Industries and agriculture

1. Location,
Production and
Change
Topic 1 A-level Human Geography

2. Agriculture Geography
• Describe and explain spatial variations in
agricultural activity over the earth’s surface
• There are many species of crops grown around the
world
• Within one species, there are many variations
• Within one variation there are many methods
• Thus agricultural can be highly diverse

3. Agricultural
• The purposive raising of livestock and crops for
human needs
• Excludes nomadic hunters/ gatherers

4. Content
1. Agricultural Systems and Food Production
2. The Management of Agricultural Change
3. Manufacturing and Related Industries
4. The management of change in manufacturing
industry

5. AGRICULTURAL
SYSTEMS AND FOOD
PRODUCTION

6. Factors affecting Agricultural Landuse
Physical Factors
• Climate
• Slopes/ Relief/ Altitude
• Biodiversity/ Ecosystem
• Soil
Human Factors
• Economic Factors
• Agricultural Technology
• Government Policies and
Land Tenure
• Markets and Transports
• Land availability
• Population/ Labor supply

7. Biological Characteristics
• Because plants receive direct energy from sunlight
• There is higher energy stored in plants
• Yield per hectare in crops are always higher than
livestock
• More land will be required for raising of livestock than
crops
• Productivity of crops: How many parts can be used for
food
• Can the crops be used for anything else
(Biofuel, construction)
• Note that climate, soil, input and
technologies will impact these

8. Biological Characteristics
• Role of pests and diseases – is impacted by the lack of new
variations of crops to create resilience
• Pests and diseases are parts of natural disaster that can
destroy the livelihood of farmers
• Biodiversity – in tropical rainforest, not a lot of nutrient
exists in soil as it is always being taken up by thick plant
• Thus the need for deforestation to clear land

9. Biological Characteristics
• Perennial Crops: Crops that are alive year-round and are
harvested multiple times
• Can reduce soil erosion by removing the need for
fallowing
• Extensive roots system more efficient
• Preserves water and energy
• Annual Crops: A plant that completes its life cycle, from
germination to the production of seed within one year.
• Needs tilling
• At times require irrigation
• Need fallowing and reduced input
• May be summer/ winter annual

10. Climate and Agriculture
• Climate is an environmental requirement
• Every plant has a optimum growth requirement
• This arises from a balance between temperature
and rainfall

13. Climate and Agriculture
• For every plant there are:
• Minimum requirement for temperature and
moisture without which no growth would take
place
• Maximum limit, beyond which growth ceases
• Environmental characteristics that arise from the
climate
• This is called the ABSOLUTE LIMIT

14. Climate and Agriculture
• Production cost increases as the climate
condition becomes more adverse
• Farmers cultivate only beyond the point when
production cost equal profit
• Anything lower than this, it is an economic lost
• Economic limit can shift according to production
cost and changes in price

15. Climate and Agriculture
• There is a geographical limit: Thermal limit for
crop growth
• Arid areas are not suitable for crop growth e.g.
the Sahel

17. • Semi-nomads, farming and raising livestock
• The dry north  soil nutrients
• wetter south
• Wet season  herds graze on high quality feed
in north
• and trek several hundred kilometers down to the
south, to graze on more abundant but less
nutritious feed during the dry period.
• Increased permanent settlement and pastoralism
in fertile areas has been the source of conflicts
with traditional nomadic herders

18. Water
• Rainfed water or
Irrigated Water
• The former is
dependent on the
climate
• The latter depends
on the efficiency of
technology

19. Water
• Green water: Precipitation absorbed by soil and
plants then released back into the air; thus it is
unavailable for human use
• Blue water: the precipitation which collects as
surface water
• In tropical/ equatorial climate, Rainfed water may
be enough
• Closer to a more savannah
climate, there may be a
requirement for irrigation

20. Water
• In certain tropical countries, rain may be
influenced by Monsoon
• Rain can be concentrated in one season
• The frequency to which crops can be grown and
harvest reduces, so would the productivity

22. Climate and Agriculture
• Note that climate can varies even within a single
country – this is based upon:
• Altitude
• Latitude
• Vegetation Cover
• Proximity to the sea

23. Soil Types
• Level of nutrients
• Acidity
• Saturation
• Permeability

24. Soil Type
• Good soils: deep, well drained, neutral and can
retain moisture
• Texture: Soils with larger grains = more pores =
more easy for water to be drained or evaporated
• Plant nutrients: 16 – nitrogen, phosphorus,
potassium

25. Soil Type
• A closed cycle of nutrients: Roots take up
nutrients, plant decompose and give back to soil
– nitrogen fixing bacteria play the part
• Thus agriculture depletes nutrients from soil
• The reducing quality = more erosion

