Industrial activity and geographic location

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Industrial activity and geographic location

  1. 1. Industrial Activity and Geographic Location01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 1 nrvmba,email:1966patel@gmail.c
  2. 2. Economic Unit Study Guide *Rostow’s modernization model (5 stages) *Location Theory/Harold Hotelling *Wallenstein’s Theory *Self sufficiency and the practices of international trade *Compare and contrast the differences that distinguish the developing from the developed world *Why are there regional economic difference within a country?*Causes of deindustrialization - tertiary and quatenary economic sectors *Positive and negative effects of industrialization *Globalization and the effects.01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 2 nrvmba,email:1966patel@gmail.c
  3. 3. • “Preindustrial World” – Industries did exist before the Ind. Rev. (e.g. India – carpenters, textiles, silver,…) – Ind. Rev. began in Midlands of North-Central England (Black Country – coal fields) & diffused eastward – Affected production, transportation, and communication (steam-engine, locomotive, telegraph,…)• The Location Decision – Primary industries – located near raw mat.s – Secondary industries – less dependent on resource location 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 3 nrvmba,email:1966patel@gmail.c
  4. 4. – Economic models assume: • 1) People will try to maximize their advantages over competitors, • 2) They will want to make as much profit as possible, • 3) They will take into account variable costs – energy, transportation, labor,…– Friction of distance – the increase in time and cost that usually comes w/ increasing distance– Distance decay – the impact of a function or activity will decline as one moves away from its point of origin01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 4 nrvmba,email:1966patel@gmail.c
  5. 5. • Key Concepts of Trans. & Comm.:• Require a specially designed and constructed [cultural] landscape (roads, TV stations,…)• Cumulative causation – e.g. investment is risky; usually occurs in developed states• Trans. & Comm. systems can be viewed as a surface or a network:• 1) Surface: Pool table; move freely (high potential for collisions); move at limited speeds• 2) Network: faster movement, but restricted to certain paths (fewer collisions) 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 5• We modify systems b/w both nrvmba,email:1966patel@gmail.c
  6. 6. • Ullman’s Conceptual Frame:• Forms a basis for understanding the volume & timing of the flows of goods b/w locations; 3 main concepts:• 1) Complementarily – refers to the needs of one region matching the products of another (copper from AK to manufacturing cities)• 2) Intervening opportunity – reduces attractiveness of more distant locations• 3) Transferability – refers to the ease w/ which products can be moved 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 6 Kennicott Copper Mine nrvmba,email:1966patel@gmail.c
  7. 7. • –Harold Hotelling Model (Two dimensional) – Locational interdependence – the location of industries can’t be understood w/o ref. to the location of other industries of like kind – Two vendors located on pts. A & C, eventually gravitate toward pt. B (moving from this pt. will only hurt profitability) – A third vendor complicates this (spatially) 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 7 nrvmba,email:1966patel@gmail.c
  8. 8. • –Least Cost Theory (1909) – Alfred Weber’s model – owners of manufacturing plants seek to minimize three costs: 1) Transportation, 2) labor, and 3) agglomeration (too much can lead to high rents & wages, circulation problems) – Weight-losing case: final product weighs less than raw mat.s; location = source 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 8 nrvmba,email:1966patel@gmail.c
  9. 9. – Weight-gaining case: final product weighs more (or takes more space) than raw mat.s (e.g. addition of water); location = market– Some argue Weber’s model doesn’t adequately account for variations in costs over time (e.g. taxation, consumer demand)– Substitution principle – decreases in certain costs can offset increases in others01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 9 nrvmba,email:1966patel@gmail.c
  10. 10. • Christaller’s Central Place Theory – Revisited • Distance affects the marketing strategies of enterprises • Businesses identify one location, possess a monopoly • Hexagons display a nesting pattern; Christaller’s theory is not as accurate today (diminishing specialization)01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 10 nrvmba,email:1966patel@gmail.c
  11. 11. • –August Lösch – Profit-maximization: firms will identify a zone of profitability (not just a point) – Other businesses can come in and change the configuration of that zone – Agglomeration can give the entire area a competitive advantage 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 11 nrvmba,email:1966patel@gmail.c
