Economic structure or countries, regions, and globalization

1. Economic Structure of Countries
& Regions & Globalization
Ch. 8 – Geographies of Economic
Development

2. Economic Activities
• Primary activities – natural resource extraction &
production – agriculture, mining, fishing, & forestry
• Secondary activities – process, transform, assemble
raw materials into food products & manufactured
goods such as textiles, furniture, automobiles,
garments, etc.
• Tertiary activities – sale & exchange of goods &
services, warehousing, retail, personal services,
accounting, advertising, entertainment, professional
services, etc.
• Quaternary activities – processing of knowledge &
information. Data processing, information storage &
retrieval, education, research & development.

3. Geographical Divisions of Labor
• National, regional, & locally based economic
specializations evolving out of world-system
of trade & politics & with locational needs of
successive technology systems.
• Economies with primary-sector activities –
low per capita GDP, mineral extraction &
agriculture, exception is Oil extraction
• Africa & Asia – 50-75% of labor force engaged
in primary economic activities

4. International division of labor
Specialization by country / products for
export:
• Globally-large Secondary sector, higher GDP
• Argentina, South Korea are nations with large
exports of products, agricultural &
manufactured goods
• Specialized manufacturing industries in Core
& semi-Peripheral countries

5. Newly industrializing countries (NIC’s)
• Former peripheral nations – acquired
significant industrial sector via Foreign direct
investment
• 7 NIC’s including China, South Korea, Mexico,
Brazil, India, Indonesia & Thailand in order
• China – 2nd largest exporter of manufactured
goods Brazil & India rank 9th & 10th in
manufacturing output 2010 or MVA Africa 1%
• Asian NIC’s manufacturing growth is highest

6. Asian “Tigers”
Largest gains in manufacturing growth:
• South Korea
• Hong Kong – separate political entity from China
• Taiwan
• Singapore
• Malaysia
• Thailand
• All have access to Ocean Port shipping for Export

7. Post Industrial Economies
• Core nations – Tertiary & Quaternary sectors
dominate the workforce with smaller, highly
productive secondary sectors. 2% primary, 22%
secondary,
• United States - share of world manufacturing
output was 40% in 1960’s, now 22%
• Japan - was 6% in 1960’s to 18% in 2010
• Tertiary & Quaternary sectors only significant in
U.S. – 50% Tertiary, 25% Quaternary –
knowledge-based activities part of Globalization

8. Knowledge & Technology
• Core dominance via tech & knowledge
• Knowledge is more important than physical &
human resources – ½ U.S. GDP based on
knowledge production
• Peripheral nations always at disadvantage, do
not have same economic specialization, &
educational institutions

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Stages of Economic Development
Figure 7.15 A model based on the idea of
successive stages of economic development, now
regarded as overly simplistic.

10. International Trading blocs dominate
economic trade
Global Trading Blocs:
• Western Europe, former African, India,
Caribbean, & Austral nations
• North America & Latin American nations
• Former Soviet nations – border western Russia
• Japan & East Asian states, Saudi Arabia & Bahrain
• Blocs are Core & semi Periphery & Oil-producing
nations

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Economic Structure, (cont’d)
• Trading blocs
• Autarky
• Neoliberal polices
Figure 7.8 Manufacturing in South Korea
Figure 7.9 World economic forum in
Switzerland, 2011

12. Autarky & world trade trends
• Countries that do not contribute significantly to
world flows of imports & exports
• Smaller peripheral countries: Bolivia (S.
America), Burkina Faso, Ghana, Malawi, Tanzania
(Africa), & Samoa (Micronesia)
• Trend toward intensification of trade within &
between core regions at expense of peripheral
countries except for Oil.
• Innovations – transport, communications,
manufacturing diminish constraints of distance.
• Intervening opportunities are regionally
significant but not as much globally

13. Global politics & trade
• Neoliberal policies – favor unregulated
capitalism but human rights suffer &
transnational corporations concentrate wealth
& advantage
• Persistence of peripheral dependence on
trade with core countries that are proximally
closer in distance. No big surprise, advantage
& wealth concentrates within Core while
choking off any hope of development at the
same scale in periphery.

