Key Issues Where is industry distributed? Why are situation and site factors important? How does industrialization affect the environment? Why are situation and site factors changing? Key issue 1: where is industry distributed? Where Is Industry Distributed?
Modern concept of industry: the manufacturing of goods in a factory. Origin: northern England and southern Scotland in late 1700s Industrial Revolution - improvements made in industrial technology that transformed the process of manufacturing goods. Remember: also coincided with Second Agricultural Revolution Industrial Revolution
Facilitated by the availability of natural resources in the hearth countries (water power, coal, iron ore) Diffusion of industry led to growing populations and increased food supplies (remember the Second Agricultural Revolution!) This freed workers from farming and caused many to seek industrial jobs in cities Increased the demand for raw materials and the search for new markets: led to colonialism and imperialism Diffusion of Industrial Revolution
FIGURE 11-2 DIFFUSION OF THE INDUSTRIAL REVOLUTION The construction of railroads in the United Kingdom and on the European continent reflects the diffusion of the Industrial Revolution. Europes political problems impeded the diffusion of the railroad. Cooperation among small neighboring states was essential to build an efficient rail network and to raise money for constructing and operating the system. Because such cooperation could not be attained, railroads in some parts of Europe were delayed 50 years after their debut in Britain. Where Is Industry Distributed?
Industrial Regions Industry is concentrated in three regions Europe North America East Asia Each region accounts for roughly of the worlds total industrial output. Brazil and India account for most of industrial output outside of the regions listed above Europes Industrial Centers
FIGURE 11-3 Europes Industrial Areas Europe was the first region to industrialize during the nineteenth century. Numerous industrial centers emerged in Europe as countries competed with each other for supremacy. Europe was the first region to industrialize during the nineteenth century. Numerous industrial centers emerged in Europe as countries competed with each other for supremacy. North Americas Industrial Centers
FIGURE 11-4 North Americas Industrial Areas Industry arrived a bit later in North America than in Europe, but it grew much faster in the nineteenth century. North Americas manufacturing was traditionally highly concentrated in the northeastern United States and southeastern Canada. In recent years, manufacturing has relocated to the South, lured by lower wages and legislation that has made it difficult for unions to organize factory workers. North Americas manufacturing was traditionally highly concentrated in the northeastern United States and southeastern Canada. In recent years, manufacturing has relocated to the South, lured by lower wages and legislation that has made it difficult for unions to organize factory workers. East Asias Industrial Areas
East Asia became an important industrial region in the second half of the 20th century, beginning with Japan. Into the 21st century, China has emerged as the worlds leading manufacturing country by most measures. FIGURE 11-5 East Asias Industrial Areas East Asia became an important industrial region in the second half of the twentieth century, beginning with Japan. Into the twenty-first century, China has emerged as the worlds leading manufacturing country by most measures. Newly Industrialized Country (NIC)
A country whose level of economic development ranks it somewhere between developing and developed (semi-periphery) These countries have moved away from an agriculture-based economy and into a more industrialized, urban economy. In the 1970s and 1980s, examples of newly industrialized countries included Hong Kong, South Korea, Singapore and Taiwan. Examples in the 2000s include South Africa, Mexico, Brazil, China, India, Malaysia, the Philippines, Thailand and Turkey Sectors of the economy Primary - Agriculture, fishing, forestry, and mining Largest sector in low-income, pre-industrial nations Secondary - Transforms raw materials into manufactured goods Grows quickly as societies industrialize Tertiary - Involves services rather than goods Dominates post-industrial societies Trade, finance, real estate, government, transportation, education, entertainment, media Offshoots of Tertiary Sector
Quaternary intellectual activities research and development, management and administration, libraries, information technology, government, education Quinary - highest levels of decision making in a society or economy top executives or officials in government, science, universities, nonprofit, healthcare, culture, and the media The contemporary economic landscape has been transformed by the emergence of:
