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Economic Development and Industry Chapters 9 and 11 © Robin Foster

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  • Slide 1
  • Chapters 9 and 11 Robin Foster
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  • Topic of great interest in Economic Geography Economic geography studies the impact of economic activities on the landscape and investigates the reasons behind the location of economic activity
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  • Process by which economic activities evolved from primary goods to using factories.
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  • Primary economic activity extracts products from the earth. Secondary economic activities transform raw materials into usable products, giving them usefulness.
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  • Began in England in the late 18 th century. Secondary Economic activity was created by the Industrial Revolution. Animal and human muscle was replaced by machines. Transformed societies beyond economic activities changing lifestyles, customs, beliefs and values.
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  • James Watt First reliable Steam Engine 1775First reliable Steam Engine Eli Whitney Cotton Gin, Interchangeable parts for muskets 1793, 1798Cotton Gin Robert Fulton Regular Steamboat service on the Hudson River 1807 Robert Fulton Samuel F. B. Morse Telegraph 1836Telegraph Elias Howe Sewing Machine 1844Sewing Machine Isaac Singer Improves and markets Howe's Sewing Machine 1851 Cyrus Field Transatlantic Cable 1866 Alexander Graham Bell Telephone 1876Telephone Thomas Edison Phonograph, Incandescant Light Bulb 1877, 1879Thomas Edison Nikola Tesla Induction Electric Motor 1888 Nikola Tesla Rudolf Diesel Diesel Engine 1892 Rudolf Diesel Orville and Wilbur Wright First Airplane 1903First Airplane Henry Ford Model T Ford, Assembly Line 1908, 1913Henry Ford
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  • Rapid political and economic change. Transforms country into a stable nation with a growing economy. Mexico is an example. Beginning in the 1980s based on its abundance of oil.
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  • 1. Gross Domestic Product per Capita. Per capita GDP= GDP population $14,143.3 billion 307,448,945 The higher the per capita GDP, the more industrialized the country.
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  • 3. Types of job MDCs-fewer workers in primary sector LDCs-more workers are farmers.
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  • 4. Worker productivity MDC-more machinery, tools and equipment to perform work. LDC-more human and animal power. Productivity measured by the value added in manufacturing by each worker. Product value=$ of raw materials-energy
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  • 5. Access to raw materials Development requires access to raw materials-oil, coal, water, natural gas. Englands access to coal fueled the industrial revolution European empires came to control raw materials in other areas of the world.
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  • 6. Availability of consumer goods MDCs money for essentials and non- essentials. Cars, telephones and televisions measures of consumption. LDCs few people can buy non-essential goods.
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  • Less than 1% of the Earths land is devoted to industry. Industrial production concentrated in 4 regions: Northwestern Europe Eastern Europe Eastern North America East Asia
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  • What factors explain differences in levels of economic development? Two conflicting theories have developed: Modernization Theory (Westernization Model) Dependency Theory
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  • Economic prosperity is open to all nations. According to W.W. Rostow, modernization occurs in four stages: 1. Traditional stage 2. Preconditions for takeoff 3. Take off stage 4. Drive to technological maturity 5. High mass consumption
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  • 1. Traditional stage-society built lives around families, local communities and religious beliefs. 2. Precondtions for Takeoff-investment in infrastructure. More knowledge=more ability to have technology. Trade is promoted. 3. Take off stage-people produce goods for profit. Some form of industrial revolution takes place. Urbanization increases, technological breakthroughs occur. Desire for material goods take hold at the expense of family ties and traditional customs.
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  • 4. Drive to technological maturity-economic growth accepted, people focus on higher living standards. Economy diversifies because people can afford luxuries. Poverty reduced, material goods are more common. Rate of population growth reduced, as children are more expensive to raise. International trade expands.
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  • 5. High Mass Consumption- Economic development raises standards of living as pass production encourages mass consumption. Items which once were considered luxuries are now necessities. High incomes, with a majority of workers in the service sector of the economy.
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  • High income countries can help poorer countries with foreign aide, economic aide. Criticized as exploiting capitalism. Fails to recognize rich nations, which benefit from status quo. Blames poor countries for being poor. Poor countries develop from a position of global weakess.
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  • Immanuel Wallerstein explained economic growth using a model of the capitalist world economy. A global economic system that is based in high income nations that have a market economy.
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  • Wallerstein divided todays countries into three types, according to how they fit in the global economy. 1. Core countries 2. Countries of the periphery 3. Countries of the semi-periphery
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  • Core countries-rich nations that fuel the worlds economy by taking raw materials from around the world and channeling wealth to North America, Europe, Australia and Japan through multinational corporations Periphery-low income countries drawn into world economy by colonial exploitation Semiperiphery-remaining countries of the world somewhere in between. Exert more power than periphery, but are dominated to some degree by core countries.
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  • Primary economic activity develops around location of natural resources. Secondary industry develops based on several factors as raw materials can be shipped: 1. variable costs-energy, labor, and transportation. 2. friction of distance-cost increases as distance to transport increases. 3. distance decay-industries are more likely to serve markets nearby than far away.
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  • World economy benefits rich societies, harms others by making them dependent on core countries. Sell inexpensive raw materials and buy expensive manufactured goods-high foreign debt. Economies are crippled even further. Ignore cultural factors that in poor countries such as family values and tradition rather than innovation. Corrupt leaders,, poor economic health, countries wealth squandered by the elite. To Summarize-Rich nations keep poor nations poor
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  • Core-primary and secondary economic activity. Within cores-wealthy urban cores and depressed rural areas. People move to cities for jobs.
