Economic Geography

Unit 5 – Secondary and Tertiary Activities

Patterns in Manufacturing (p. 216)• Although we use natural resources to obtain materials we need or

want, rarely are these materials in a suitable form at harvest.– E.g.: Soil (resource) is used to grow wheat, which we require for

food, but wheat must be processed into flour and combined with other inputs to produce a baked good.

• An important part of the economy (providing for our needs and wants) involves this conversion of materials into usable goods, which is called manufacturing, processing, or secondary activity.

• Manufacturing requires the use of physical labour, mechanical energy, and technology.

• There is often a direct link between primary and secondary activities in a region.

• E.g.: Australia has a large cattle and sheep resource base, therefore the country has a large leather and woolen products manufacturing industries.

Manufacturing Processes

When changing raw materials into usable forms there are three different manufacturing processes that can be used:1. Conditioning process: A process that causes a minimal change to a

raw material, making it a more useful and marketable good.– Trees are harvested and sawn into lengths, widths, and

thicknesses suitable for building materials.2. Analytic process: A process that takes apart a raw material,

breaking it down into it’s constituent parts.– Cows are butchered into steaks and meat products, while their

hide is made into leather.3. Synthetic process: A process that builds up, joins, or combines raw

materials or goods to create a product.– Light bulbs are made by combining tungsten wire, nitrogen gas,

glass, and metal.

Types of Manufacturing Industries (p. 217)Labour Intensive vs. Capital Intensive• All manufacturing businesses can be classified as either requiring

large quantities of labour or machinery to do the processing.• Machinery now does much of the work formerly done by humans. In

many industries that has resulted in significant job losses for employees.

Labor intensive industries require a lot of person hours to produce the product. E.g.: Jewelry making Capital intensive industries: require a lot of expensive equipment to make the product. E.g.: Automotive industry

Types of Manufacturing Industries (p. 217)Heavy vs. Light IndustryAll manufacturing businesses can be classified as either producing large, expensive items for other business to use or as producing small items for consumers to purchase directly. Heavy industry produces large expensive products for other industry. E.g.: Ship yard, tractor production.Light Industry produces products for consumers. E.g.: Pop industry.

CASE STUDY

• Complete questions 1-4 on pp. 217-219.

• Read “Manufacturing Wrigley’s Gum” on p. 219 and “Making Steel World Wide” on p. 221.

• Complete the case study activity sheet.

Factors Affecting the Location of Industry (p. 223)

What is meant by industrialization?What pattern do you see in global industrialization above?

Countries with agricultural economies employ high percentages of workers in the primary sector and obtain most of their wealth from such activities.– These countries tend to have higher rates of poverty, fewer

services for citizens, and lower quality of life.– Sometimes equated with less developed countries.

Industrialization - The process in which a country transforms itself from a primarily agricultural society into one based on the manufacturing of goods and services.

Countries with industrialized economies employ higher percentages of workers in the secondary and tertiary sectors, with a significant reliance on manufacturing and goods production.– These countries have lower rates of poverty, a wider range of

services for citizens, and a higher quality of life.– Sometimes equated with developed countries.

Most of the world’s industry is located in developed countries:– North America, Western Europe, Australia, Japan.

Some other countries have experienced lesser degrees of industrialization, with growing secondary sectors. The primary sector is still heavily relied upon:– Parts of South America (e.g.: Brazil, Argentina), South Africa,

Saudi Arabia.

Some countries still remain highly dependent on agriculture. Most people live in rural areas that have made less economic progress in terms of manufacturing. This results in lower incomes for most people:– China, India, most of sub-Saharan Africa.

Locations of Manufacturing Industries• The most important conditions that determine location of industry are cost.

Manufacturing industries tend to exist in economically feasible sites.• These factors may be divided into two categories:

– physical and human-based cost factors.

Physical/Site cost factors1. Proximity to raw material– Resource oriented industries are located close to the resource because it

is heavy/bulky to transport. This reduced cost due to time, fuel, labour, etc.

2. Land– Characteristics of the site affect location: price, slope, drainage, dense

soil.3. Energy– Ability to supply electricity to the industrial site (power lines, power

plants, fuel sources).

Human-based cost factors

1. Market Oriented Industry – Industries that are located close to the market because the product is

expensive to transport. The Soft drink industry is a good example. 2. Market vs. Resource Oriented Industries:

– If the product weight is greater (weight gain) than the input resources it is located near market. Conversely if product weight is less (weight loss) than the input resources it is located near resource.