26. Whittlesey’s Agricultural
Regions

27. Factors used to classify agriculture
• Crop and Livestock
• Labor and Capital Intensity
• Productivity
• Consumption Pattern of Production
• Methods and Techniques used

28. Nomadic Herding
• The wandering, but
controlled movement
of livestock, solely
dependent on natural
forage
• Ecological system of
agriculture
• Subsistence
• The most extensive
form of agriculture
• Livestocks: Sheep,
goats, yaks, cattle,
horses

29. Nomadic Herding
• Length of stay in each region depends on forage and
water availability
• Depletion of old pasture = movement
• Livestocks feed on forage
• Farmers sell/ feed on Livestocks products
• Distribution: Saharan Africa, Southwest – Central Asia,
Northern Scandinavian nations
• Mauritania, Mali, Niger, Chad, Sudan, Libya,
Algeria, Mongolia, China, Norway,
Sweden, Finland

30. Distribution of
Nomadic Herding

31. Livestock Ranching
• Commercial grazing of livestock over an
extensive area
• Large land requirement
• Low input in capital/ human resources per unit
area
• Vegetation cover
• Sheeps, cattle, goats, horses
• Livestock products

32. Livestock Ranching

34. Commercial Dairy Farming
• A class of agriculture for long term production of
milk – dairy products
• Utilization of pastures
• Labor intensive
• High productivity
• Associated with industries/ wholesalers
• Temperate latitude

35. Commercial Dairy Farming
• Northeastern United States/ Northwestern
Europe
• Coastal, low-lying meadows
• New Zealand, Eastern Argentina, Middle Chile,
Republic of South Africa, Eastern Japan, Western
Russia

37. Commercial Crop and Livestock
• A mixed system of farming integrating both
crops and livestocks
• A result of internal and external factors: Physical,
economic, political and social
• Variable holding sizes
• Intense livestock production
• Greater ratio of cropland to total agricultural
land

38. Commercial Crop and Livestock
• High expenditure on machineries/ farm buildings
• Labor input high (technical)
• Workload distributed throughout year
• Crop rotation to maintain soil fertility
• High return but low output per unit area

40. Commercial Grain Farming
• The mechanized production of grain for market
purposes
• Wheat/ maize
• Monoculture
• Large/ extensive farming system
• Low labor input
• Low output per unit area

42. Commercial Plantation
• Commercial farming where crops are grown for
profits
• Large scale production
• Monoculture
• Coffee, Tea, Rubber
• Estate farming
• Export orientes

44. Commercial Gardening
• A business with small area of land that farmer
does what he chooses to do with it
• Fruits, vegetables, Flowers, cash crops
• Smaller land requirements

45. Mediterranean Agriculture
• Combined planting of cereals, vegetables, fruits
and raising livestocks
• Moderate rainfall and seasonal winter
• Can be subsistent and commercial
• Specialized and intensive
• Supports from the climate

47. Shifting Cultivation
• Small part of the forest cleared
• Trees burned – releasing nutrients
• Planting/ harvesting
• Weeds grow, nutrients drop, yields fall
• Move to a different areas
• The plot of land left to fallow
• Low population density

48. Fallowing
• Conservative use of land
• Requiring lower population density
• Lately in Africa, Bush fallowing is followed
where the plot of land is left to fallow just
enough
• This leads to Soil Exhaustion
• Usually due to increase in population density

49. Intensive Subsistence Cultivation
• Labor intensive – using human/ animals energy
• Various types of crops including wet-rice
• Less Mechanization
• Common in populous society
• Common in LEDCs

50. Basic Classification System

51. AGRICULTURE
TRADITIONAL INDUSTRIALIZED
Subsistence Traditional Subsistence -
Intensive/ Commercialized Traditional Intensive Agro-industrialized

52. Traditional Agriculture
• Subsistence/ Intensive
• Subsistence: generates just enough for family
• Intensive/ commercial: generates enough crops
for commercial purposes

53. Industrialized Agriculture
• Common in MEDCs
• Fossil fuels replace human/ animal power
• Machineries/ technologies used to improve
output per unit area
• Monoculture

54. Monoculture
• Same species
• Genetically identical crops – genetic designs to increase
standardization
• More commercial
• Higher yield
• More vulnerable to diseases

55. Polyculture
• Polyculture: Growing more than one types of crops
• Different crops take different nutrients from different
layers of soil
• Thus polyculture maximizes uptake of soil nutrient
• Legumes can also fix nitrogen
• Prevents pest – harder to spread across species/
variations

57. Economic Factors/
Agricultural Technology

58. Von Thunen’s
Theory
of Location

59. Von Thunen’s Theory
• The Isolated State 1826
• Main argument: Distance from the market was
the main determinant of combination of crop
and intensity
• Form a good basis but a relatively outdated
concept