Service industries High technology industries Growth poles Service Industries In the global economic core, service industries (tertiary, quaternary, quinary) employ more workers than primary and secondary industries combined Quaternary and quinary have experienced rapid growth in the last 30 years, giving greater meaning to the word postindustrial Not all services contribute to an economy equally Ex: you pay $20 for a haircut and $20,000 for a surgery High-Technology Industries
Designated by government to benefit from lower taxes, with goal of providing high-tech jobs to local population Attracts designers of computers, telecommunications, medical equipment, etc. Examples of high-technology corridors are Californias Silicon Valley North Carolinas Research Triangle High-Tech Corridors Attracted by prospect of developing links with existing research communities and availability of a highly educated workforce Californias Silicon Valley (UC Berkley, Stanford University) is home to Adobe, HP, Intel, IBM North Carolinas Research Triangle (Duke, NC State, and UNC Chapel Hill) is also home to many high-tech companies Major Employers in NC Research Triangle
American Airlines Bayer The Body Shop Burt's Bees Duke University DuPont Fidelity Investments General Electric GlaxoSmithKline IBM PNC Qualcomm Quintiles Sony Ericsson Toyota Verizon Growth Poles Growth Pole Theory: economic development, or growth, is not uniform over an entire region, but instead takes place around a specific pole (or cluster). This pole is often characterized by core industries around which linked industries develop, mainly through direct and indirect effects. Silicon Valley became a growth pole because the concentration of businesses spurred economic development in the surrounding area Rust Belt and Sun Belt Rust Belt: The industrial zone of the northeasternUnited States (around Great Lakes) used to be called the Manufacturing Belt Evokes image of abandoned, rusted out steel factories Sun Belt: southern region of the United States Both population and economy of this region has grown recently as service sector businesses have chosen to locate where climate is warm Rust Belt and Sun Belt Ecotourism Ecotourism is defined as "responsible travel to natural areas that conserves the environment, sustains the well-being of the local people, and involves interpretation and education" (TIES, 2015) Helps to protect the environment AND generate jobs Principles of Ecotourism
Build environmental and cultural awareness and respect. Provide direct financial benefits for conservation. Generate financial benefits for both local people and private industry. Help to raise sensitivity to host countries' political, environmental, and social climates. Design, construct and operate low-impact facilities. Work in partnership with indigenous people to create empowerment for them. National Geographics Top 10 Ecotourism Destinations:
Brazil Dubai Canada Belize Kenya Gabon Laos Ireland Turks and Caicos Greece Webers Model of Industrial Location
Alfred Weber 1909 Germany Also called the Least Cost Theory Explains the location of industries in terms of 3 factors: Transportation cost of moving raw materials to factory and finished products to market Labor Cheap labor may allow an industry to make up for higher transportation costs Agglomeration if several industries cluster in one city, they can share talents, services, and facilities Webers Model The substitution principle states that business owners can juggle expenses as long as labor, land rent, transportation, and other costs dont all go up at once Need to find the sweet spot that is best for the company financially The sweet spot can move depending on the variables Ex: Nike pays extra for transportation in exchange for cheap labor overseas Webers Industrial Least Cost Model
Labor Sweet spot Agglomeration Transportation Key issue 2: why are situation and site factors important? Situation and Site Factors
Geographers attempt to explain why one location may prove more profitable for a factory than others. Companies ordinarily face two geographic costs. Situation factors costs associated with the established transportation networks accessible from a specific place. The farther something is transported, the more it costs Site factors costs resulting from the unique characteristics of a location. Labor, capital, and land vary by location Situation Factors Two main situation factors:
Proximity to Input: optimal plant location is near the raw materials This is best when raw material transportation costs are greater than transportation costs of product to consumer When raw materials cost more than final product, it is called a bulk-reducing industry Examples: lumber turned into paper, raw metals (copper, steel) being turned into lighter finished products 2. Proximity to Market: the optimal plant location is as close as possible to the customer