3. Agglomerating Tendency – The tendency for factories producing related products to locate close to

each other for mutual benefit. E.g.: Car factory & tire factory.4. Industrial Parks – Existing infrastructure of roads, on ramps and off ramps to highways,

large lots, sewer, ample electricity, and close location to related industries make industrial parks attractive for manufacturing businesses.

Human-based cost factors

5. Labour Force Characteristics– Wages: lower wages in some developing countries like Mexico and the

Philippines attract manufacturing businesses.– Training: highly skilled labourers can attract businesses that require

welders, mechanics, carpenters, etc.– Benefits: lower cost of providing Employment Insurance, pensions,

health plans, etc. to workers can attract businesses.– Availability of labour: a high unemployment rate may attract

businesses, especially if large numbers of workers are required.

Government Influence

Governments can have a significant influence on the location of industry:

1. Transportation subsidies (money) affect the location of industry. – Subsidies allow businesses to locate farther from the resource. – Subsidies allow governments to encourage industry in rural areas.– Examples: government sharing cost of roads in difficult terrain or

coastal transportation2. Tax breaks affect the location of Industry. – The company obtains a financial break (paying less in taxes) while

the region gets the advantage of higher levels of employment.

Government subsidies offset operation costs, which can encourage more industry in a local area.

CASE STUDY

Read “Human and Physical Factors in Japan’s Car Industry” on p. 227. • Complete #s

18 & 19, p. 228.

Manufacturing and the Environment (p. 237)• We think of industry as the use of raw material inputs to create a

finished product output, but industrial waste is also an important manufacturing output. Examples include:– Green house gases, such as carbon dioxide, chlorofluorocarbons,

and methane, contribute to the atmosphere’s ability to hold in heat, thus increasing problems associated with global warming.

– Chlorofluorocarbons (CFCs), such as refrigerants and sprays, break down ozone in the atmosphere and reduce the filtering of UV rays.

– Acid Rain, created when sulphur, nitrogen, and moisture interact in the atmosphere, decreases soil fertility, kills fish, and corrodes buildings.

• These industrial wastes are most associated with areas of high industrialization, but prevailing winds play a part in the further spread of pollution.

What can be done to reduce these environmental threats? • Interest groups raise valid points of concern regarding an issue, and

develop strong arguments for their chosen perspectives:– Industrialists are owners and operators of manufacturing

businesses. How would they view an environmental threat posed by their company? What points would they consider most in addressing the issue?

– Environmentalists are groups that advocate for the protection of plants, animals, and ecosystems. How would they view an environmental threat posed by industry? What points would they consider most in addressing the issue?

• What is government’s responsibility on this issue?– Find a balance between the concerns of industrialists and

environmentalists.– Government wants to encourage economic development (money,

job creation, business, etc.), but must do so in a way that ensures sustainability.

International Environmental issues…• Issues that are international in scope requires a solution that involves

cooperation between nations.• Environmental summits (meetings between representatives of

countries) have been held in recent years to discuss options for addressing threats.– The Earth Summits in Rio de Janerio (1992 & 2012) discussed

global patterns of manufacturing, reliance on transportation systems, alternative energy sources, and growing stress on water resources.

– The Kyoto Protocol was a plan that extended work at the Earth Summit and focused on reduction of greenhouse gas emissions.• Some countries withdrew from this agreement (Canada

included) on the grounds that required reductions in emissions would be too sudden and harmful to the economy. Canada’s emissions actually increased during the period from 1990-2009.

Sample environmental issue…Prevailing winds transport acid rain from industrialized areas and deposit it in locations down wind from the industrialized region. Both these areas are affected.

What are some solutions that governments can implement to reduce the negative effects of this issue?

– government regulation to reduce Sulphur and nitrogen emission– development of Sulphur filtering equipment to prevent further

emissions– tax breaks for companies if they reduce pollution output– meetings and consultation between business, environmentalists

and government to decide on a plan of action.

Tertiary Economic Activity (p. 240)• This sector of the economy deals with the provision of services for

people.– E.g.: doctor, lawyer, waitress, tourism industry, mechanic, teacher.

Public vs. Private Services• Private sector service industry is run by private business and requires that a

profit be made from the service. Ex. Mechanics, Lawyers, Tourism. • Public Sector services are those that are operated by the government.• The four types of tertiary activity are:

– Distributive activities: involves the transportation and sale of all products from manufacturer to consumer. ex. truck driver, warehouse manager, sales person

– Financial Activity: involves banks, insurance companies, & financial advising companies.

– Personal Service: ranges from legal services, to food services, to entertainment and counselling services.