60. Theories
• Intensity Theory: Labor per unit areas
• Crop Theory
• Land/ Economic rent: Profits minus production
cost, labor cost or other capitals
• Thus economic rent measure the profit made
from a single factor: Land

61. An Isolated State
• Von Thunen imagined a state where all factors
except for distance to markets and crop types/
intensity are constant
• A plain, no climatic/ soil variations
• Market is located in a town at the central plain
• The state has no import/ export

63. Transportation
• Transport by a single common vehicle
• Paid for by farmers
• Directly proportional to the weight of the products
• Cost of transport increasing with as distance increase
from market
• Thus profit diminishes with growing distance from
market – Distance Decay relationship

64. Intensity Theory
• 1 crop grown in isolated state
Without fallow
• Growing crops closer to market reduces
transport cost
• Economic rent decline with increasing distance
from market
With Fallow: there will be no labor for a period of
time – reduces labor cost –
Lower production in fallowing = lower
economic rent

65. Intensity Theory
• Farmers near market realizes he has little to pay
for transport
• Can therefore increase input of labor: makes it
intensive
• Farmers further from the market realizes he has
more to pay in transport thus reduces cost of
input to maximize profits  use more land?

66. The Crop Theory
• How do farmers cope with increasing distance?
• Change the combination of crops to maximize
profits

68. Inferences
• Perishable commodities e.g. milk – closer to
market
• Low value per unit area – produced near market
– price will equal to transport cost
• High value products can tolerate long distances
– high price makes up for high cost
• Processing/ manufacturing have impacts e.g.
milk to cheese, and grain to alcohol

69. Problems with the Model
Time period
• Lower technological capabilities in packaging
and preserving food
• Better infrastructures and transportation
• Inclusion of a river to the isolated state allows
rings to extend (canals more efficient than roads)
• Labor has declined as an input nowadays

70. Economies of Scale
• In this case refers to the ability of a farm to lower
costs of production by increasing production
• Increase in farm sizes maximize profits
• Machineries allow single farmer to operate large
farms

71. Agricultural Technology
• Modern agriculture depends a lot on
engineering, technology and biological/ physical
sciences
• Irrigation, conservation and channeling: essential
to guaranteeing yields
• Agricultural chemistry: Use of fertilizers,
insecticides, fungicides, soil structure and
nutritional needs of farm animals

72. Agricultural Technology
• Mechanization freed up labors
• Increased efficiency/ productivity on farms
• Impacts the social structure and transform the
agrarian society

73. Precision agriculture
• No more need to apply water, fertilizer,
pesticides uniformly
• Calculations of minimum requirements
• Thus no wastage
• Also: reduced impact on ecosystem, less runoff
into rivers/ groundwater
• Safety of farm workers

74. Ladder of Agricultural Technology
• Agricultural tools used to till lands, carry sand,
conduct weeding, remove soil layer, conduct
trenching, carry fertilizers/ materials
• There is a ladder of agricultural tools used
• Differences in effectiveness/ sophistication

75. The role of agriculture in
society

76. The Agricultural Revolution (1700)
• Period of agricultural development between 18th
century to 19th century
• Improvement in farm technologies lead to
higher productivity
• Ability to harvest large amount of food and store
them create surplus
• This allows social stratification and class
differences as more professions develop

77. Role of Agriculture
• Production of food
• Provides the basis of subsistence for the
population
• Modern times: regional/ international trade
reduced dependence on subsistence farming
• Now food production is more a political decision
of how much food to import than a case of
when, where and how to harvest

78. Role of Agriculture
• The urban society demands lower price
• The primary sector may insist on higher price
• This is partly a result of economies of scale
• Use of agricultural technologies increases
production
• Increase in output and productivity comes as a
result of specialization

79. Role of Agriculture
• Agriculture becomes more commercialized and
interwoven with other sectors
• The need for packaging, manufacturing and
transportation
• Means agriculture also provides job for the
secondary and tertiary sectors

80. Role of Agriculture
• Increase in rural-urban migration changes lives
of rural population
• More professional, more requirements in
technical know-hows
• In MEDCs, they may become fully industrialized
• In LEDCs, some farms are left with only ageing
population

81. Agro-industrialization
• The globalization and
industrialization of
farming on a large
scale
• Large scale
• Use of machinery
• Specialized
monoculture
• IT management
• Intensive chemical
uses
• Low labor input
• Vertically integrated
with food processing
• May be owned by
agribusinesses

82. Agro-industrialization
• Intensification: increasing output by increasing
amount grown per unit area of land
• Mechanization: increased use of machine power
over manpower
• Land reclamation
• Increased chemical uses – more fertilizers – less
fallow periods – pesticides protect against pests

83. Agro-industrialization
• Better irrigation: more areas farmed over long
period of time
• Between transports: increase profits due to
reduction in transport cost

