Weber 1


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Weber 1

  1. 1. Weber and Industrial Location Theory Industrial Activity and Geographic Location
  2. 2. Economic Geography• Economic geographers investigate the reasons behind the location of an economic activity
  3. 3. Location Theory• Attempts to explain the pattern of the location of an economic activity in terms of influential factors
  4. 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. 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. 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. 7. The Location Decision (3) Transportation (most important) moving raw materials to factory and finished goods to market
  8. 8. The Location Decision (3) Labor High labor costs reduce margin of profit current economic boom on Pacific rim
  9. 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. 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. 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. 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
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  14. 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. 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