Transcript Topic _6 Review - Doral Academy Preparatory

Industry and Services
Key Question:
Where did the Industrial
Revolution begin, and
How did it Diffuse?
Industrial Revolution:
a series of inventions that brought new uses to known
energy sources, new machines to improve efficiencies
and enable other new inventions.
eg.
steam engine
iron smelting
water pump
Beginning of Industrial Revolution
• When and where did the industrial
revolution begin?
– In Great Britain in the mid to late 1700s
• Why Great Britain?
–
–
–
–
Flow of capital
Second agricultural revolution
Mercantilism and cottage industries
Resources: coal, iron ore, and water power
The Industrial Revolution
• European domestic markets were growing,
and a labor force was lacking in England
• The steam-driven engine made up for the
lack of available labor
Flow of Capital into Europe, 1775
Needed flow of capital in order to fuel the industrial revolution.
The Industrial Revolution
• Freed from charcoal use, iron smelters
could be concentrated near British coal
fields
• Transportation and communications were
affected
Textiles
Production:
Liverpool and
Manchester
Iron Production:
Birmingham
Coal Mining:
Newcastle
The Industrial Revolution
• The first steam-powered ocean-going
vessel emerged
• England held a monopoly over products in
world demand and the skills to make
machines to manufacture them
Ironbridge, England
World’s first bridge made entirely of cast iron,
constructed in late 1700s.
Iron Ore to Steel
Diffusion to Mainland Europe
In early 1800s, innovations diffused into mainland Europe.
Location criteria:
proximity to coal fields
connection via water to a port
flow of capital
Later Diffusion
In late 1800s, innovations diffused to some regions
without coal.
Location criteria:
access to railroad
flow of capital
Diffusion of
Industrial
Revolution
How do Location Theories
explain Industrial Location?
The Paris Basin is the Industrial base of France. Rouen (pictured
here) is at the head of navigation point on the Seine River.
Location Theory
• Location Theory – predicting where
business will or should be located.
Considers:
- Variable costs
- Profit maximization
- Friction of distance
- Transportation
Factors of Industrial Location
Raw Materials
• Very few industries use raw materials
• Most manufacturing is based on the
further processing and shaping of
materials already treated in
some fashion
• Transportation costs affect
industry location
Power Supply (Energy)
• Power supplies that
are immobile or of low
transferability may
attract activities
dependent on them
• Current technology
made less important
• Industries requiring
large amounts of
energy still situated
near the power source
Labor
• Spatial variable affecting location
decisions and industrial development
• 3 major traditional considerations
– price, skill, and amount
• Labor Flexibility: highly
educated workers able
to apply themselves to a
wide variety of tasks
and functions
Market
• Goods are produced to supply a market
demand
• Size, nature, and distribution or markets is
important in industrial location decisions
• Ubiquitous industries
Transportation
• Unifying thread of
all factors of industrial location
• Modern industry is immediately tied to
transportation
• Use many different form of
transportation media
Alfred Weber
• Created the classical model of industrial
location theory in 1909
Least-Cost Theory
• Explains the optimum location of a
manufacturing establishment in terms of
minimizing three basic expenses
– Transportation cost, labor, agglomeration
Least Cost Theory
1)Transportation: the site chosen must entail
the lowest possible cost of
A) moving raw materials to the factory
B) finished products to the market. This,
according to Weber, is the most important.
Least Cost Theory
2) Labor: higher labor costs reduce profits, so
a factory might do better farther from raw
materials and markets if cheap labor is
available
-ex: China – today
Least Cost Theory
3) Agglomeration: when a large number of
enterprises cluster in the same area, they
can provide assistance to each other
through shared talents, services, and
facilities
-ex: manufacturing
plants need office
furniture
5 Controlling Assumptions
1. Area is uniform physically, culturally, and
technologically
2. Manufacturing involves a single product
to be shipped to a single market whose
location is known
3. Inputs involve raw materials from more
than one known source location
5 Controlling Assumptions
4. Labor is infinitely available but immobile
in location
5. Transportation routes connect origin and
destination by the shortest path and
directly reflect the weight of the items
shipped and distance moved
Other Location Models
Hotelling’s Model
Location of an industry cannot be
understood without reference to other
industries of the same kind.