84. The Green Revolution
• Second half of the 20th Century
• Classical Malthusian theory belied
• Doubling of population is true
• But did not exceed food production which tripled
• Increase in land cultivation: only 30%
• Developing world was overcoming chronic food deficit –
with the exception of Sub Saharan Africa

85. The Green Revolution
• http://www.pnas.org/content/109/31/12302.full

86. Globalization of Agriculture
• http://www.fao.org/docrep/005/y4671e/y4671e0
c.htm
• http://web.missouri.edu/ikerdj/papers/TorontoGl
obalization.html

87. Food security
• When all people, at all times, have physical,
social and economic access to sufficient, safe
and nutritious food which meets their dietary
needs and food preferences for an active and
healthy life
• Food insecurity exists when people do not have
adequate physical, social or economic access to
food as defined above

88. Household insecurity
• Members are worried about adequacy of food
• Foods bought do not last
• Cannot afford balanced meal
• Needed to ration
• Have to eat less
• Must acquire food through socially unacceptable
means

89. The different Dimensions
• Availability: the wealth of food – indicator:
agricultural production
• Access: whether or not families/ individuals can
access/ buy food – indicator: food prices
• Utilization: What food do/ how people eat/
nutritional outcome/ healthcare/ sanitation –
indicator: waste rate etc.
• Stability: How stable and sustainable the other 3
dimensions are – indicators: political instability/
unemployment rate

91. Chronic Food insecurity
• Caused by widespread poverty
• Economic injustice, lack of assets
• Lack of accessibility
• Case study: Horn of Africa
• https://www.unicef.org/media/media_49619.html

92. Transitory food insecurity
• Sudden lack of food
• Short term fluctuations in food level/
accessibility
• Natural disasters
• Conflicts
• Thailand

93. Political Factors

94. Why governments intervene
• To ensure food security
• Protect farmers from instability in prices in
agricultural products
• Declining importance of the agricultural sector in
recent times – gap of income between primary
and secondary sectors increase

95. Price support loans
• This loan tides the farmers over until they can
sell their products
• Government sets a price for each farm that it can
support
• If farmers cannot sell crops at this price
• Government keeps the crops
• Farmers keep the loans

96. Production controls
• Limit production of surplus crops
• So that the price does not drop too much
• Farmers who do not comply will be penalized
through losses of price support loan

97. Income Supplements
• Payments for farmers of major crops during
years when price do not reach adequate levels

98. Centrally Planned Economy
• In command economy such as communist states,
production has always been controlled
• For example, former Soviet Union and China
• Influence of government remain relatively strong
in China for example

99. EU’s Common Agriculture Policy
• The CAP
• Set of rules/ regulations governing agricultural
activities in the EU
• Introduced in the 1960 to ensure adequate
supply of post-war food production
• Quite expensive to run, takes up a lot from
taxpayers

100. Social/ Cultural Factors

101. Social Cultural Factors
• Many decisions at farms can be based upon the
farmers themselves
• These farmers can be governed by their cultures,
traditions and social standing
• Unlike manufacturing industries where capitalism
is paramount, agriculture is far more sensitive to
socio cultural impacts

102. Culture of Shifting Cultivation
• One of the oldest systems of agriculture
• Still used today
• This is a from of traditional agriculture which is
changing as the farmers come into contact with
modernized farming

103. Legal rights and land tenure
• Land tenure is the way in which land can be
owned
• In the past: inheritance law reduces sizes of
famers – also dowry law
• Keeps farming at subsistence level

104. Gender cultures
• The dowry law means women are regularly
marginalized in traditional agriculture in land
and property owning
• Agricultural reforms in the mid century failed to
look at this – many women lost possessions and
lands
• Pushes women to other areas of the society

105. Problem with Land Tenure
• Land is the main mean of subsistence for many
farmers
• Their only properties – can be directly linked to
poverty
• Involve management of natural resources
• Management of floodplains in irrigated
croplands

106. Agricultural Systems

107. A system
• Farms operate as a system
• Input (Labor, energy, capital)
• Processes (planting, tilling),
• Outputs - products

108. Behavioral Inputs
• Factors that influence farmers’ personal decisions
• Age
• Knowledge
• Ambition
• Experience
• Perception

109. Economic Inputs
• Transport
• Technology
• Markets
• Government
• Capital
• Buildings

110. Cultural Inputs
• Tenure
• Farm Size
• Inheritance

111. Physical Inputs
• Temperature
• Slope
• Precipitation
• Aspect
• Wind
• Soils
• Altitude

112. Arable Farms
• Only cultivate crops
• Not involved with livestocks
• May be mono or polyculture
• Crops can change over time following markets
demand

