Transcript Industry_PPT

INDUSTRY AND SERVICES
Chapter 12
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
Beginning of Industrial Revolution
• Began in Great Britain in the middle to late 1700s
• Why Great Britain?
– Flow of capital
– Second Agricultural Revolution
– Mercantilism and cottage industries
– Resources: Coal, iron ore, and water power
Flow of Capital into Europe, 1775
Origins of the Industrial Revolution
• Textiles: Liverpool,
Manchester
• Iron: Birmingham
• Coal mining:
Newcastle
Diffusion of the Industrial Revolution
• Mainland Europe
– Early 1800s
– Location criteria:
•Proximity to coal fields
•Connection via water to a port
•Flow of capital
• Later
– Late 1800s
– Some regions without coal
– Location criteria
•Access to railroad
•Flow of capital
Diffusion of the Industrial Revolution
How Do Location Theories
Explain Industrial Location?
Location theory: Predicting where business
will or should be located, considering
• Variable costs
• Friction of distance
Location Models
Weber’s Model
Manufacturing plants will
locate where costs of
Hotelling’s Model
transportation, labor, and
Location of an industry
agglomeration are the
cannot be understood
least
without reference to
Theory: Least Cost
other industries of the
Theory
same kind
Theory: Locational
Interdependence
Losch’s Model
Manufacturing plants
choose locations where
they can maximize profit
Theory: Zone of
Profitability
• –Least Cost Theory (1909)
– Alfred Weber’s model – owners of
manufacturing plants seek to minimize
three costs: 1) Transportation, 2) labor, and
3) agglomeration (too much can lead to
high rents & wages, circulation problems)
– Weight-losing case: final product weighs
less than raw mat.s; location = source
– Weight-gaining case: final product weighs
more (or takes more space) than raw mat.s
(e.g. addition of water); location = market
– Some argue Weber’s model doesn’t
adequately account for variations in costs
over time (e.g. taxation, consumer demand)
– Substitution principle – decreases in
certain costs can offset increases in others
C1 – Raw Materials
C2 – Raw Materials
M - Market
• –Harold Hotelling Model (Two dimensional)
– Locational interdependence – the location
of industries can’t be understood w/o ref. to
the location of other industries of like kind
– Two vendors located on pts. A & C,
eventually gravitate toward pt. B (moving
from this pt. will only hurt profitability)
– A third vendor complicates this (spatially)
Losch’s Model: Zone of Profitability
Major Industrial Regions of the World
Before 1950
• Main determinants
– Near raw materials
– Transportation
• But…additional needs
– Goods and capital
– Political circumstances
– Economic leadership
– Labor costs
– Levels of education and training
Western
and
Central
Europe
Major Deposits of
Fossil Fuels in North America
Major Manufacturing
Regions of North America
Major Manufacturing Regions of Russia
Major Manufacturing Regions of East Asia
How Has Industrial Production
Changed?
• Fordist : Dominant mode of mass production
during the twentieth century, with production of
consumer goods at a single site
• Post-Fordist : Current mode of production with
more flexible production practices
– Goods not mass produced
– Production accelerated and dispersed around
the globe
– Multinational companies that shift production,
outsourcing it around the world
Time-Space Compression
• Improvements in transportation and
communications technologies
• Many places in the world more connected than
ever before
Effects of Time-Space Compression
• Just-in-time delivery
– Keeping just what is needed for short-term
production
– New parts shipped quickly when needed
• Global division of labor: Corporations drawing
from labor around the globe for different
components of production
New Influences on the
Geography of Manufacturing
• Transportation
• Regional and global trade agreements
• Energy
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
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
– Period of high unemployment in
deindustrialized region
– Goal: Switch to a service economy
• Newly industrialized regions
– Pro–free trade laws
– Lax environmental regulations
China: Newly Industrialized Country
• Major industrial growth after 1950, in 1960s
– State-planned
– Focus on:
• Northeast district
• Shanghai and Chang district
• Today
– Companies that bring production (not the whole
company)
– Advantages
•Chinese labor
•Special economic zones (SEZs)
Geographical Dimensions of the Service
Economy
Influences on location
• Information technologies
• Less tied to energy sources than manufacturing
• Market accessibility more relevant for some and
less relevant for others because of
telecommunications
• Presence of multinational corporations
• Quaternary and quinary economic activities
High-Technology Corridors
• Technology corridor: 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
• Technopole: An area planned for high technology
with agglomeration built on a synergy among
technological companies