INDUSTRIALIZATION AND DEVELOPMENT

Economic Geography

Economic systems include:

Capitalism (free market) Socialism

Communism (command economy)

FOUR ECONOMIC ACTIVITIES

Primary

Secondary

Tertiary

Quaternary

Farming, mining, fishing

Creating something: manufacturing

Services – selling a product or service (retail, banker)

Research and development (GM foods, technology)

INDUSTRIAL REVOLUTION

The confluence of resources, technology and innovation. One of the major turning points in human history.

Started in Britain. At that time all the resources necessary were available in one place.

A shift in power form wood to coal. The critical component was the steam engine.

Major industrial regions of the world today.

1 23 4

In a post-industrial society (USA, Western Europe), manufacturing is declining as services expand. “the core”

MDC’SLDC’S

NIC’S – Newly industrialized countries.

The “dragons” (tigers) of East Asia.

South Korea, Taiwan, Singapore, Hong Kong

Many of these countries are experiencing “compressed modernity.”

Rapid economic and political change – stable government and economic freedoms.

Terms: Gross domestic product -- the value and output of goods a country produces in a year (the amount of business done.)

GDP per capita: the GDP divided by the total population.

Productivity: The value of a particular product in relation to the labor it took to produce it.

Workers in MDC’s are more productive because of?

Value added is figured by the costs of materials and energy from the value of the product.

Theories of Modern Development

Modernization model: based on Europe’s development, from Britain until today. This is based on “western” ideas of development. Western countries help poorer countries by encouraging population control, increased food production and take advantage of industrial technology.

Economic colonialism (neo-colonialism) : LDC’s are still dependent on MDC’s for markets, financing, technology.

New international division of labor: Moving labor intensive jobs to less expensive locations.

Less expensive regions USA to Mexico to China

WORLD SYSTEMS THEORY - CORE-PERIPHERY -- EMMANUEL WALLERSTEIN (applicable in industry, development, or political units.)

Dependency theory: Wallerstein places the burden of global poverty on developed countries and their exploitation of LDC’s dating back to the colonial era.

Rostow’s Stages of Development:

Traditional: Limited wealth, subsistence farmers, folk culturesEx: Papua New Guinea

Pre-conditions for takeoff:

Begins when an elite group initiates innovation economic activities. Invests in infrastructure. Ex: Ghana, Sudan

Take-off: Rapid growth in select fields such as textiles. (cheap labor) ex: Mexico, Brazil, China, India, SE Asia

Drive to Maturity:

Modern technology diffuses, rapid growth of skilled industries. Ex: Poland, Hungary, Czech Republic

Age of mass consumption.

Economy shifts from heavy industry to tertiary and quaternary sector. Industry produces consumer items. USA, Western Europe, Japan

Like many models, what is the underlying weakness in the theory?

It is based on a European development model.

Barriers to development

Social conditions: high birth rates, low life expectancy, high IMR, lack of education, women’s rights

Political instability: Dictatorship, few political rights, income gap

Kenya-wealthiest 10% control 40% of wealth

Foreign debt: After independence in the 60’s, many counties borrowed heavily to advance development (International Monetary Fund.)

Soon a large part of the country’s income has to go to servicing the debt – historically to Core countries.

Export Processing Zone (EPZ’s) or SEZ – Special Economic Zones

Special manufacturing zones set up in periphery and semi-periphery countries to promote investment from core countries.

Provides jobs for local workers

The two best known EPZ’s are Mexican Maquiladoras and China’s “special economic zones”

Think city models of “modern” Asian cities.

Modern manufacturing facilities try to operate on the “JIT” system. Parts and supplies arrive “just in time” for the manufacturing process.

This allows companies to free up needed capital rather than have it tied up paying for parts that might not be used for months.

Remember, the higher the number of people involved in agriculture, the lower the development level.

Micro-credit

Small loans given in poor countries to people (generally women) to start small businesses.

First developed in Bangladesh with the Grameen Bank. The programs have been generally very successful.

Not practical in MDC’s due to the amounts involved. ($50-150 in most cases)

Many people in LDC’s operate in an “informal economy.” This means they don’t pay taxes on their sales.

Site and Situation

Site factors are particular to a geographic location.

Considerations are varying costs of land, labor, and capital, as well as geography such as port sites and viable land structure.