113. Pastoral Farms
• Keeping/ rearing of livestocks

114. Mixed Farms
• Both livestocks and polyculture crops

115. Organic Farms
• Do not use chemicals
• No pesticides, insecticides, herbicides
• Animal manures/ natural fertilizers (fish bones)
are used
• Higher input of labor: e.g. more weeding
• More environmental friendly: no nitrate runoff
• Output of much higher prices

116. Agricultural Changes

117. Intensification of Agriculture
• Increasing yield per hectare when scientific
advancement allows such changes to occur
• Use of HYV(High Yield Variety)
• Use of fertilizers
• Use of herbicides
• Irrigation systems

118. Intensification of Agriculture
• This has led to increase in food production over
the last 60 years
• Associated with the green revolution

119. Extension of cultivation
• Extending land under cultivation through
construction of irrigation system or moving into
marginal land
• Tends to lead to more deforestations
• Sterilized landscape
• Produces cheap food

120. Local alterations to ecosystem
• Increase soil erosion: Deforestations
• Leaching of nitrate: use of fertilizers
• Lower soil fertility: Growing crops without
fallowing cycle
• Reduced biodiversity: Deforestation

121. Regional alterations to ecosystem
• Pollution of groundwater: Irrigation, fertilizers/
pesticides used
• Eutrophication: Fertilizers such as nitrates and
phosphates used

122. Global alterations to ecosystem
• Atmospheric conditions affected by:
• Reduced forest covers
• Less evaporation due to less interception by
vegetation
• Less cloud cover
• Drier climates in certain areas
• Changes to circulation pattern

123. Soil degradation
• Physical loss and reduction in quality of topsoil
associated with nutrients decline and
contamination
• Can impact both rural and urban environment
• Leads to pollution/ flooding

124. Soil profiles
• A soil horizon making up layers of soil
• Thinning of soil profile
• Means lower quality
• Less water storage
• Less nutrient storage
• Reduction in crops yield

125. Impacts
• Carbon dioxide in the air comes from losses of
forest land
• Lack of vegetation cover = land more reflective
• Soil degradation most severe in marginal lands
• Heavy, sustained use of fertilizers is dangerous
• Increase fine soil aggregates

126. MANUFACTURING INDUSTRIES

127. Industrial Location
• The strategic placement of various economic
activities in relation to specific human and
physical factors
• Wide range of factors affect total cost 
impacting decisions of industries
• The importance of factors change over time

128. Physical Factors
• Site: availability, relief, drainage, bedrock,
proximity to water supply
• Raw materials: Bulky/ light
• Energy: Energy requirement of industries
• Natural Route: Essential in the past and also
today as related to the role of import and export

129. Human Factors
• Capital: Area where investment rate is high
• Labor: Reputation, turnover and mobility of
labor, quantity and quality
• Transport: Access to infrastructures
• Markets: Location/ size
• Government: Regulations and incentives
• Quality of life: Matters to skilled personnel

130. Weber’s Theory
• Weber’s theory posits that industries are most
likely to be located at the location where
transport cost of raw materials and final
products are together minimum
• He looks at 2 cases: Weight-loss and Weight-
gain industry

131. Weber’s Theory
• Weight-loss: Where the final product is lighter
than the raw material e.g. cloth, sugar, small
metal products
• Weight-gain: Where the final product is heavier
than the raw material e.g. coca cola, juice

132. Weber’s Theory - Assumption
• The idea that resources are localized – can be
found only in certain areas, ubiquitous resources
negligible
• Market center is constant
• Spatial patterns of labor cost constant

133. Weber’s Theory
• Transport costs are determined by weight of raw
materials/ final products and distance from
source of raw materials to factory/ distance from
factory to market
• The problem is to find the point of industrial
location where overall transport cost would be at
its lowest

134. Weber’s Theory
• The location could be 1 of the 3:
1. Source of Raw material
2. The Market
3. Point x between Source and market

135. Weber’s Theory
• Weber imagines a triangle made up of three
points
• The apex represents the market (C)
• The other two points linking the base represents
most advantageous locations of raw materials
(M1, M2)
• From there, economists can then plot the point
within the triangle that would result in lowest
transport cost

136. Weber’s Theory
• Weight loss industries would concur more transport cost from
source to factory than transport cost from factory to market
• Therefore, any weight loss industries would likely be located closer
to its bulkiest raw materials
• This maximizes the transport cost from factory to market by
increasing distance – the originally low cost means even at its
maximum, final cost will remain relatively low
• This is because the high transport cost associated with
transportation of heavy raw materials has been minimized by
placing the factory closer to the source.