Theory:
Locational interdependence:
indicates that locational decisions
are not made independently but
are influenced by the actions of others.
Other Location Models
Losch’s Model
Manufacturing plants choose
locations where they can
maximize profit.
Theory:
Zone of Profitability
Major Industrial Regions of the
World before 1950
Industrialization Through WWI
• The four primary industrial regions:
1) Western & Central Europe
2) Eastern North America
3) Russia & Ukraine
4) Eastern Asia
Western and
Central Europe
Late 18th Century:
Britain
France
Belgium
Netherlands
Germany: 3 districts?
Early 20th Century:
Italy:
Spain: Sweden
Finland
Major Manufacturing Regions of North America
-Benefitted from overseas resources
-Large coal and gas reserves to provide energy to manufacturing plants
-US capitalized on industry after Western Europe destruction during WWI and WWII
Major Manufacturing Regions of Russia
-Many resources throughout the vast expanse of land
-Volga River provided an energy resource and transportation through canals
Major
Manufacturing
Regions of East
Asia
-Japan imported raw
materials from it’s colonial
empire into Korea, Taiwan,
and China
-3 major belts in Japan?
How has Industrial
Production Changed?
Post-Fordist
Fordist – dominant mode of mass production
during the twentieth century, production of
consumer goods at a SINGLE SITE
Post-Fordist – current mode of production
with a more flexible set of production
practices in which goods are not mass
produced. Production is accelerated and
dispersed around the globe by multinational
companies that shift production,
outsourcing it around the world.
Time-Space
Compression
Through
improvements in
transportation and
communications
technologies, many
places in the world
are more connected
than ever before.
Time-Space Compression
• Just-in-time delivery
rather than keeping a large inventory of
components or products, companies keep just
what they need for short-term production and new
parts are shipped quickly when needed.
• Global division of labor
corporations can draw from labor around the
globe for different components of production.
New Influences on the
Geography of Manufacturing
• Transportation on industrial location
– Development of infrastructure: containers, refrigeration
– Intermodal connections
• Regional and global trade agreements
– NAFTA, EU
– WTO: ~150 countries, promotes free trade to eliminate
quotas
• Proximity to Energy sources in industrial location less
important
– Pipelines and tankers deliver fuel to far away places
– 2.5 million miles of pipelines in NA
Where are the Major
Industrial Belts in the
World Today and Why?
Deindustrialization –
a process by which companies move industrial jobs to
other regions with cheaper labor, leaving the newly
deindustrialized region to switch to a service economy and
work through a period of high unemployment.
The former Gautier rolling mills
of Bethlehem Steel Corp. in
Johnstown, PA
Abandoned street in Liverpool,
England, where the population
has decreased by one-third since
deindustrialization
Newly Industrialized
•East Asia
•South East Asia
Also known as the Pacific Rim.
Newly Industrialized
China – major industrial growth after 1950
1. Industrialization in the 1960s was state-planned:
-Northeast district
-Shanghai and Chang district
2. Today, industrialization is spurred by companies that
move production (not the whole company) to
-take advantage of Chinese labor
-special economic zones (SEZs).
ex: Shenzhen
As China’s economy
continues to grow, old
neighborhoods (right)
are destroyed to make
room for new buildings
(below).
Beijing, China
Newly Industrialized
East and Southeast Asia
1. Four Tigers
South Korea
Hong Kong
Tiawan
Singapore
A map showing the Four Asian Tigers
Hong Kong
South Korea
Singapore
Taiwan
What is the Service Economy,
and Where are
Services Concentrated?
Service Economy
Service Industry – Tertiary
1. Economic activity associated with the provision
of services
– such as transportation, banking, retailing,
education, and routine office-based jobs.
2. As services become more developed specific
divisions are used:
ex: Quaternary – exchange of information…ex?
Quinary – complex decision making…ex?
Service Economy
Postindustrial:
a society in which an economic transition
has occurred from a manufacturing based
economy to a service based economy
Examples:
United States, Canada, Japan, and Western Europe
Geographical Dimensions
of the Service Economy
New Influences on Location:
- Information technologies
- Less tied to energy sources
- Market accessibility is more relevant for
some
and less relevant for others because of
telecommunications
- Presence of Multinational Corporations
Geographical Dimensions
of the Service Economy
Sunbelt: southern region of the US stretching
from the southeast to the southwest
- secondary industrial regions moving into Atlanta, Phoenix
- high-tech industry
Wal-Mart
Requires producers of goods to locate offices in the
Bentonville, Arkansas (Wal-Mart’s headquarters) area in
order to negotiate deals with Wal-Mart.