Situation factors deal mainly with transportation.(relative location)

Bringing in raw materials or parts and shipping finished goods to the consumer or retailer.

Auto factories are located in the central US today to maximize site and situation costs.

INDUSTRY

Market

Input 1 Input 2

a b c

Weber’s Least Cost Theory

Purest form deals only with transportation costs

Substitution Principle

labor

taxes

Bulk gaining industry?

Bulk reducing industry

Shipping costs might be higher from South Carolina, but labor costs and lower taxes can substitute for higher shipping costs.

A worker doesn’t have to join a union to have a job.

Bulk reducing industries:

The output product is smaller than the input. Copper smelters, steel mills.

Bulk gaining industries:

The output is greater than the individual inputs. Bottling, canned goods.

Fordist Industries: Traditional factory manufacturing. Every person has a particular job to do. Very “top down” system. The traditional assembly line.

Post-Fordist Industries:

Flexible work rules, teams of workers, workers perform various tasks.

Economies of scale

Company increases output, it can buy raw materials or supplies in bulk, reducing costs.

Footloose industries

Aren’t tied to a particular location. They have the freedom to locate in various places.

Brick and mortar industryA traditional business with actual stores to conduct trade.

Locational interdepence involves the influence on a firms location based on the location of competitors or other major services that may benefit your service.

Agglomeration: Several similar industries or outlets locating near one another. (the mall, ship channel)

Deglomeration? Exodus of companies form an area due to variable factors. (labor/too much competition))

Break of bulk center

Where goods are moved from one form of transportation to another.

Benefits of agglomeration

Trained workforce

suppliers

resources

transportation

Rust Belt

Sun belt

Heavy industry has been in decline for the past 40 years.Unions, high wages

Population in most of the states has been stagnant or declining.

Job and population growth during the same time frame.

Right to work states, pay lower wages, lower taxes

SEZ’s (special economic zones) or Entrepots

Special “economic zones” that provide tax breaks for goods shipped in or out, or, locations foreign factories can be built in to take advantage of low cost local labor.

Maquiladora’s in Mexico:

Factories in northern Mexico that work as partners to USA factories.

Goods are shipped in from a foreign country (usually the USA), assembled, and sent back to home country or exported.

Takes advantage of low cost Mexican labor, provides jobs for Mexicans and not Mexican taxes on goods.

The Great Lakes/Northeast has traditionally been the center of American manufacturing.

Where have those plants been relocating to (if they remain in the USA?)

Why the move?

Right to work states, lower taxes, and lower labor costs.

Auto parts mfgr.

Supranational organizations regarding industry and development.

European Union

NAFTA

Multi-national corporations (conglomerates)

Labor intensive industries

Friction of distance

New international division of labor

The first economic association between peds and pings

Self Sufficiency and International models of development.

Free trade movement

Human Development Index (from United Nations)

Every country in the world is rated based on the criteria of education, GDP per capita, and life expectancy.

IF YOU LEARNED ONLY FIVE THINGS REGARDING DEVELOPMENT AND INDUSTRY (from Kaplan’s Human Geography review book) 1. Industry is based on transportation and labor costs. Weber's least cost theory sug gests that a production point must be located within a "triangle," with raw materi als coming from at least two sources. Weight-gaining industries must have their production point closer to the market. Weight-reducing industries must have their production point closer to the source of raw materials.

2. The five main means of industrial transportation are truck, train, plane, pipeline, and ship. Each has advantages and disadvantages for hauling raw materials or fin ished products to production points and markets around the globe.

3. Basic industries are city-forming industries, whereas non basic industries are city serving industries. Basic industries are the main business for which a city is known. Detroit/automobiles, Pittsburgh/steel, San Jose/computer chips are just three exam ples of basic industries in major urban areas in the United States.

4. The main factor in determining an area's development is the Human Development Index, which measures life expectancy, literacy, education, and the overall standard of living for different countries around the world. It was developed in 1990 and has since been used by the United Nations as the primary indicator of countries' levels of development.

5. The core-periphery model describes regions as core, semi-periphery, and periphery areas. It also describes four areas, the industrial core, upward transition, downward transition, and resource frontier. The model can be used from a worldwide scale down to an urban scale to analyze city zones.

Kaplans AP Human GeographyKelly Swanson2008