– Government service: Public service industry is operated by Government and is not for profit. On the contrary it cost tax payers money. Ex. Education, health care, mail, water, sewer, roads. Hence the term “public servant”.

Public vs. Private Services

Can you think of jobs in the tertiary sector that may be considered part of both the private and public sectors?

• Some examples…– Teachers can work in the public school system, or be employed by

private colleges.– Parcel delivery can be conducted by Canada Post (public sector) or

a courier business (FedEx).– Doctors that work in state funded hospitals are part of the public

sector, but those who work in clinic businesses are part of the private sector.

Factors Affecting the Location of Tertiary Activities (p. 244)

• Proximity and price are two key factors that determine the location of service industries. – Location: services must be

located close to a large enough market to produce a demand for them. High cost of transportation to and from a service can reduce demand.

– Viability: services are only viable as businesses if the demand is high enough and the price is reasonable.

• Service Availability vs. Population Size. – Larger populations support a wider range of services.– Consider Health services, Education, recreation facilities, shopping

facilities, hotels, and restaurants found in Gander (population of 11,054) and those found in Toronto (population of 2,615,060).

International Tourism in the Tertiary Sector (p. 245)

• Tourism is one of the fastest growing sectors of the economy. It is also very profitable.

– In the last quarter of the 20th century, international tourism increased by 12.5%, while the world economy grew by only 9.7%.

– This potential for growth is seen by some less developed countries as a way to increase their economies without having a strong secondary sector. Bermuda, for example, is nearly completely dependent on the tourist trade.

– International trade provides these countries with foreign capital (money), but also diversifies the skills of domestic workers, leading to more jobs and increased employment.

Bermuda Tourism Ad.

International tourism has increased dramatically for 6 reasons:

1. people have increased leisure time due to available technologies; 2. retired people have secure incomes and are able to travel; 3. people have increased discretionary spending money; 4. travel has become easier and less expensive; 5. travel agencies have packaged attractive "all expenses paid" trips; 6. advertising has been effective using attractive & exotic pictures.

Travel agents see that people are usually looking for one of three different kinds of vacations:• Climate oriented (skiing and sun bathing are at opposite extremes, but both

rely on climate)• Landscape oriented (some people like to view the Rocky Mountains, or the

Amazon River, for example)• Culture oriented (cultural land marks and history attract tourists, e.g.:

Athens, battlefields in France, the Roman Colosseum)

Mount Fuji (Landscape oriented

vacation)

Patong Beach, Thailand (Climate oriented vacation)

Great Wall of China (Culture oriented

vacation)

The Quaternary Sector (p. 249)• The quaternary sector is a specialized part of the tertiary sector that

focuses on information, research, and related technologies.– involves the collection, recoding, arranging, storage, retrieval, exchange,

and dissemination of information. Computers, Cell Phones, E-mail, and the WWW are new information technology which drives the quaternary sector.

Component of Information Technology

Definition Examples

Information Content that moves along networks between send-points and receive-points

Messages, data, images, text, voice transmissions

Networks Transporters of content that form “information highways”, along which information is sent and received

Wires, cables, fibre optics, satellites, wireless pathways

Appliances Devices that serve as send-points and receive-points

Telephones, televisions, radios, fax machines, cell phones, computers, tablets

Information Technology (IT) and Economic Development

Which regions have the greatest Minutes of Telecommunication Traffic?What does this say about the connection between a country’s level of development and it’s communications connectivity?

Information Technology (IT) and Economic Development• Areas where connectivity to global computer/communications

networks are restricted or limited are often less developed countries.– Poor countries lack the capital (money) to obtain technologies

necessary for a strong quaternary sector.• Some economists believe IT can be a means for less developed

countries to address their social and economic needs.– For example: educational services can be provided to rural areas

through communications technologies; Exporters can Internet services to market their goods, giving them access to a larger consumer base.

• Less developed countries may be able to “skip” the secondary stage of economic development and use IT to create jobs and develop the service sector– For example: countries like India earn significant revenue by

exporting information to more developed countries (i.e.: call centres).

Factors Affecting Location of Quaternary Activity

• People and Infrastructure:– Populations concentrated in an area make the information sector

viable. The population must be large enough to support information technology. E.g.: digital cell phone service, and high speed internet connection.

– Infrastructure, or basic framework, is required for the communication of information. (E.g.: Telephone technology is required in order to have high speed internet). The larger the population, the better and more developed the infrastructure.• As infrastructure develops the prices of service and technology

decrease. Lesser developed nations currently do not have much access. Lesser developed nations have to build infrastructure before they can further develop their quaternary sector.