137. Weber’s Theory
• Weight gain industries concur more costs of transportation from
factory to market
• Therefore any weight gain industries would be located closer to the
market
• This will maximize the lower transport cost between factory and
market by increasing distance
• However it will minimize the higher transport cost between source
and factory
• Thus the overall transport cost will be lower

138. Weber’s Theory
• Labor costs is another factor
• Weber posits that areas with lower labor costs
can be more beneficial if the reduced cost of
workers make up for the increase in cost of
transport

139. Weber’s Theory and Agglomeration
Factor
• Agglomeration is another important factor
• Weber assumes that agglomeration reduces
production cost and transport cost by 20 dollars
per unit of production
• Thus agglomeration of industries have the
impact of moving industries away from areas of
lowest transport cost

140. Raw Material
• Processing Industries use the raw materials directly
• This used to be the most common type of industries but now
manufacturing industries use components from other firms
• Weber’s Theory influences this point immensely
• Tidewater location will be popular with industries using
imported raw materials
• Break-of-bulk points: where cargo is unloaded and placed in
new mode of transport

141. Markets
• Other than the cost of transports studied in
Weber’s Theory
• Market also influences location in terms of cost
of distribution
• Industries where fashion and tastes play huge
roles
• Industries that produce cars may locate
themselves in specific countries to understand
the demand there

142. Energy
• In the Industrial Revolution, industries grow near
coalfields – main source of energy
• Coalfields soon become points where transport
infrastructures grow in hubs as well
• Nowadays, electricity allows further expansions
• However may industries remain where the usual
advantageous point is: Industrial Inertia

143. Energy
• Decline in coal use has led to urban decay and
industrial decline in those areas
• In MEDCs, industries have moved elsewhere,
leaving those regions of inner city
underdeveloped
• Most modern industries are footloose: not tied
down to any areas of energy requirement

144. Energy
• Some industries are still constrained by energy
requirement
• Electro-metallurgical/ electro-chemical industries
require a large amount of energy
• Thus they might choose to locate themselves
close to hydro power plants where electricity is
cheaper
• In LEDCs, electricity grid or natural gas pipeline
may not reach every point

145. Transport
• Once an important factor
• The share in total cost of transport has dropped
due to improvement in infrastructures and
transport technologies
• Increase in production of higher value lower bulk
goods

146. Transport
• Two components of transport cost:
• Fixed costs – Equipments used to handle/ store
goods + the cost for providing transport system
• Line-haul costs – costs of actually moving the
goods (fuel costs and labor wages)

147. Transport – Fixed Cost ranked
• Road is lowest: only a driver, roads and trucks
needed
• Rail: More loading crew, larger space, more
infrastructures of rails and trains
• Water: More crew, boats, danger
• Pipeline: More expensive infrastructure cost
• Air: more expensive infrastructures: planes

148. Transport – Impact of line-haul costs
• Cost of transportation by road increases most
steeply with distance
• Rail increases less steeply
• Lower line-haul costs for water and pipeline
• Increase in distance does not impact the linehaul
cost for pipeline

149. Transport – Impact of line-haul costs
• Thus at close distance, the industries may choose
transportation by roads where fixed cost is
lowest
• Further away rail may be more suitable
• Then water and pipeline

150. Transport
Per tonnes
Distance
Road Rail
Water
Pipeline

151. Transport – Type of loads
• Perishable/ breakable commodities more costly
to move
• Required careful handling
• Robust goods cost less to move e.g. iron ore/
coal

152. Transport – Type of Journey
• Where changes in modes of transports are
required: more costly
• Associated with more danger e.g. canals/ rivers –
more costly

153. Transport – Degree of competition
• Different firms offering transport ask for different
prices
• Availability of different modes may influence
prices

154. Land
• Space requirements differ with types of
industries/ size of firms/ productions
• Modern industries – more space efficient
• Horizontal structure more preferred
• Transportation may take up more spaces
• Cost of land is important

155. Land
• Space requirements  affects distance from
cities
• Landuse zonation/ greenbelts
• Panning restrictions: growth of urban areas
• Population increases
• Movement towards the conservation of nature/
environment

156. Capital
• Finance invested to start up a business and to
keep it in production
• Fixed capital: immobile, money invested in plant
and machinery
• Working capital: money used for investment
• Usually obtained from shareholders/ banks

157. Capital
• Social capital: investment in housing, schools/
other amenities valued by the community
• During industrial revolutions – availability of
capitals – geographically constrained by:
• Location of major capital raising centres
• Limited accessibility of education
• This led to clustering of industries

158. Capital
• Rapid diffusion of information nowadays change
that
• Mobility of money/ capital
• This is less so in LEDCs
• The role of perceived risk: political instability and
lack of law and order

159. Capital
• Substitution of Capital instead of labor
• Reduce cost and improve quality
• Capital has become more important
• There is now a higher threshold of capital
requirement for a business to succeed
• Allowing few businesses to monopolize the
markets

160. Labor
• Cost, quality, availability, reputation
• Cost of labors measured in: wage rates, unit
costs
• Wage rates: regular payment to workers
• Unit cost: Productivity (wage rates and output)
• Unit cost play a bigger role in spite of high wage
rate