  12. 12. • Factors of Industrial Location: • Raw Materials-e.g. Japan has few, but grew into an ind. giant b/c of skilled labor & low wages • Labor-e.g. 1994 – wages in Shanghai’s Pudong dist. = 1/40 Japan, 1/30 Taiwan • Infrastructure-banks, transportation, communication, Open-air laundrybyin01/25/13 01:04 AM social services,… 12 Dr.Rajesh Patel,Director, Mumbai, India nrvmba,email:1966patel@gmail.c
  13. 13. Resources and Regions: The Global Distribution of Industry01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 13 nrvmba,email:1966patel@gmail.c
  14. 14. • Four Primary Industrial Regions: – Eastern North America (largest) – Western & Central Europe – Russia & Ukraine – Eastern Asia (fastest growing)• Industrialization Through WWI – Britain - enormous comparative advantage – Industrialization expanded along coal deposits: N. France – Belgium – N-C Germany – NW Czechoslovakia – S. Poland – Colonialism supplied Europe w/ raw mat.s – Ind. Rev. diffused (exp.) from core regions 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 14 nrvmba,email:1966patel@gmail.c
  15. 15. 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 15 nrvmba,email:1966patel@gmail.c
  16. 16. – North America: only serious rival to Eur. – New York – great relative location, major break-of-bulk (e.g. ship-to-rail) port – N. Am. benefited from nat. resources, trans. networks, capital, and labor – Most of the rest of the world lagged far behind (exceptions: Ukraine, Australia,…)• Mid-Twentieth Century Industrialization – Oil & natural gas played a key role (U.S. is very dependent on foreign sources today) – U.S. emerged as the world’s preeminent power (escaped destruction of WWI) – American Manufacturing Belt - NE 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 16 nrvmba,email:1966patel@gmail.c
  17. 17. • Late Twentieth Century and Beyond – “Four Tigers”: South Korea (Seoul), Taiwan (Taipei), Hong Kong, Singapore (industrial powers) – China – rapidly growing in influence – Japan is losing its dominance01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 17Pusan, South Korea – nrvmba,email:1966patel@gmail.c
  18. 18. - N. Hemisphere Ind. Zone: U.S. – Europe – Former USSR – E. Asia- Secondary Regions – Mexico, Brazil, S. Africa, Egypt, India, Australia,… 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 18 nrvmba,email:1966patel@gmail.c
  19. 19. Concepts of Development01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 19 nrvmba,email:1966patel@gmail.c
  20. 20. • Economic Activities (revisited) – Primary – ext.; Secondary – manufacturing – Tertiary – service (trans., sales, education,…) – Quaternary – exchange or application of info., knowledge, or capital (finance, insurance & real estate (FIRE activities), legal services,…) – Quinary – higher order, specialized knowledge or skill (scientific research, high management) – Relationship b/w industrialization and urban location changed over time • First industries were rural (e.g. water-powered) • Mass production factories of early 1900s were urban based (e.g. cheap labor) • Expansion of tertiary,Patel,Director, 01/25/13 01:04 AM by Dr.Rajesh quaternary, & quinary 20 nrvmba,email:1966patel@gmail.c activities closely associated w/ growth of suburban
  21. 21. • Agglomeration (revisited): – Occurs when certain conditions are met: – 1) When a cluster of activities create enough demand for support services – 2) Activities needing access to information & control tend to concentrate (e.g. face-to-face is better, no matter how rapid other forms of comm. are (e-mail, phone,…)) – 3) When cultural institutions (schools, hospitals,…) are attracted to the area – Deglomeration = too many activities (of the wrong type); traffic, pollution, capital shortages, inc. land prices,… 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 21 nrvmba,email:1966patel@gmail.c
  22. 22. • GNP (Gross National Product): – Total value of all goods and services produced by a country in a single year (includes domestic & international) – Does NOT: 1) include informal econ.; 2) reflect negative spinoffs (e.g. resource depletion, pollution, prisons,…), 3) illustrate distribution of wealth (UAE = >$15,000 p.c.) – Alternative measures: 1) Occupational structure, 2) Productivity per worker, 3) Consumption of energy per person, 4) Trans. & comm. facilities per person, 5) Dependency (young & old) ratio, 6) social indicator rates (e.g. literacy, inf. mortality) 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 22 nrvmba,email:1966patel@gmail.c
  23. 23. 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 23 nrvmba,email:1966patel@gmail.c