This is best when the cost of transporting raw materials is less than the cost of transporting the product to consumers When the final product weighs more or takes up more space than the raw materials, it is called a bulk-gaining industry Examples: beverage bottling, automobile assembly, potato chips Exception: wine is bottled near the raw materials (grapes) because grapes are very fragile Manufacturers may also prefer proximity to market if:
They are a single-market manufacturer with only one or two customers A manufacturer or buttons, zippers, etc. makes sense to be located close to a garment factory (its customer) They have perishable products Bread bakers, milk bottlers, newspaper printers Bulk-gaining: Beverage Production
Figure 11-9 BULK-GAINING: BEVERAGE PRODUCTION Beer is a bulk-gaining industry. The cans or bottles are filled mostly with water. Most beer is bottled near major metropolitan areas, where most of the consumers are clustered add to caption: The areas in color on the map have relatively high population density. Beer is a bulk-gaining industry. The cans or bottles are filled mostly with water. Most beer is bottled near major metropolitan areas, where most of the consumers are clustered Perishable Products FIGURE PERISHABLE PRODUCTS Potato chips are best consumed when fresh, and they are much bulkier after they have been sliced, fried until they curl, and placed in large air-filled bags. As a result, most are produced relatively close to the market. Potato chips are best consumed when fresh, and they are much bulkier after they have been sliced, fried until they curl, and placed in large air-filled bags. As a result, most are produced relatively close to the market. Footloose Industries For some businesses, transportation costs are not a factor Footloose industries that can locate anywhere and be profitable Examples: Call centers Credit card processing centers Online companies Alternative example: both parts and finished products in the computer industry are expensive, so transportation costs are only a small part of total production costs Why Are Situation and Site Factors Important?
Site Factors: Labor, Capital, and Land 1. Labor Most important factor on a global scale. Minimizing labor costs, which vary around the world, is extremely important to some industries. A labor-intensive industry is an industry in which wages and other compensation paid to employees constitute a higher percentage of expenses. Example: it costs more to make a car but is less labor intensive than making a t-shirt (where a large percentage of the cost of production is labor) Why Are Situation and Site Factors Important?
2. Capital Manufacturers typically borrow the funds needed to establish new factories or expand existing ones. Ability to borrow money has greatly influenced the distribution of industry in developing countries. 3. Land Must consider natural resources, human resources, and the actual land itself Modern factories are most efficient when they are in one-story buildings (need more space) Mostly available in suburban and rural locations and tends to be relatively cheaper than land in the city. Basis for Trade Comparative advantage: the competitive edge enjoyed by one location over another Ex: places with favorable growing conditions and inexpensive labor will become specialized in the production of something like bananas Some locations begin to specialize in one economic activity and exchange goods with other regions. Complementarity: the degree to which one place can supply what another place demands Ex: Florida has a high degree of economic complementarity with northeastern U.S. because it can supply fresh fruits and vegetables year-round Challenges for Developed Countries
Protection of markets from new competitors can be a challenge Competition now occurs more frequently within regional trading blocs (free trade zones within a region no tariffs or barriers to trade among member countries) Three most important trading blocs: North America (NAFTA U.S., Canada, Mexico) European Union (EU) East Asia no formal organization, but Japanese companies play leading roles in the economies of other countries in the region Trading Blocs Free trade zones - free movement of products across borders in these regions has led to closer integration of industries within North America and within Europe Example: parts of cars are made in different countries within the bloc and moved easily across borders Competition among blocs: trade barriers like taxes, lengthy permit procedures, and quotas on exports have been placed between blocs Ex: Japanese government maintains quotas on the number of cars Japanese companies can export to the U.S. Problems within blocs In the EU industry is concentrated in Germany, France, and UK Within those countries, some areas are more industrialized (and thus richer) than others France most industry and wealth are around Paris Germany eastern part lags far behind the west Within NAFTA, Mexicos economy lags behind those of the U.S. and Canada Transnational Corporations