Factors Affecting Location of Quaternary Activity

• Less developed countries can have advantages here:– Often wages are lower in these countries, attracting business.– Infrastructure (wires, computers, etc.) is getting cheaper.– It is cheaper to install new equipment than to take out old

equipment and replace it.

• In order to benefit from these advantages, less developed countries need to...– Set down realistic long-term plans and policies to improve

quaternary sector.– Encourage telecommunication companies to reduce long-distance

charges and cost of operation.– Prepare for the future by developing educational training

programs for people, creating an available local workforce.

Mass Communication Affects Workplace Location

• As more people work in the information sector we may see a reduction in urbanization (people moving to cities for work). People would not be tied to an office building if they could work at home. Work from home could be submitted electronically.

• Some businesses need not be located physically near other businesses as we saw with the agglomerating tendency of the manufacturing sector.

• If Infrastructure improves to the point where it overcomes distances, information technology will be a new source of employment and economic activity in rural depressed regions. (E.g.: call centres in smaller towns).

**Complete #s 21 & 22 on p. 251**

DEVELOPMENT OF A NATION (p. 230)• As we have seen, the level of services and products available to people in

the world varies. Some countries are “better off” or “wealthier” than others.

Complete “Developing Nations” worksheet.

• Economists and sociologists use the term standard of living to describe how well off people are. Standard of living equates to quality of life.

• There are two measures that are used to help determine standard of living:– Economic development refers to how well the economy is doing and

how much money people have at their disposal.– Social development is often closely tied to economic development, but

refers to more human indicators of well being such as life expectancy, infant mortality rate, literacy rate, and availability of communications.

• Some countries have a very high standard of living with long life expectancy, equal rights, high average wages, strong economies, great health care and high literacy rates.

• Other countries have a short life expectancy, fierce discrimination against woman, very low wages, faltering economies, little health care and very low literacy rates.

• The United Nations has developed a set of “millennium goals” for countries to achieve as a way of limiting the large disparity between countries and their levels of development:– Eradicate extreme poverty and hunger – Achieve universal primary education – Promote gender equality and empower women – Reduce child mortality – Improve maternal health – Combat HIV/AIDS, malaria and other diseases – Ensure environmental sustainability – Develop a global partnership for development

Standard of Living indicators• "Indicators" are used to give some degree of measure to the concept

of development. • There are two aspects to development, economic (financial) and

social (human). Social scientists have, therefore, developed economic indicators and social indicators.

Economic Indicators• Employment Structure and GNP per Capita are two common

measures used for economic development.

1. An employment structure is a set of statistics that specify the percentage of a country’s labour force engaged in each of the four economic sectors (primary, secondary, tertiary, quaternary)

What pattern exists between employment structure and level of development?

• Countries that have become "developed" have been able to move their economy beyond the primary sector to the secondary sector which in turn grows the tertiary sector (i.e.: developed countries have a larger percentage of their work force employed in the secondary and tertiary sectors, while lesser developed countries have most of their work force employed in the primary economic sector.

• For individual countries, an employment structure would look like this:

EMPLOYMENT STRUCTURE FOR LESS DEVELOPED COUNTRYPrimary 60%

Secondary 15%

Tertiary 25%

EMPLOYMENT STRUCTURE FOR DEVELOPED COUNTRYPrimary 5%

Secondary 25%

Tertiary 70%

2. GNP per capita:a measure based on the Gross National Product (GNP) of a country. GNP refers to the total value of the production of goods and services in a nation measured over a year, together with any money earned from investment abroad, less the income earned in the nation by non-nationals. The GNP per capita takes that dollar value (US$) and divides it by the population of the country to get an average value per citizen.

For example:If GNP for a country is $30,000,000,000 and the total population of the country was 1,000,000 then…

GNP per capita = $30,000,000,000 = $30,000 per person 1,000,000 people

GNP per capita is an average value, so it can not accurately reflect the true nature of wealth in a country (There may be a few extremely wealthy citizens that skew the value).

• This visual (p. 231) compares the average GNP per capita of nations.• Some developed countries have 4-5 times the world average GNP per

capita, highlighting how significant the wealth gap is.

Standard of Living indicators

Social Indicators• There are a range of indicators used to measure social development.

These are some of the more common used:

– Life expectancy– Infant mortality rate– Literacy rate– Persons per doctor– Persons per telephone– Persons per computer– Internet users

A lower value is better for some indicators (persons per telephone for example), while higher values for life expectancy, literacy, and GNP per capita are desired.

Complete#s 22-27, pp. 232-233.