  24. 24. • Core-Periphery (revisited) – World System’s Theory (Immanuel Wallerstein) – Core-periphery link can exist at many scales: w/in a region (Los Angeles is a core of S. Cal.), w/in a country (Johannesburg is a core of S. Afr), global (Japan is a core of E. Asia) – North-South Line (W. German Chancellor Brandt) – map of economic development in 1960s (“1st” world (US, Eur, Japan) market economies dominating the “3rd” world, w/ “2nd”AM 01/25/13 01:04 world (USSR & China) traveling down by Dr.Rajesh Patel,Director, 24 a state-planned economic path) nrvmba,email:1966patel@gmail.c
  25. 25. Per Capita GNPs S. Afr. - $3,310 Haiti - $410 S. Korea - $8,600 Pakistan - $470 U.S. - $29,24001/25/13 01:04 AM by Dr.Rajesh Patel,Director, 25 Egypt - $1,290 nrvmba,email:1966patel@gmail.cJapan - $32,350
  26. 26. • GDP/GNP vs. GNI PPP – GDP/GNP = Gross Domestic/Nat. Product – GNI PPP = Gross National Income w/ purchasing power parity (allow cross-country comparisons of economic aggregates on the basis of physical levels of output, free of price and exchange rate distortions) Country (2000) GDP ($ bn) GNI PPP ($ bn) Nepal 5.5 31.6 India 457 2,375 China 1,080 4,951 Japan 4,842 3,436 U.S. 01/25/13 01:04 AM 9,837 by Dr.Rajesh Patel,Director, nrvmba,email:1966patel@gmail.c 9,60126
  27. 27. • Models of Development – Liberal: 1) Assume all countries are capable of developing economically in the same way, and 2) disparities b/w countries & regions are the result of short-term inefficiencies in local or regional markets – Structuralist: Economic disparities are the result of historically derived power relations w/in the global economic system; cannot be changed easily (misleading to assume all areas will go through the same process of development) 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 27 nrvmba,email:1966patel@gmail.c
  28. 28. • Modernization Model (a “liberal” model) – Walt Rostow – 1960s; 5 stages: – 1) The Traditional Society: high % in agr. (subsistence), high % of national wealth spent on “non-productive” areas (military, religion) – 2) Preconditions for Take-Off: Educated elite influence pop. to invest in tech. & infrastructure; inc. in openness & production – 3) Take-Off: “Industrial Rev”; urbanization, industrialization, but still some trad. areas – 4) Drive to Maturity: Tech. diffuses, ind. specialization, modernization occurs in core – 5) Age of Mass Consumption: high incomes, widespread prod., majority in service sector 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, nrvmba,email:1966patel@gmail.c 28
  29. 29. Walt Rostow’s Modernization Model Selected countries up to 196001/25/13 01:04 AM by Dr.Rajesh Patel,Director, 29 nrvmba,email:1966patel@gmail.c
  30. 30. • Dependency Theory (“structuralist”) – Political & economic relationships b/w countries & regions control & limit the developmental possibilities of less well-off areas (e.g. imperialism caused colonies to be dependent – this helps sustain the prosperity of dominant areas & poverty of other regions) – Only at later stages of development does the core have a positive impact on the periphery (grants, loans, special economic zones,…) 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 30 nrvmba,email:1966patel@gmail.c
  31. 31. • Conditions for Core Development: – Core – regions w/ concentrations of employment, capital & economic control; develops w/ agglomeration – Attract new investment through: • Backward linkages – supply firms w/ components & services • Forward linkages – help firms find uses & markets for their products • Ancillary industries – firms providing services for other corporations • Investment into infrastructure & technology 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 31 nrvmba,email:1966patel@gmail.c
  32. 32. Images of New York City01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 32 nrvmba,email:1966patel@gmail.c
  33. 33. • Conditions in the Periphery (revisited) – High rates of birth, death, infant mortality, illiteracy, malnutrition, incidence of disease, rural populations, overcrowding in urban areas – Women’s workloads are often heavier than men’s, landholdings are often fragmented (w/ poor harvesting tech.), soil erosion is commonplace, families often in debt,… – A country’s core may illustrate “progress”, but often differs greatly w/ most areas 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 33 nrvmba,email:1966patel@gmail.c
  34. 34. Images of Lagos,01/25/13 01:04 AM by Dr.Rajesh Patel,Director, Nigeria 34 nrvmba,email:1966patel@gmail.c
  35. 35. Deindustrialization and the Rise of the Service Sector01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 35 nrvmba,email:1966patel@gmail.c
  36. 36. Deindustrialization and the Rise of the Service Sector01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 36 nrvmba,email:1966patel@gmail.c
  37. 37. • New International Division of Labor – Periphery regions are dependent on core for manufacturing jobs, likewise … – Core TNCs are dependent on periphery for cheap labor, fewer environmental 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 37 regulations,nrvmba,email:1966patel@gmail.c markets and expanding
