors; short statute of limitations

• IMF, UN, Tax Justice Institute (look at figure)• Cayman Islands- British colony near Cuba $1trillion

legally based• To get at the $ lawsuits need to be filed in offshore

centers-difficult

Business Process Outsourcing (BPO)

• “back office” like insurance claims, payroll, transcription, clearical activities, billing/technical

• Traditionally this was done “in house” with close supervision and rapid turn around; raising rents + modern communication= less spatial proximity– Low wages- 1/10th MDC wage – attracts educated/motivated

LDC employees– English abilities- India, Malaysia, Philippines (British/ American

colonies)- late night/American day. Entertainment rooms provided- rely on public transportation come- early stay late-

– If it is 3pm today in Louisville, what time is it in India?

Economic base settlements

• Basic industries– Settlements distinctive economic structure derives from

exports to consumer outside settlement• Non basic industries– Enterprises whose customers live in the same community;

consumer services• Economic base– Community's collection of basic industries (exports) important

because exporting brings $ to local economy stimulating non basic for settlement

– New workers, families for new industries, non basic supermarket, laundry, restaurants to settlement.

– Basic drives non basic

Calculating basic vs. non basic industries

• % of workers in an industry compared to the national level

• If higher % in the local community basic economic activity

Settlements classified by basic activity- manufacturingPost industrial society- MDC basic activity is business/consumer/public serviceS/W growing rapidly, but N/E expanded business services more rapidly

ex. Cleveland/Pittsburg- steel to hospitals

Distribution Talent

• Individuals with talent gravitate toward cities with more cultural diversity.

• They promote economic innovation so important to attract

Checkpoint!

• T/F Business services cluster in global cities?• Developing countries provide two services for

MDC. What are they?

Clustered vs. Dispersed rural settlement

• ½ ppl in the world live rural

• Clustered rural settlements are agriculturally based communities in which families live in close proximity w/fields surrounding

• ½ ppl live in urban settlements

• Dispersed rural settlements- farmers living on individual farms isolated from neighbors rather than along side other farmers in settlements

Clustered

• Homes, barns, tool sheds, church, school, shops

• Hamlet or village concept

• Allotted strips of land (shortage)• Own/rent• Collectively owned by “lord”• Farmers own/responsible to

fragmented parcels- live in clusters• As the population grows 2 options1) Circular- central open space

surrounded by structures (colonial America)

2) Linear- building clustered roads, river, communication, river access (Quebec)

How does a cluster settlement contribute to regional dialect of English from Chapter 5?

Dispersed

• Immigration brings heterogeneous groups

• Bought or given land- plentiful and cheap

• Natural increase/net in migration• Enclosure movement- 1750-1850

England– Individual strips- single farms in

some cases govt forced ppl to give up land

– Disadvantages of strips- time traveled + more roads (restricted planting)

– + agricultural efficiency– Displaced farmers go to urban

settlements so village centers were kept or destroyed based on centrality of new farms.

Services in Early Settlements

• Nomad – Von Thunen (city with surrounding) – permanent settlement

• Early consumer services- bury the dead, priests, builders

• 5,000 yrs ago recorded history- settlements easier on males because “home + hearth” mentality

• Manufacturing tools, clothing, shelters, containers, fuel-> specialization of jobs ex. blacksmiths

• Early public service- protection, religious activities, walls

• Early business services- food- hunt/gather– extra food for hard times turns into transportation,

everyone has a different resource based on environment so settlements -> warehouse centers->trade, terms of transactions, fair price, records, currency, etc.

Settlements discover plants-> agriculture…plant seeds, raise animals

Checkpoint!

• Summarize the types of services in early settlements

Urbanization

• Rural settlements existed 5,000 years ago• In 1800 3% Earths pop lived urban; today ½

• Urban origins-> Mesopotamia->fertile crescent of SW Asia and diffused Egypt, China, S. Asia (4 hearths)

• Prehistoric urban- fertile crescent (present day Iraq), SW Asia, Africa

Ancient Urbanization

• 2500 BC E Mediterranean (Crete, Turkey, Greece) trade centers provided government and military for surrounding hinterland.

• City- states- independent self governing communities that included settlement and nearby countryside.– Athens- largest city-state ancient Greece- culture, philosophy,

public service, consumer service- activities not found in smaller settlements

– Roman empire encouraged urban settlement “all roads lead to Rome” • 5th century fall of Rome• Urban settlement dies as self-sufficiency model through fragmented

rulers• Europe’s culture was preserved by monasteries/isolated rural areas

Medieval Urban

• Europe’s urban revival happened in the 11th century with feudal lords establishing urban settlements.

• Benefit– Lords get army without paying full time “standing army”– Residents freedom from rural serfdom (farmed lords land, but only

kept small portion of output (sharecropping))

Surplus from the countryside brought into the city for sale/exchange; markets expand trade with other free cities

Palaces, churches, prominent buildings arranged around central market square (tallest/elaborate church) usually walled city which lacked space for construction.

• Modern tourists appreciate churches, but lack understanding of densely built medieval town.

Post Roman Empire CollapseLargest urban settlements in China

Industrial revolution- London largestNY in the 20th century

21st Tokyo

Dimensions of Urbanizationprocess by which the population of urban settlements grow

• Number of people living in urban areas

• MDC higher %• LDC more # large urban

settlements• 44/50 largest urban

settlements in LDCsFactors: Migration w/w out jobHigh natural increase rates

• % of ppl living in urban areas

• 2008 urban population exceeded rural settlement pop except in Latin America (urban % = MDC urban %)

Cause: industrial revolution + development of services

Urban vs. Rural1930s Lewis Worth said urban dweller is different today…city = permanent

settlement with large size

Urban rural

Size Know small % ppl- roles-boss, etc.Relationships are contractual

Know neighbors, related?“look out for everyone”

High density Specialization of roleSocial groups compete for same territory

Social heterogeneity Freedom, tolerate diversityLonely/isolated

Restricted- scored for bad behavior

*Worth’s theory valid for LDC’s. All but 1% workers in MDC hold “urban” jobs

Television, car, phone- equalizer

Checkpoint!

• Developed countries have higher ______ of urban residents.

• T/F Developing countries have most of the very large cities.

• T/F Few humans lived in urban settlements until the 19th century

• Settlements are either _____ or _______.• T/F Rural settlements, which specialize in

agricultural services, may be clustered or dispersed