161. Labor
• Productivity and quality pushes up wage rate
• In this case unit cost may drop, thus causing
industries to move to areas where productivity is
lower but wage rates higher
• Skills become concentrated in areas: Sectorial
Spatial Division of Labor
• This leads to greater reputation – attracting firms
to the area

162. Labor
• Global disparity in wage rates between LEDCs
and MEDCs are high
• The lower wage rates attract transnational
investments
• Filter-down economy

163. Labor
• There are also non-wage labor costs
• Employer socials security, payroll taxes, holiday
pay, sick leave + other benefits
• Labor availability usually indicated by
unemployment
• This is a less important factor

164. Labor
• Despite high availability
• Areas with high unemployment do no thve good
reputation
• Lack skills for modern industries
• Physical dereliction discourage investment
• Social problems discourage investment and
reduce social capital

165. Labor
• Labor availability is not sustainable
• Due to high push factors of migration
• Problems with attracting skilled labors
• Problems with lack of infrastructures
• Labor availability may still have impact in
sparsely populated areas

166. Labor
• Sparsely populated areas may be avoided
• Difficulty of finding workers
• Even areas with ageing population and low
workforce proportions
• They are usually ruled out from the beginning

167. Geographical Mobility of Labor
• Spatial disparity of unemployment indicates
limited geographical mobility of labor
• Geographical mobility is the ability for
workforces to move between places
• This is influence by cost of housing and
economic development

168. Geographical Mobility of Labor
• Geographical mobility of labors increase with
skills and qualifications
• The financially secure people will be more
mobile in both social and geographical terms

169. Occupational Mobility
• The ability for people to move between jobs
• Changes in social demand/ skills demanded

170. Reputation
• Reputation of labor force play huge parts in
influencing investment
• Militant trade unions may drive away investors
• However trade unions have reduced due to
governmental actions

171. Internal Economies of Scale
• An increase in production leads to lowering of
unit cost (in this case refers to cost of
production)
• Reduced cost of production can be passed on to
customers
• Thus allowing firms to increase market
• Thus increasing profits

172. Bulk-buying economies
• Growth of businesses
• Means increase in bargaining power with
suppliers increase
• Allowing more supplies to be bought at lower
prices

173. Technical Economies
• Larger businesses use more advanced machinery
• Or use existing machineries more efficiently
• More R&D research
• More ICT can regulate productions

174. Financial Economies
• Large firms  easier to find potential lenders/
shareholders
• Raise money at lower interest rate

175. Marketing Economies
• Spread cost of marketing over a wide range of
products type
• Cutting average marketing cost per unit

176. Managerial Economies
• Company grows
• More potential for managers to specialize
• Tasks become more efficient

177. Diseconomies of Scale
• With increase in output and lowering of unit
costs
• A firm may reach a point where unit costs
increase
• Large firms experience poor communication,
poor morale

178. External Economies of Scale
• Agglomeration economy
• Firms locate themselves close to each to share
benefits

179. Urbanization Economies
• Cost saving due to urban location
• Labor availability
• Transport infrastructures
• Investment

180. Localized Economy
• Firm locates close to suppliers (backward
linkages)
• Firms locate close to firms it supplies (Forward
linkages)
• Reduce transport costs
• High level personal communication and faster
delivery

181. Urbanization Diseconomies
• Traffic congestion increase transport cost
• Intense competition for land increase land rent
• Increase in wages as demand for labor increases
supply
• Thus firms are also moving away from urban
areas
• E.g. Santa Clara’s Silicon Valley

182. Rapid Growth
• Expansion of land use
• Intrusion of agricultural lands
• Precludes residential/ housing Developments
• This has 3 effects

183. 1. Huge increase in industrial Traffic
• This increases pressure on transport
infrastructures
• Thus leads to extension of commuting/ highway
systems
• Reduction in local environment quality
• This will in turn lead to the 2nd impact of rapid
gowth

184. 2. Space
• Lack of available space for further expansion
• Disallow further economy of scale and limit sizes
of production
• Recruitment faces problems as residential
housings are not provided
• Transport can be congested, unattractive to
skilled labors

185. 3. Housing
• The 3rd impact of rapid growth is the increase in demand
for housing
• This outstrips supply
• Leads to rapid rises in housing prices
• This will drive employees to seek houses in peripheral
location
• This functions in correlation with the improvement of
highway and commuting system discussed in the 1st
impact

186. (2)  Saturation Point
• Residential areas reach saturation point
• Population density too high
• Not enough areas to expand
• Residential businesses look for business in other
regions

187.  Improvement leads to more rapid
growth
• High technology R&D
• Skilled pool of labor
• High perceived quality of life
• Attracts migrants
• This lead to rapid growth but also increases in
housing demand (3)