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Dependency
Figure 7.10 One reflection of dependency: the index of commodity concentration of
exports, 2002

15. Economic dependency
• Forced Dependency created by Core’s dominance of
periphery countries for natural resources without
investing in the population. Morally lacking in regard
for culture, environment & human rights.
• Dependency is an artificial situation caused by focus on
market gain only.
• Results in a narrower economic base for peripheral
countries. No manufacturing & export of a few
resources – agriculture or minerals.
Figure 7.12 Cocoa production, Ghana
Coffee bananas, & cocoa are grown in
tropical soils, often at higher altitudes

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The 2008 debt crisis
Figure 7.11 The 2008 debt crisis

17. International Debt
• Another outcome of Core dominance & lack of
investment in Peripheral infrastructure
• Ridiculous amounts of debt service levels to keep
Core markets profitable & periphery in debt.
• At root is structural inequality of world
economy!
• Terms of trade always benefit Core who sucks up
natural resources of Primary Producers/Exporters
without benefit to periphery & forces issues of
sustainability
• Ratio of prices at which exports & imports are
exchanged on global markets.

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Fair Trade
Figure 7.13 Fair trade coffee in Uganda Figure 7.14 A fair trade shop in Canterbury, England

19. Fair Trade –
Mobilization against Globalization
• Movement result of increasing awareness within
Core that small producers supply the global
economy, but make the least profit.
• Now a global network of Producers of traders, marketers,
advocates, & consumers building equitable trading
relationships.
• 750 Fair Trade-certified retailers & “world shops”
supporting periphery producers.
• Fair Trade Bananas = 20% of retail market
• Fair Trade Coffee = U.S. $600 M in Sales – 2009
• Ethical Trading Initiative (ETI) Multiagency groups of
companies & non-govt. orgs (NGO’s) – basic code of labor
practices to protect Workers, conditions, living wage, 48 hr.

20. Regional Economic Development
• Geographical path dependence – relationship
between present-day activities in a place & the
past patterns & relationships – i.e. infrastructure,
educational institutions, early manufacturing,
history of economy
• Initial advantage – importance of early start in a
new business that take advantage of:
• External economies – existing labor force,
consumer markets, fixed social capital, etc.
Educated financial workers take positions in
newly formed investment firms targeted towards
upper middle class technical labor force

21. Regional Economic Cores
• Agglomeration effects are associated with
kinds of economic linkages &
interdependencies
• Cost advantages that accrue to companies
because of location among functionally-
related activities

22. Regional Economic Cores cont.
• Backward linkages – firms supply new industry
with components, supplies, specialized services,
consulting, or facilities to support industry.
• Forward linkages – develop as firms integrate
finished products into their own processing, assembly,
finishing, packaging or distribution operations.
• Ancillary industries that support industry such as
maintenance & repair, recycling, security & business
services
• An established pool of specialized labor force with
specific skills and expertise that are attractive to other
firms. Engineers, accountants, marketing professionals
can work with many business types.

23. Regional & Local economic growth
• Cumulative causation is spiraling accrual of
advantages of geographic location as a result of
external economies, agglomeration effects &
localization. Specialized / trained work force in movie industry
located in a region with accrual of proximity of forward, backward &
ancillary industries. Actors, editors, technical professionals, support &
construction professionals, service & transport professionals. Media &
print industries.
• Infrastructure - roads, airports, residential &
commercial areas, school districts, recreational
activities, physical amenities from environment, etc.
• Backwash effects – out-migration of trained work
force, investment capital outflow to other regions,
states, etc., shrinking local tax bases

24. Modification of Regional
Core-Periphery Patterns
• Spread effects positive impacts on a region from
economic growth of another core economic
region.
– Creates demand for food, consumer products, other
manufacturing industries, construction, roads, public
services, etc. to support a growing community.
• Import substitution – closely imitated product or
service replaces more expensive or core related
product or service.
– Businesses copy an innovative idea or service and
create new forward and backward regional linkages
resulting in more positive spread effects.

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Regional Economic Development,
(cont’d)
• Modification of regional
core-periphery patterns
• Spread effects
• Import substitution
• Agglomeration
diseconomies
• Deindustrialization
• Creative destruction
Figure 7.18 An abandoned Packard automobile
plant in Detroit, Michigan.