Most cooperation and competition within and among trading blocs takes place through transnational corporations companies that operate factories in countries other than the ones in which they are headquartered Most transnational corporations are headquartered in the U.S., but some are located in Japan or Europe Transnational Corporations Outsourcing Where to produce or assemble a product is only a small aspect of the commodity chain A large part of business decision making today has to do with where to have parts produced and assembled Outsourcing a company moving production or services abroad Gained a negative connotation as people felt American jobs were moved elsewhere Media focused on outsourcing of jobs to China and call centers to India Outsourcing Today, globalization has deepened and created a new world economy Outsourcing is now an umbrella term for globalized production in which a defined segment of the commodity chain is performed abroad Regardless of where goods are produced, consumption is still concentrated in the core countries and wealthy and middle classes of the semi-periphery countries of the world Top 5 U.S employers in India:
General Electric: 17,800 employees Hewlett-Packard: 11,000 employees IBM 6,000 employees American Express 4,000 employees Dell 3,800 employees Typical salary for a computer programmer: U.S. - $70,000 India - $8,000 Challenges for Less Developed Countries
LDCs face the challenge of reducing inequality in wealth between them and MDCs Problems they encounter: Distance from markets wealthy consumers in MDCs are generally far away need to invest a lot in transportation Inadequate infrastructure lacking in transportation, communication, equipment, and also schools and universities to educate workers, managers, and executives Competition companies seek out low-cost labor in LDCs but keep highly skilled jobs in MDCs New International Division of Labor
Also known as global division of labor Reorganization and relocation of jobs from a national to a global scale Selective transfer of production operations requiring highly skilled workers to factories located in MDCs and those requiring little skill to factories located in LDCs New International Division of Labor
Key features: Dependence on the core (MDC) countries on lower-cost production from the LDCs for mass-produced goods Transportation efficiency leads to separation of producers and consumers Locations are selected that have lower operating costs Specialized jobs are contracted to companies or specific locations New International Division of Labor
Impacts on the United States: Unemployment Deindustrialization restructuring toward tertiary/quaternary job sectors Migration from areas of unemployment to areas of employment (Rust Belt to Sun Belt) Availability of less-expensive goods changes the standard of living New International Division of Labor
Impacts on developing countries such as Mexico, China, and India: Added job opportunities Entry of women into the workforce Child labor Increased wage gap Migration Pollution Regional growth and concentration of wealth, pollution, etc. Westernization/globalization effects on society and culture of region U.S. Clothing Manufacturing
FIGURE U.S. CLOTHING The percentage of clothing made in the United States declined from around 50 percent in the 1990s to around 2 percent today. Key issue 3: how does industrialization affect the environment? Natural Resources The shift from wood to coal as the leading energy source in North America and Western Europe lessened deforestation Began depletion of coal, petroleum, and natural gas Population growth has added to the problem Energy use in MDCs is far greater than in LDCs MDCs contain 25% of worlds people but consume about 75% of worlds fossil fuels The U.S. burns 25-40% of the world's energy but only has 4.6% of the world's population Top consumers of oil U.S. 20,700,000 barrels/day
China 6,500,000 barrels/day Japan Germany Russia India Canada South Korea Brazil France Sustainable Development
Basic idea: People living today should not impair the ability of future generations to meet their needs Possible solutions to environmental problems: Prevention limit population growth or use of resources Technological change installing filters for industrial runoff and recycling industrial waste Mitigation reverse damage, ex: clean up chemical spills Compensation hold companies legally responsible for damages or illnesses caused Industrial Pollution Industrial development has greatly increased air, water, and land pollution Global warming increase in earths temperature caused primarily by the burning of fossil fuels Greenhouse effect carbon dioxide in atmosphere traps heat- could melt polar ice caps and raise level of oceans Consequence: destruction of coastal cities and massive migrations inland Acid rain causes corrosion of buildings, kills fish, stunts growth of forests, harms crops Key issue 4: why are situation and site factors changing? Why Are Situation and Site Factors Changing?