188. Government Policies
• In centrally planned economy (former Soviet
Union and China), industries are regulated to an
absolute degree
• Nowadays there are varying degrees of public
ownership
• Regional restrictions and incentives

189. Government Policies
• Governments do influence location of industries
• A great deal of competition between LEDCs to
attract FDI (Foreign Direct Investment)

190. Technology
• Influence type of industries a country can impact
based upon level of infrastructures and human
skills in operating technologies
• Technological advances may attract industries to
different countries where R&D and innovations
are at the forefront e.g. Japan
• Biotechnology has stimulated clusters of
industries
• There are stages to technological development

191. Basic Production
• Train workers in basic/ essential production/ technical
skills
• Plant design implemented/ performance levels checked
• Products and processes planned and configured
• Quality management present
• Institute supervisors, procurement/ inventory
management present
• In-bound/ Out-bound logistics

192. Significant Adaptation
• Every section of management adapted for new
technologies for local import and export market
needs
• Maybe based upon in-house management
• In-house R&D
• Interactions with other firms

193. Technology improvement/ Monitoring
• Improve products, processes, skills to improve
productivity through implementation of
technologies
• In-house R&D
• Licensing
• Initiate interactions with firms and educational
institutions

194. Frontier Innovation
• Create new technologies

195. Industrial Inertia
• When the importance affecting location of industries
diminish over time
• Profit of location reduces
• Cost of moving too high// traditional reasons demand
the industry remains in the same location
• E.g. industries that develop near coalfields
• Investment in hard/ soft engineering might improve the
areas from urban decay

196. Industrial Agglomeration
• Clustering together and association of economic
activities in close proximity to one another
• Benefits of external economies of scale
• Lowering the firms cost due to external factors
• Grouping encourage governments to invest in
infrastructures and provide incentives
• Costs can be shared: catering, security

197. Linkages
• The contacts and flows of information between
companies locate in close proximity
• Backward: linking to supplier
• Forward: Linking to the firm being supplied
• Horizontal: Same type of firm sharing costs

198. Linkages
• Vertical: Raw material goes through successive
processes
• Horizontal: An industry relies on several other
industries to provide its component parts
• Diagonal: An industry makes one component
that can be used by many other industries
• Technological linkages: product from one
industry used as raw material in another

199. Industrial Estates
• An area zoned and planned for the purpose of
industrial development
• Can be found in inner cities and rural areas
• Smaller in inner city  important to local
employment

200. Industrial estates benefits
• Concentrating dedicated infrastructures – reduce
expenses
• Attracting businesses by providing opportunities
of integration and sharing of infrastructures
• Reduce externality by separating from residential
areas and protecting environment
• Localized control of production and environment
• Regional economic development policies

201. Industrial Estate Disadvantage
• Urban Diseconomy of scales
• Environmental problems in given areas
• Businesses may establish political power
influencing government decisions  cluster of
unethical business activities
• Attract migrations causing unequal distribution
of justice
• Residential segregation

202. Export Processing Zone
• Industrial zones with special incentives set up to
attract foreign investors, in which some imported
materials undergo some degrees of processing
before being re-exported.
• Can include just data
• High tech science park, finance zones, logistic
centres, tourist resorts

203. Types
• Free port: development of trading centres,
diversification of economic bases
• Special economic zone: deregulation allowing
private sector investment
• EPZ: Development of exports
• Enterprise zone: Development of SMEs in depressed
areas
• Information processing zone: Information processing
• Financial Service zones: Offshore banking,
insurances, securities hub
• Commercial free zone: Facilitation of trades/ imports

204. The Formal Employment
• Government department knows about such jobs
– can be taxed
• Generally better pay
• Much greater security
• Include public/ private sectors

205. The Informal Employment
• Part of the economy operating outside official
recognition from government
• Outside tax system
• Low job security
• Absence of fringe benefits
• High in LEDCs
• May include illegal activities

206. Role of Informal sectors
• Coping strategies: casual/ temporary jobs for
unemployed
• Non paid jobs for survival
• Multiple jobs holdings

207. Unofficial Earnings
• Illegalities in business
• Tax evasion
• Avoidance of labor regulations
• Crimes/ corruption

208. Advantage
• Provides jobs and reduce unemployment
• Alleviates poverty
• Bolsters entrepreneurial activities
• Community cohesion/ solidarity

209. Obstacles
• Little access to credits for small entrepreneurs –
microcredit being used in many countries
• Increase in size during economic downturns
causing problems
• May become grounds for illegal activities –
gender based discrimination – highlights the size
of gender based problems in prostitutions etc.

210. Informal sectors
• Concentrated around CBD
• Potential demand for services high
• In inner cities for MEDCs
• Key tourist locations
• May offer foods and services to workers in
industrial areas