Transcript clustered industries

INDUSTRIALIZATION &
ECONOMICS
Industry
• Manufacturing/Secondary Sector
– Production of finished products from raw
materials
– 3 principal countries of origin????
– 4 primary industrial areas of industry????
– Recently diffused throughout many LDCs
(some becoming NIC – newly industrialized
countries) Ex – South Korea – compressed
modernity – rapid economic/political change
bringing about stable nation
Why Great Britain?
• Quick Review: What does any place need to
industrialize?
• 8 (or more) Ingredients of Industrialization
– Profit Motive
– Political Stability
– “Cheap, cheap, cheap” – labor and materials
– Capital (foreign or domestic)
– Infrastructure aka linkages
– Market
Why Great Britain?
• 2nd Agricultural Revolution + 2nd Stage DTM
= Surplus population = Cheap Labor
• Cheap, abundant raw materials
– Iron Ore
– Coal (cheap energy)
– Colonies (provided cheap resources and labor)
• Transportation easy
– Water: ISLAND STATE with many navigable
rivers, canals & accessible ports
– Railroads developed and built throughout island
• Human Capital: Innovative thinkers
• HUGE market – Europe & colonies
Industrial Revolution
• Began in 1800s
• Cottage Industry (home based business)
was replaced with large scale factories
• G.B. led the way in several imp. Industries
– Textiles
– Steel Production
– Transportation
Hans Rosling and the Magic Washing Machine
@http://www.ted.com/talks/hans_rosling_and_t
he_magic_washing_machine.html (9:16)
Industrial Rev. Spreads
• Regional Industrial Cores
– Germany
• Rhine-Ruhr Valley – important industrial area; drove
Hitler’s war efforts
• Mid-Rhine
– U.S.
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New England - Textiles
New York-Washington – core area
Pittsburgh – Lake Erie – Steel
Western Great Lakes – Cars
– East Asia
• Eastern China
• Japan – Kanto Plain
– Eastern Europe – Ukraine – largest iron ore deposit
USA’s Industrial Core
• Bosnywash
megalopolis/conurbation (an
aggregation or continuous network of
urban communities)
–
• heart of U.S.
• industrial development
USA’s Industrial Core
• U.S. advantages:
– Huge skilled and semiskilled labor force
– Abundant natural resources
• United States’ coal reserves among world’s largest
& widely spread
• Huge producer of oil
• Iron ore
– Infrastructure
• Natural transportation systems
• Developed RR, canals, & (eventually) interstate
highway system
– Economies of agglomeration (clustered
industries) helped early on
Japan’s Industrial Core
Kantō region is the most highly developed, urbanized, and industrialized part of
Japan. Tokyo and Yokohama form a single industrial complex with a concentration of
light and heavy industry along Tokyo Bay. The average population density reached
1,192 persons per square kilometer in 2011. 45% of Japan’s population lives in this
region.
Factors 2 determine industrial location = “Location Theory”
• Situational Factors
– Transportation costs
• Near who we buy from OR who we sell to???
• Mode – Rail, truck, ship, or air???
– Line cost (MODE) vs. terminal cost (handling of goods at
each end of a route)
– Trucks – short/railroads-medium/ships-longest
• Route flexibility??
• Break of bulk point/entrepots(terminal costs) - a location where
transfer is possible from one mode of transportation to another
– Airports and seaports most common
– Proximity to inputs
• Bulk-reducing industries - an industry in which the final
product weighs less or compromises a lower volume than the inputs. – close
to raw materials since they are HEAVIER than final product
– Most metals (copper and steel), lumber (paper)
Port of NY/NJ – December 29, 2008
Location Theory cont.
• Situation Factors cont.
– Proximity to markets
• Bulk-gaining industries (exs?)
• Perishable products (exs?)
• Site Factors
– Labor (most imp. in labor-intensive industries
like textiles) – Cost and Skill-level
– Land
• Cost of land
• Cost of living
• Amenities/Climate
– Access to Capital – loose investors – people willing to
take chances!
Place in Economic Geography
• Where firms come from is important.
• As firms expand …
– they stitch together places
– they create global interdependency
Principles of location
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Raw materials
Labor supply and cost
Processing costs
Markets
Transport costs
Government policies
Ice Cream Stand principle
If you were at the beach
and there were a number of
ice cream stands, which
one would you buy your ice
cream from and why?
• –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)
Variable Revenue Analysis –
ability to capture a market from
competitors
Weber's model “Least Cost Theory”
• Companies attempt THREE things
– Minimize transportation costs (most critical)
• Air, truck, rail, or ship?
• Break of bulk transportation nodes imp. in reducing
costs
– Minimize Labor costs
– Maximize Economies of Agglomeration (shared
resources)
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Cheaper supplies
Abundance of skilled labor
Larger market
Specialization of each company/Division of labor
• Ex: Silicon valley? Ex: Michigan?Ex: Research Triangle?
Silicon Valley Silicon Valley, California Bay Area
Silicon Valley, California
Changing Location of Industry
• Domestic shift: NE  SE, S, and W
• Global shift: Old Industrial hearths 2:
– East Asia (China’s the largest in the world at 31%)
– Latin America (Maquiladoras – factory built by US
company in Mexico near US border to take advantage of
cheaper labor)
– Western Europe  Central/Eastern Europe
• Why is the distribution changing???
1. Countries/states/cities attracting industries with
incentives
2. Industry focus on proximity to cheap labor
3. Industry focus on skilled labor
4. Role of TNCs (diff. countries)/MNCs
(stocks/management also multinational)
5. Changing business practices (J-I-T delivery)
1. Ways Countries Attract Industry
• SEZ: “Special Economic Zone (a.k.a. ExportProcessing Zones” EPZ or Free Trade Zone”
FTZ)
– Gov’t create small regions…
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W/o regulations
Subsidized rents
Low or no tax rates
Few environmental laws (¡HOLA Méjico!)
Paid for infrastructure
– Labor costs go up?  factories move elsewhere
– Ex: Maquiladoras: tax free zones built within 35
miles of US border
– Goal = attract export-oriented businesses =
basic jobs
Maquiladoras
• Delphi/Deltronico – Maquiladora in Matamoros for car
radios
• The tour was led by the environmental manager of the
maquiladora. He explained to us the rules and regulations
designed to protect the environment and the workers, a
rare trait for a typical maquiladora. After explaining to us the
working conditions and how well they comply with
environmental laws, he led us through a clean and well airconditioned factory full of mainly young women working hard.
He showed us the cafeteria with several chain restaurants
ready to serve employees and their own private sewage
system, something Matamoros generally lacks. They still had
some flaws. Minimum wage is $1.80 an hour. If you were
absent for one day you were docked three days’ pay. If you
were late your name could be put on a list for all to see,
resulting in possible mockery from your coworkers and
humiliation. Despite these flaws, Deltronico offers a nursery
to take care of children, as well flexibility with sickness and
vacation.
Maquiladoras
APHG exam question 2004
China, the birthplace of your Nike's