Chapter 11 KEY ISSUE 3 WHERE IS INDUSTRY EXPANDING

Chapter 11KEY ISSUE 3 WHERE IS INDUSTRY EXPANDING

Industrial Expansion

Changing distribution within MDCs

Intraregional shifts in manufacturing

Interregional shifts in manufacturing

New industrial regions

Asia

Latin America

“Central” Europe

Changing Distribution Within MDCs

Various reasons for a shift of manufacturing plants

Intraregional shifts

Interregional shifts

Intraregional Shifts in Manufacturing

Factories used to locate inside cities

Situation

Proximity to market & convenience of shipping by rail

Site

Proximity to supply of labor and capital

Land became less available

Space for large machinery suburban or rural areas

More space & highways for trucking (not rail)

Interregional Shifts in Manufacturing

United States: Shifts South and West

Northeast lost 1 million manufacturing jobs over last 3 decades (NY & PA)

Industrial growth in South stimulated economy

Lack of unions made South enticing for industries

Workers in south willing to work for lower wages

Gulf Coast: oil & natural gas

Los Angeles: harbor for shipping & low-pay workers from Mexico & Asia

Interregional Shifts in Manufacturing

Western Europe: shifts toward undeveloped areas

Diffused from industrial centers in NW Europe toward South & Eastern Europe

Government policies encourage relocation: incentives

Spain: has become 2nd largest motor vehicle industry in Europe

New Industrial Regions

China: new leading industrial center

Steel production: 1980 80% in MDCs, now LDCs is 55%

ASIA

China: largest manufacturer or textiles, apparel, steel & household products

Largest supply of low cost labor & largest market for consumer products

1990s opened China to transnational corporations

New Industrial Regions

China: 3 main industrial areas along east coast

Only ¼ of China’s population

But, ½ of China’s wealth, ¾ of foreign investment, 5/6 of foreign trade

New Industrial Regions

Latin America

Mexico: Mexico City & Brazil: Sao Paulo

1960s, Latin American countries decreased imports of foreign goods through regulations

Foreign companies could only operate in Lat America if most parts/materials were domestic

1980s Lat Amer hit hard from oil shortages, inflation, etc

New Industrial Regions

Mexico: far north, not population center

Increase in manufacturing, large US market

Maquiladora plants established on border

Regulations decreased to open foreign trade, NAFTA

Mexican manufacturing wages not as low as China (400/month vs 100/month)

Maquiladora plants closing as plants move to China

“Central” Europe

Fall of Communism, early 1990s

Poland, Czech Republic & Hungary

More industrial development

Abundant labor and market proximity

Less skilled, cheaper labor than W Europe