Proctor & Gamble
put their office in
nearby Fayetteville,
Arkansas.
How does the
presence of these
companies in the
region change the
region’s economy
and its cultural
landscape?
Nike
Headquartered in Beaverton, Oregon, Nike has never
produced a shoe in Oregon. Beginning in the 1960s, Nike
contracted with an Asian firm to produce its shoes.
Skopje, Macedonia
The swoosh is
ubiquitous, but
where is the shoe
produced?
Nike has a global
network of
international
manufacturing and
sales.
Modern Production
Outsourcing –
moving individual steps in the
production process (of a good
or a service) to a supplier, who
focuses their production and
offers a cost savings.
Offshore –
Outsourced work that is
located outside of the country.
High-Technology Corridors
• An area designated by local or state
government to benefit from lower taxes and
high-technology infrastructure with the goal
of providing high-technology jobs to the
local population.
eg. Silicon Valley, California
• Technopole – an area planned for high
technology where agglomeration built on a
synergy among technological companies
occurs.
eg. Route 128 corridor in Boston
Plano-Richardson, Texas
Telecom Corridor is just north of Dallas
Development
How do you Define and
Measure Development?
What does Development Mean?
• Development implies “progress”
– Progress in what?
– Do all cultures view development the same
way?
– Do all cultures “value” the same kinds of
development?
Measuring Development
Gross National
Product (GNP)
Measure of the total
value of the officially
recorded goods and
services produced by the
citizens and
corporations of a
country in a given year.
Includes things
produced inside and
outside a country’s
territory.
Gross Domestic
Product (GDP)
Measure of the total
value of the officially
recorded goods and
services produced by the
citizens and
corporations of a
country in a given year.
Gross National
Income (GNI)
Measure of the
monetary worth of what
is produced within a
country plus income
received from
investments outside the
country.
** Most common
measurement used
today.
Issues with Measuring
Economic Development
• All measurements count the:
– Formal Economy – the legal economy that
governments tax and monitor.
• All measurements do not count the:
– Informal Economy – the illegal or uncounted
economy that governments do not tax or keep
track of.
Other Ways of
Measuring Development
• Occupational Structure of the Labor Force
• Productivity per Worker
• Transportation and Communications
Facilities per Person
• Dependency Ratio
Non-Economic Measures of
Development
•Education: LDC’s 2/3 illiterate, DC 1%
•Public Services: access to safe drinking
water (2000 2.48/40%)
•Health Services: ratio of people to doctors
DC 1:350, LDC 1:5,800, Sub Saharan 1:18,500
Differences in
Communications
Connectivity
Around the World
Dependency Ratio by Country, 2005
A measure of the number of people under the age of 15 and
over the age of 65 that depends on each working-age adult.
Development Models
Rostow Modernization Model
Walt Rostow’s model assumes all countries follow a similar
path to development or modernization, advancing through
five stages of development, climbing a ladder of
development.
- traditional
- preconditions of takeoff
- takeoff
- drive to maturity
- high mass consumption
Rostow Modernization Model
1. Traditional: dominant activity is
subsistence farming
• Rigid social structure, resistance to
change
2. Preconditions of Takeoff: progressive
leadership moves the country toward
openness and diversification
Rostow Modernization Model
3. Takeoff: Industrial Revolution,
Urbanization, Mass-Production
4. Drive to Maturity: Tech. Diffusion,
industrial specialization, international
trade, modernization of core,pop.
Decline
Rostow Modernization Model
5. High Mass Consumption: high income,
widespread production of G&S, Service
Sector
Many nations are past Stage 5. Create your own
column entitled High Technology, depicting the
modern world.
Use the chart above as a source.
Rostow’s Ladder of Development
Rostow Modernization Model
1. What does Rostow not take into
consideration with his model?
1.
does not take into account what is happening in
the countries around them. It assumes that only
what happens within the country affects its
development when in reality what happens in
other countries can have a huge effect.