Changes within Developed Regions Shifts within the U.S. Northeastern U.S. lost 6 million jobs in manufacturing between 1950 and 2010 2 million jobs were added in the South and West California and Texas had largest increases Industrialization during the late 19th and early 20th centuries largely bypassed the South, because they lacked the needed infrastructure (had not recovered from losing Civil War) In a closed shop a company and the union agree that everyone must join the union to work in the factory. In an open shop a union and a company may not negotiate a contract that requires workers to join a union as a condition of employment. Right-to-work laws send a powerful signal that antiunion attitudes will be tolerated and perhaps even actively supported More recently, manufacturers have been lured to the south by right-to-work laws - legislation that requires a factory to prohibit workers from being forced to join a union. Essentially, industry in the U.S. over time has shifted from the Northeast toward the South and West. Steel, textiles, tobacco, and furniture industries have become dispersed through smaller communities in the South Many people in South will work for lower wage and forego joining a union Gulf Coast has access to oil and natural gas Changes in U.S. Manufacturing
FIGURE CHANGING U.S. MANUFACTURI NG Manufacturing has decreased in the Northeast. Interregional Shifts in Europe
Manufacturing has diffused from traditional industrial centers in northwestern Europe toward Southern and Eastern Europe European government policies have encouraged this relocation because incomes in Southern and Eastern Europe lag behind Europes average Emerging Industrial Regions
In 1970, half of world industry was in Europe and 1/3 was in North America Today, these regions account for only each Industrys share of total economic output has steadily declined in MDCs since the 1970s Labor-intensive industries have been especially attracted to emerging industrial regions Manufacturing Value as a % of GNI
FIGURE MANUFACTURING VALUE AS A PERCENTAGE OF GNI Manufacturing has accounted for a much higher share of GNI in developing countries than in developed countries since the 1990s. Mexico and NAFTA NAFTA eliminated most barriers to moving goods among Mexico, the U.S., and Canada since 1994. Mexico attracts labor-intensive industries because of its relatively low-cost labor and its proximity to the U.S. Plants in Mexico near the U.S. border are known as maquiladoras. Companies receive tax breaks if they ship materials from the U.S., assemble components in Mexico, and export finished product back to U.S. Special Economic Zones (SEZ)
Designated areas in countries that possess special economic regulations that are different from other areas in the same country. Conducting business in a SEZ usually means that a company will receive tax incentives,lower tariffs, or eased environmental restrictions China has been the most successful in using SEZs allow foreign companies to have free trade rights and to outsource China has even declared an entire province (Hainan) to be an SEZ Most SEZs are cities BRICS The countries expected to dominate global manufacturing during 21st century: Brazil, Russia, India, China These four control 25% of the worlds land area and contain 3 billion people Account for only 1/6 of the world GDP China is expected to pass the U.S. as the worlds largest economy around 2020 South Africa was added to the acronym in 2010 GDP for BRIC Countries By 2050, the worlds largest economies are expected to be held by:
China India United States Indonesia Nigeria Brazil Russia Women in Industry Changes in the global economy have resulted in a rapid increase in the number of women engaged in industrial employment in LDCs Women are paid lower wages than men for the same work (even in developed countries like the U.S.) Women are often required to work in addition to their family responsibilities Women work longer hours than men in every country except the U.S., Canada, and Australia (including paid and unpaid labor) Women in Industry Increased job opportunities for women have led to better healthcare, education, an childcare for women worldwide Women are 40% of worlds workforce but have just 1% of its wealth Women account for 58% of unpaid labor worldwide 552 million women joined the global labor force between 1980 and 2008 Globally, 4 out of every 10 workers is a woman The feminist movement of the 1960s led the way for women to increase their presence in almost all occupations in the Western world. Over the subsequent decades, U.S. women had higher labor participation rates than most other developed countries. Seven decades since the end of World War II, is that statement still true? A. Yes, the United States still leads. B. Not quite, but it is still near the top. C. No, it is in the middle of the pack. D. No, it is near the bottom.