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  • Theory of the Location of Industries, 1909. Compared to Von Thunens agricultural model because they explain location of economic activity. Webers Least Cost theory explained location of industry in terms of three factors: 1. Transportation 2. Labor 3. Agglomeration
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  • 1. Transportation-cost of moving raw materials to factory; then factory to market. 2. Labor-cheap labor allows for higher transportation costs. Example: an American Factory in Mexico. Factories in South rather than north because of unions vs. non-union labor. 3. Agglomeration-several industries cluster in one city, they can share talents, services and facilities. Ex. Restaurant supply stores
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  • A result of excessive agglomeration can lead to: Deglomeration-the exodus of a business from a crowded area. Substitution principle-business owners can juggle expenses as long as labor, rent, transportation and other costs do not increase all at once.
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  • The influence on a firms locational decisions by locations chosen by its competitors Variable revenue analysis-a firms ability to capture a market that will earn it more customers and money than its competitors.
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  • Water Beach middle of beach Freds snow cones Sams snow cones area of profitability
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  • 1. Situation factors- involve transporting materials to and from a factory. A firm seeks a location that minimizes the cost of transporting inputs to the factory and finished goods to the customers. 2. Site factors-result from the unique characteristics of a location. Land, labor an capital are the three traditional production factors that may vary among locations.
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  • 1. Proximity to inputs- 1.Every industry uses inputs. 2.Raw materials, parts of materials 3.Locate near input to minimize transportation costs. Bulk reducing industry-final product weighs less than its inputs-copper
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  • 2. Proximity to markets where product is sold. Transporting goods to consumers is critical location factor in three types of industries: Bulk gaining-volume, weight added during production-soft drinks, fabricated machinery
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  • Single market factories- manufacturers with only one or two customers
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  • Perishable products-produce, milk, bread, newspapers Frozen, canned food can be farther from the market.
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  • Inputs are transported in one of four ways: ship rail truck air Firms seek the lowest cost. Long distance transportation is cheaper.
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  • A location where transfer among transportation modes is possible. Important break-of-bulk points are airports and seaports. A steel mill near Baltimore-iron ore by ship from South America, coal by train from Appalachia. Port of New York, Port of Houston
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  • Labor-your workers labor intensive industries-wages and compensation are a large portion of costs- textile industry Cottage industries-work done at home. High tech industries tied to skilled labor.
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  • Land-not every location has the same climate, topography, recreational opportunities, cultural facilities and cost of living. Industries like low cost energy sources-Alcoa- hydroelectric power.
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  • Capital-where is the money available? Industries typically borrow money for new factories. Banks in MDCs typically loan money to businesses in LDCs
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  • Interregional shifts-USA to the South and West. Right to work laws Southern and Eastern Europe Asia-China Latin America-Mexico and Brazil
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  • Manufacturing zone created in the 1960s in Northern Mexico just south of the border. Goods are produced primarily for US consumers This has been promoted by NAFTA-1995 treaty to promote free trade with the USA, Canada and Mexico.
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  • Cost of labor Outsourcing-new international division of labor
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  • Just in time delivery-reduces money that is tied up in inventory. Parts and materials arrive daily, if not hourly. Producers have less cushion against disruptions in the arrival of needed parts. Labor unrest Weather related events, acts of God
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  • Challenges for MDCs competition within countries in a trading bloc. NAFTA EU-European Union East Asia-no formal organization Transnational corporations-operate factories in countries other than headquarters country conglomerate corporations exist-smaller firms that support the overall industry
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  • Fewer jobs within industrial sector. Number of jobs in service or tertiary sector has increased. A result of globalization? Labor intensive manufacturing in developing world is displacing jobs of workers in advanced economies.
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  • Distance from markets-invest scarce resources for airports, docks and ships. Inadequate infrastructure-few schools to educate workers Competition with existing manufacturers in other countries-transnational corporations in MDCs use LDCs for cheap labor. Competition among LDCs for MDCs factories.
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  • Fossil Fuel Reserves-how much coal, oil and natural gas remains in uncertain. MDCs with of the population consume of the worlds fossil fuels Industrial pollution global warming, greenhouse effect-increasing earths temperature acid rain-sulfur dioxide and nitrogen oxides released into atmosphere by burning fossil fuels. Sustainable development-people living today should provide for future generations
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  • 1. Prevention 2. Technological change 3. Mitigation-undo or reduce damage once it happens 4. Compensation-persons who sue companies.
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  • Developed by the United Nations. Measures a countries level of development according to three factors: Economic Social demographic
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  • GDP per capita Types of jobs Productivity Raw materials Consumer goods
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  • Education and literacy Health and welfare
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  • Life expectancy Infant mortality rate Natural increase rate Crude birth rate
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  • A numeric measurement The nearer to 1 the better. Anglo America-.94 Western Europe-.93 Eastern Europe-.8 Japan-.94 Latin America-.9 East Asia-.76 Southeast Asia-.58 Middle East-.68 South Asia-.58 Sub Saharan Africa-.51
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  • Gender-related Development Index (GDI) Average incomes of men/women Education and literacy Life expectancy Gender Empowerment Measure (GEM) Economic power-income and professional jobs Political power-managerial and elected jobs
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  • Products are made and traded according to standards that protect workers and small businesses in LDCs. Food or craft products can be fair trade.