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  • 1. Weber and Industrial Location Theory Industrial Activity and Geographic Location
  • 2. Economic Geography• Economic geographers investigate the reasons behind the location of an economic activity
  • 3. Location Theory• Attempts to explain the pattern of the location of an economic activity in terms of influential factors
  • 4. The Location Decision (1)• Primary Industries – Because these deal with the extraction of resources, primary industries must be located where the resources are
  • 5. The Location Decision (1)• Secondary Industries – less dependent on resource location – raw materials can be transported if profits outweigh the costs of transportation
  • 6. The Location Decision (2)• Alfred Weber: 1868-1958• German• The Von Thunen of economic geography• Least Cost Theory – Accounted for the location of a manufacturing plant in terms of the owner’s desire to maximize three costs
  • 7. The Location Decision (3) Transportation (most important) moving raw materials to factory and finished goods to market
  • 8. The Location Decision (3) Labor High labor costs reduce margin of profit current economic boom on Pacific rim
  • 9. The Location Decision (3) Agglomeration number of similar enterprises clustered in the same area Shared talents, services and facilities when excessive, can lead to high rents, rising wages, circulation problems
  • 10. Weber• Some argued that Weber’s model did not adequately account for variations in costs over time – Substitution principle: when one cost decreases can endure higher costs in another area (fixed vs variable costs) – Model suggests that one particular site (point vs area) would be optimal but the business could flourish in more than one area – Taxation policies are not accounted for by Weber
  • 11. Factors of Industrial Location (1) – Raw Materials• resources involved in manufacturing• steel plants along Atlantic seaboard because iron shipped in from Venezuela• Europe’s coal and iron ore regions – Iron smelters built near coal fields
  • 12. Factors of Industrial Location (1) – Raw Materials• Japan’s colonial expansion into E Asia (China/Korea) due to raw materials• Japan’s cheap labor allowed them to purchase and transport goods from other locales (substitution principle)• European colonization for resources, periphery to core
  • 13.
  • 14. Factors of Industrial Location (2) – Labor• a large, low-wage trainable labor force will attract manufacturers• Japan’s postwar success based on skills and low wages of workforce, low quality high quantity initially
  • 15. Factors of Industrial Location (2) – Labor• China emerged with large labor force in 80’s• Taiwan and South Korea emerged to challenge Japan in mid ‘90’s due to cheaper labor• Four Tigers today