Part two - industry


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Part two - industry

  1. 1. Part two -- industryDiffusion of industry and location theories
  2. 2. The first Railroad in England opened in 1825 and by 1830 Manchester and Lancaster wereconnected by rail
  3. 3. Diffusion to Mainland Europe• Early 1800s innovations diffused to mainland Europe-Low Countries & Germany – Location criteria-proximity to coal fields – Connection to a water port• Latter Diffusion in late 1800s innovations – Location criteria-access to railroads strengthened Paris and London as manufacturing centers
  4. 4. Over 50% of goods entering Europe arrive at two ports in the Netherlands
  5. 5. Diffusion of the Industrial Revolution
  6. 6. Diffusion to Mainland Europe• A belt of coal fields stretch along southern edge of North European Plain-northern France, Netherlands, German Ruhr, western Bohemia & Silesia• Rotterdam, Netherlands- located on the Rhine-connects Ruhr Valley to the sea-most important port of Europe• Paris-luxury items-jewelry, perfume, fashions plus metallurgy and chemicals- LeHavre major port connects Paris with the sea
  7. 7. Diffusion ofIndustrialRevolution
  8. 8. The Paris Basin is the Industrial base of France. Rouen (above)is at the head of navigation point on the Seine River.
  9. 9. How do Location Theories explain Industrial Location?
  10. 10. Location Theory• Location Theory – predicting where a business will or should be located.• Location of an industry is dependent on economic, political, cultural features as well as whim.• Location Theory Considers: – Variable costs-energy, transportation costs & labor costs – Friction of distance-increasing distance =increased time & cost
  11. 11. Location ModelsWeber’s Model-The Least Cost TheoryAlfred Weber, (1868-1958) a German economists, published Theory of the Location of Industries in 1909. His theory was the industrial equivalent of the Von Thunen Model.Manufacturing plants will locate where costs are the least.Three Categories of Costs:Transportation-the most important cost-usually the best site is where cost to transport raw material and finished product is the lowestLabor-high labor costs reduce profit-location where there is a supply of cheap, non-union labor may offset transportation costsAgglomeration-when a group of industries cluster for mutual benefit- shared services, facilities, etc.-costs can be lowerDeglomeration-when excessive agglomeration offsets advantage- eastern crowded cities
  12. 12. Location Models• Hotelling’s Model-Harold Hotelling (1895-1973) this economist modified Weber’s theory by saying the location of an industry cannot be understood with out reference to other similar industries-called Locational Interdependence• Losch’s Model-August Losch said that manufacturing plants choose locations where they can maximize profit. Theory: Zone of Profitability
  13. 13. Losch’s Model-Zone of Profitability