  38. 38. • New International Division of Labor – Periphery regions are dependent on core for manufacturing jobs, likewise … – Core TNCs are dependent on periphery for cheap labor, fewer environmental 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 38 regulations,nrvmba,email:1966patel@gmail.c markets and expanding
  39. 39. • Deindustrialization – Regions with high labor costs & old technology may experience deind. (core countries, “Rustbelt”) as new tech. can be more cheaply appropriated elsewere – US Sunbelt drew investment away from NE b/c of lower rates of unionization, higher amenity values (i.e. place), gov’t contracts, … 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 39 nrvmba,email:1966patel@gmail.c
  40. 40. • Deindustrialization – Regions with high labor costs & old technology may experience deind. (core countries, “Rustbelt”) as new tech. can be more cheaply appropriated elsewere – US Sunbelt drew investment away from NE b/c of lower rates of unionization, higher amenity values (i.e. place), gov’t contracts, … 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 40 nrvmba,email:1966patel@gmail.c
  41. 41. – Specialized Economic Zones: area w/in acountry in which tax incentives & fewer enviro.regulations attract foreign business/investment– Manufacturing export zone – periphery;favorable tax, regulatory & trade arrangements– High technology corridors – core; network of 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 41research, development & tech. enterprises nrvmba,email:1966patel@gmail.c
  42. 42. A maquiladora in Mexico A technopolePatel,Director,01/25/13 01:04 AM by Dr.Rajesh – Silicon Valley nrvmba,email:1966patel@gmail.c 42
  43. 43. • OECD - Organisation for Economic Co- operation and Development – Forum where gov’ts work together to address economic, social and environmental challenges – Born after World War II to coordinate the Marshall Plan; today has 30 member countries (which produce > 2/3 world’s goods & services), w/ more than 70 developing and transition economies working w/ them – Membership is limited only by a countrys commitment to 1) a market economy, and 2) a pluralistic democracy 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 43 nrvmba,email:1966patel@gmail.c
  44. 44. OECD Member Countries Countries/Economies Engaged in Working Relationships with the OECD– OECD: Sometimes accused of neo-colonialism (entrenchment of the colonialorder (trade & investment) under a new (non-pol.) guise); some countries’ have a high % oftheir GNP being allocated to payment of01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 44interest on accumulated foreign debts nrvmba,email:1966patel@gmail.c
  45. 45. – World Cities: John Friedmann (1980s)– Dominant in terms of their global-politicaleconomy; centers of control of the worldeconomy, not the largest in terms of pop. or ind. 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 45–Examples: N.Y.C., London, Tokyo, Sao Paolo,… nrvmba,email:1966patel@gmail.c
  46. 46. • Time-Space Compression: – Refers to the social and psychological effects of living in a technologically advanced world – Time-space convergence – refers to the greatly accelerated movement of goods, ideas, and information during the 20th c. made possible by tech. innovations in in transportation & communication – Transition from Fordist ind. system to a faster, more flexible system that has opened new markets & brought places “closer together” – World Wide Web - no accurate estimates of its economic impact, but it is growing 01/25/13 01:04 AM by Dr.Rajesh Patel,Director, 46 nrvmba,email:1966patel@gmail.c
  47. 47. • Tourism: A Service Industry Giant – Some countries have made agriculture their main priority, others – industry, and others,… – Tourism & travel = 11% of all global jobs, and 11% of global GNP (~$4 trillion/yr.) – Investment by “host” country is huge: i.e. building hotels diverts money that could be used for housing, education, … – Many hotels are owned by MNCs, NOT the “host” country, affects local economy little – A fast-growing industry as people are traveling more, however congestion at tourist sites is a rising problem (i.e. usually need a reservation for a campsitebyin Yellowstone in the summer) 01/25/13 01:04 AM Dr.Rajesh Patel,Director, 47 nrvmba,email:1966patel@gmail.c
  48. 48. • Tourism: A Service Industry Giant – Some countries have made agriculture their main priority, others – industry, and others,… – Tourism & travel = 11% of all global jobs, and 11% of global GNP (~$4 trillion/yr.) – Investment by “host” country is huge: i.e. building hotels diverts money that could be used for housing, education, … – Many hotels are owned by MNCs, NOT the “host” country, affects local economy little – A fast-growing industry as people are traveling more, however congestion at tourist sites is a rising problem (i.e. usually need a reservation for a campsitebyin Yellowstone in the summer) 01/25/13 01:04 AM Dr.Rajesh Patel,Director, 48 nrvmba,email:1966patel@gmail.c

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