2. Criticisms?
Structuralist Theory
• Based on neo-colonialism
• Economic disparities are built into the
system by people’s action, and it will not
change easily
• Assumes all countries will not go through
the same development process
Dependency Theory
The political and economic relationships between countries
and regions of the world control and limit the economic
development possibilities of poorer areas.
-- Economic structures make poorer countries
dependent on wealthier countries.
-- Little hope for economic prosperity in poorer
countries.
Dependency Theory
Dollarization –
Abandoning the local currency of a country and adopting
the dollar as the local currency.
El Salvador went through dollarization in 2001
Wallerstein’s World-Systems Theory
• Explain the theory
– The Core-periphery model
• Compare and contrast Rostow’s ladder of
development with Wallerstein’s three-tier
structure of the world economy.
Development in Dubai
What are the Barriers
to and the Costs of
Economic Development?
Barriers to Economic Development
• Low Levels of Social Welfare
– High dependency ratio (many under 15)
– Low number of Doctors per patient
– Lack of access to education (girls not attending
as long as boys)
• WHY??
• What are peripheral countries doing about this?
– Trafficking: adults and children
• How is this different from slavery?
• Why does this happen?
Barriers to Economic Development
• Foreign Debt
– After decolonization, peripheral countries need funds
for development
– Structural adjustment loans
• Provided by IMF and World Bank
• Loans with strings attached
–
–
–
–
–
Privatization of industry
Foreign trade, Reduced tariffs
Foreign direct investment
Free elections
Stricter laws on corruption
• Debt becomes hard to pay off and invest in more
development
– Argentina, 2001
Foreign Debt Obligations
Total interest payments compared to the export of
goods and services.
Foreign Debt Obligations
Foreign Debt and Economic Collapse
in Buenos Aires, Argentina, 2001
Barriers to Economic Development
• Political Instability
– Foreign influences
• Decolonization left gov’t unstable
– Groups competing for power
• Military coups, dictators, and liberal democracies
– Disenfranchisement of the poor
• Corruption of gov’t, cut off from foreign aid
– ex: Zimbabwe, 2002
Barriers to Economic Development
• Widespread Disease
– Poor conditions in water, sewage, and access to
health care
– Vectored Diseases spread by an intermediate
host (ex: mosquito)
• Continue to plague the Tropics
• Malaria (Silent Tsunami)
– 2-3million deaths per year
– DDT spraying in Sri Lanka dropped death rate by ¾ from
1945
– GMO mosquitos?
Widespread Disease
• Malaria kills 150,000 children in the global
periphery each month.
Tamolo, India
This baby sleeps
under a mosquito
net distributed to
villagers by
UNICEF workers.
Global Distribution of
Malaria Transmission Risk
Costs of Economic Development
• Industrialization
– Export Processing Zones (EPZs)
• maquiladoras along USA/Mexico border
• special economic zones (SEZs)
– Shenzhen in China, near Hong Kong
Export Processing Zones
Costs of Economic Development
• Agriculture
– Small plots, outdated tools
– Constant debt, no ability to by new fertilizers,
pesticides
– Desertification
• Lack of education on soil conservation
• Dry lands of Africa are growing
Areas Threatened by Desertification
Costs of Economic Development
• Tourism
– Pros
• Provides income, wealth, and employment
– Cons
• Large investments into industry, not into needed
areas
• Local economies not benefited
• Devastation of local culture
• Multi-national corporations outbid local
entrepreneurs
Why do Countries
experience Uneven
Development within the State?
How Government Policies
Affect Development
• Governments
– get involved in world markets
– price commodities
– affect whether core processes produce wealth
– shape laws to affect production
– enter international organizations that affect trade
– focus foreign investment in certain places
– support large-scale projects
Governments
and
Corporations
can create
Islands of
Development
Places within a
region or country
where foreign
investment, jobs,
and infrastructure
are concentrated.
Government-created Island of Development
Malaysian government built a new, ultramodern capital at
Putrjaya to symbolize the country’s rapid economic growth.
Corporate-created Island of Development
The global oil industry has created the entire city of
Port Gentile, Gabon to extract Gabon’s oil resources.
Nongovernmental
Organizations (NGOs)
entities that operate independent of state and local
governments, typically, NGOs are non-profit
organizations. Each NGO has its own focus/set of goals.
Microcredit program:
loans given to poor
people, particularly
women, to
encourage
development of
small businesses.