26. Deindustrialization & Creative
Destruction
• Agglomeration diseconomies – negative
economic effects of urbanization & concentration
of industry in regions, air pollution, traffic, over-
crowding, lack of housing, high housing costs,
substandard housing, health impacts, crime,
increased public service costs. California
metropolitan areas.
• Deindustrialization – Regional disinvestment in
formerly prosperous industrial core regions such
as Detroit, MI by relocation to Asia & S. Asia

27. Government Intervention
• National governments may intervene to redirect
regional economic growth to prevent disaster
• Regional planning – shapes residential & commercial,
industrial landscapes via land planning – environment,
natural resources, public health & welfare, green
spaces for recreational & public use
• Growth poles – ‘propulsive industries’ generate most
economic development; auto manufacturing, then
aerospace & military industry, biotechnology & digital
technologies
• Techno-poles- sites of high-tech industries emerge
from regional specialization & direct foreign
investment from core, Ex.: 4 Motors of Europe, Silicon
Valley

28. Flexible Production Systems
• Neo-Fordism – mass production based on assembly-line techniques
along with mass consumer consumption modified by more flexible
production, distribution & marketing systems. Allows shifts to meet
consumer demands
• Just-in-time production – vertical disintegration within large
formerly functionally integrated firms, auto manufacturers, produce
just enough for inventories to meet demands
• Between firms
• Vertical disintegration evolution of large functionally integrated
firms, such as IBM, Kodak, into less management heavy
organizations. Use more specialized subcontractors to provide
components of production.
• Strategic alliances - agreement between transnational
corporations to share technology, marketing networks, market
research, product development to sell to consumers seamlessly,
intensified globalization of standardized products. Sucks away labor
rights, forces markets to accept products without reaction time. I’m
not a fan of globalization!!!

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Globalization and Economic Development
Figure 7.20 The impact of containerization on
world trade
Figure 7.21 24-hour trading between major
financial markets

30. “Offshore” Economic Theft by Corporations
• Maquiladoras & Export-Processing Zones – direct result of lifting of trade
barriers courtesy of NAFTA, benefits manufacturing firms in cheaper labor
costs, less environmental regulations in Mexico. Consumer pays less in
short term, more profit, loss of jobs in the U.S.
• Export-Processing Zones – financial incentives to Core Export-Import
business
• Retailing Chains & Global Sourcing - nice way of saying goodbye to well
paying employment in the U.S. Advantages go to large corporations to
keep profits high
• New Geographies of Office Employment – another nice way of saying
goodbye to U.S. jobs although results in cross-cultural exchanges between
2 similar populations of India & U.S. & other nations.
• Clusters of Specialized Offices – Outsourcing or Temporary Employment,
no long term advantage for Labor
• WAL-MART – Low prices at expense of Labor. Costs U.S. Taxpayers
due to lack of health benefits. Monopolistic control of transport of goods
transnationally. Worth Billions. Gives Nothing. : ) OCCUPY WAL-MART
• Offshore Financial Centers – Another way for Corporation to evade paying
Taxes to support the country they operate from. Profits from overseas
industry do not add to nations’ GDP.

31. © 2013 Pearson Education, Inc.
Geographies of Office Employment
• Decentralization
– Back-office functions
means rote jobs with
job security
• Outsourcing –
Temporary workers
with no rights
• Clusters of specialized
offices
• Offshore financial
centers Figure 7.30 Workers at a call center in India.

32. © 2013 Pearson Education, Inc.
Economic Globalization
• Just-in-time production
• Vertical disintegration
• Strategic alliances
• Export-processing zones
• Homogenization of
consumption
• Experience economy
Figure 7.27 Principal maquiladora centers on the United
States–Mexico border

33. Tourism & Economic Development
• Ecotourism - Tourists visiting Tropical countries,
adds to peripheral GDP. Hopefully maintains
biodiversity.
• Experience Economy & Place Marketing -
Tourism is the 4th in a sequence of phases of
economic organization. 1. Shift form agrarian to
2. industrial economy to a 3. service economy &
finally to an 4. experience economy by staging
experiences. Deliberate manipulation of Culture
to appeal to large segments of population:
Museums, Staged-historical events, waterfronts
& historic districts, sport arenas, concerts,
professional conferences, marketing of “place”.

34. © 2013 Pearson Education, Inc.
Future Geographies
• Availability of resources
• Expansion of world
economy
• Globalization of
industry
• Transportation
technologies
– High-speed rail systems
– Smart roads
– Smart cars
Figure 7.34 Energy-consuming goods: in an Apple
Store in Beijing, China