Oh IndustryIndustrialization and Economic

Development-the past 300 years

IndustrializationThat is the process of economic activities on the earth’s surface evolved from producing basic goods to using factories to mass produce goods for consumption

Industry is Secondary Economic Activities: those that transform raw materials into usable products-useful

Involves advanced sources of energyMachinery Specialized laborInvolve both assembly, processing, and distribution

Economic Development

Were talking about improving material conditions of people through diffusion of knowledge but MOSTLY technology

Primary SectorSecondary SectorTertiary Sector

Newly industrializing countries-between MDC and LDC

Compressed Modernity-rapid economic and political change that stabilizes a country (South Korea)

Economic Indicators

Gross Domestic Product and GDP Per Capita20 K for MDCs and 1 K for LDCs

Differences between MDC’s and LDCsTypes of JobsWorker Productivity (value added)Access to Raw MaterialsAvailability of consumer goods

There are strong correlations between economic development and social development (literacy, education, healthcare)

Manufacturing Value Added

Theories of Economic

DevelopmentModernization (Westernization) Model: to be successful follow model of industrialized nations

Tradition greatest barrier to economic development

Dependency Theory: global poverty is the fault of rich nations and their historical and contemporary exploitation of LDC’s.

Marxism-class theory

Rostow’s Theory:Extension of Modernization

Theory4 Stage Theory

Traditional StageTake-off StageDrive to Technological MaturityHigh Mass Consumption

Modernization Theory encourages LDC’s to control population growth, increase food production, and take advantage of industrial technology.

Wallerstein’s Capitalist World Economy-

Outgrowth of Dependency TheoryDivided by role in global economy (role

determined by colonial period dominated by Europeans)

Core Countries-rich nations that fuel world economy-take raw materials from around the world (starbucks coffee commercials)Countries of the Periphery-poor nations, continue to support rich nations with raw materials, inexpensive labor, market to buy productsCountries of the Semi-Periphery-between poor and rich, still dominated by Core

A Brief History of Industrializtion

Britain-coal-steam engine-textiles-the rest of Europe-mass production-North America-more inventions-New York port

After WWI-industry needs fuel/energy starts exploring periphery for it-America most successful

Location Theory of Industry

Primary Industry-develops around location of natural resources but when transport improves

Secondary Industry-develops without dependence on resource location

Variable costs-energy labor transport less expensiveFriction of distance-costs go up as distance from source increasesDistance decay-industries are more likely to serve markets nearby

Weber’s Least Cost Theory

of location of industryLocation of Industry influenced by 3 factors

Transportation-site chosen partly based on cost of moving raw materials to factory to marketLabor-cheap labor may allow an industry to make up for higher transport costsAgglomeration-if several industries cluster in a city, they can provide supporting services (truck factory, furniture company, restaurant)

Can backfire and cause deglomeration-exodus from an areas

Locational Interdependence

TheoryDependent on locations of competition

Variable Revenue Analysis-a company’s ability to capture a market that will earn more customers and money than competitors

Ice Cream on the Beach

Worldwide Steel Production 2005

Situation and SiteRemember them?

Situation factors of development: mainly deal with transportation (locate factory as close as possible to buyers and sellers)

Bulk Reducing-copper heavy expensive to transport closer to factoryBulk Gaining-canned food and beverages, weigh more after processed closer to marketSingle Market-clothing cluster near market (buyers)

Situation and SiteRemember them?

Site factors are particular to a specific geographic location and focus on varying costs of land, labor and capital

Climate, land costs, access to cultural or sporting events, labor costs, willingness of banks to invest

Globalizationpatterns and impact of

industrializationFactories are still placed in places that have hard infrastructure (if not some industries may invest because labor is so inexpensive)

Industrial Regions of the World:Primary Industrial Regions (areas w/largest agglomeration-called the Industrial Belt)

Western and Central EuropeEastern North AmericaRussia and UkraineEastern Asia (Japan, China, Singapore, South Korea, Hong Kong, Taiwan)

Manufacturing Eastern Europe

and Russia

Manufacturing in North America

Manufacturing in East Asia

Globalization cont.

Secondary Industrial Regions: VenezuelaArgentinaBrazilSouth AfricaNigeriaCoastal Areas of India, MalaysiaSouthern Austrialia

Let’s talk about Mexico

The US, Canada, and Mexico have a special relationship that allows for free trade among the three countries called NAFTA North American Free Trade AgreementOn the border between US and Mexico regions called Maquiladora-workers produce goods primarily for US consumers in US based plantsMexico faces a dilemma-Maquiladora jobs taken elsewhere where labor is even cheaper (Mexico to China)

What about outsourced India?

India has some advantagesGovernment policies encouraging industrializationGrowing urban centersHydroelectric potential, coal, iron oreLarge labor forceMidway between Europe and Pacific Rim Global access to Information Technology

Outsourcing jobs (call centers)Tertiary sector growth

Globalization equals global inequality?Industrial Revolution set in motion

global inequality

Increasingly global economy provides challenges for all countries both MDC’s and LDC’s

Challenges for MDC’sTrading Blocs-trade among countries

North America, EU, East AsiaTransnational Corporations and Conglomerate CorporationsDeindustrialization (decreasing manufacturing)

Labor Cost Per Hour MDC’s and LDC’s

Globalization equals global inequality?Challenges for LDC’s

Distance from MarketsInadequate infrastructureCompetition with existing manufacturers in other countries

Transnational corporations set up low cost jobs in LDC’s-keeps global inequalities in place

Industry and the Environment

Coal replaces wood as leading source of energy-

New energy: coal, petroleum and natural gas will run out (fossil fuels)

Fossil Fuel reservesProven-discovered not extractedPotential-undiscoveredPetroleum is being consumed faster than it is being found

MDC’s with ¼ world’s population consume ¾ world’s fossil fuels

Industry and the Environment

Industrial PollutionAir, H20, Land Global Warming-reduce ozone layer, world gets hotter

Called the Greenhouse effectAcid Rain-sulfur dioxide nitrogen released into air by burning fossil fuels

Get into lakes and streams

Sustainable developmentEnvironment cannot sustain industrial demands on itCurrent populations should not impair future ones

Possible Solutions to Environmental

ProblemsPrevention-changing governmental policies

Technological change-pollution capturing filters for industrial runoff and recycling of industrial wastes

Alternate energy sources-wind, solar

Mitigation-reduce damage by replacing or cleaning

Compensation-political bodies could compensate companies and industries who are more responsible in practices and business