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8/12/2019 LEC1-Economic Geography Introduction
http://slidepdf.com/reader/full/lec1-economic-geography-introduction 1/78
Introduction to GGR 221- New
Economic Spaces
• Deborah Leslie
• http://www.utoronto.ca/culturaleconomy/
• [email protected]• Course blackboard site: go to utoronto portal
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What is economic geography?
• location of different types of economic
activities, the economies of particular regions,
and economic relationships between places
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I sit at a mahogany table from Honduras. The carpet on which it
stands has been manufactured at Kidderminster in England fromwool brought by a sailor from the River Plate or New South
Wales. The tea in a Berlin porcelain cup came from China or
Assam, the coffee from Java, the sugar from Lower Saxony,
Brazil or Cuba. I smoke Puerto Rican tobacco in my pipe whose
stem grew in Hungary, the material for its Meerschaum bowl,
carved in Thuringia, was dug in Asia Minor, the amber mouth
piece came from the Baltic Sea, and the silver for the rim from
the silver mines of the Erzgebirge, Harz or perhaps from
Potosi ... Karl Andree (1867)
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• where are goods and services produced?
• under what conditions?
• how is it that a good produced in one placeends up at another? By what means?
• who buys them?
• How has the production of goods and servicesevolved over time?
• What is the appropriate role of government?
• what, who, how, where, why and so what?
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• distinct from economics- less abstract and
generalizing
• Geography matters!
• "I realized that I spent my whole professional
life ... thinking and writing about economic
geography, without being aware of it" Paul
Krugman, Economist (NY Times)
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• Krugman:
• a) transportation costs encourage
manufacturers to locate close to other
manufacturers
• b) makes region attractive to workers
• c) draws other manufacturers to be close tomarket
• d) manufacturing concentrates in core area and
supplies periphery- cumulative causation
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• central geographical concepts (Coe, Kelly and
Yeung, 2013)
• a) location and distance
• b) territory
• c) place
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• d) scale: geographical levels of human activity
• global
• macro-regional
• national
• regional
• urban
• local
• lived places i.e. workplace and home
• body
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External reasons to study economic
geography
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• a) The transformation of the manufacturing
system
• from “Fordism” to “post-Fordism”
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Crisis and bailouts to North American Auto
Industry, and 2013 Canadian Renewal of
Auto Industry Investment Fund
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• clustering and agglomeration
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• b) The transition to an knowledge/creative
economy
• i) increased input of information into the
production of goods: R&D, technology, and
design
• ii) production of signs, symbols, information
• new creative clusters/ districts
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MARS and Liberty Village
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• c) financialization
• proliferation of financial markets and
institutions
• economic relations increasingly embedded in
financial transactions
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Subprime mortgage crisis
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Stock market crash
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• d) Globalization
• Canada linked to the global economy in four
main ways:
• i) ecological depletion
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Tar Sands
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• ii) technological dependence and the brain
drain
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• iii) continental integration
• across all states and regions
• iv) cultural deterritorialization
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Pinewood Studios, Toronto
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• we live in challenging economic times, andeconomic geographers are well positioned tounderstand the inherently geographical natureof recent changes
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Internal reasons to study economic
geography.
• economic geography is intellectually vibrant.
• characterized by a willingness to experiment
• never more intellectually porous and
adventurous than in current period
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• Main historical traditions/theories:
• a) modelling tradition (positivism)
• b) behaviouralism
• c) Marxian political economy (structuralism)
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• d) new economic geography: influenced bynew economic sociology, institutionaleconomics, postmodernism/ poststructuralism
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Conclusion
• economic geography diverse, polycentric
• opens up a broad and inclusive debate on how
the economy is organized geographically and
how it could and should be organized
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Staples Theory and the Forest
Industry in British Columbia
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• W. A. McIntosh: “Canada is a nation created in
defiance of geography”.
• John A. Macdonald’s National Policy
designed to strengthen east-west linkages
• a) tariff barrier
• b)transcontinental railroad
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Harold Innis
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• need theory sensitive to historical and
geographical context. “Dirt economics”.
• Canada’s history can be understood in terms
of a series of staples: fur, fish, timber,
minerals, oil and gas
• staples production: primary resource activities
and primary manufacturing activities in which
resources are major inputs to the production
process
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• staples economy: “a region that depends
primarily on the export of raw and semi-
processed materials to a more advanced
manufacturing economy” (Pat Marchak).
• Staples industries are leading sector of
economy and set pace for economic growth
• economic development a process of
diversification around export base.
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• spread effects of sector realized through four
types of interlinkages
• a) backward linkages
• b) forward linkages
• c)final demand
• d)fiscal linkages
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• two basic impediments stem from staples
production
• a) export mentality
• b) firms are often large, oligopolistic
• Mel Watkins: staples trap: once a region
specializes in producing staples, it finds it very
difficult to reconfigure production into other
types of sectors
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• Cyclonics
• result is susceptibility to volatile resource
prices, market demand, crisis
• metaphor of cyclone - boom-bust dynamics
• each staple has own rhythm, timing
• local staples region locked into set of globalrelations producing dependency
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• “Orthodox economists ... attempt to fit their
analysis of new economic facts into ... the
economic theory of old countries .... The
handicaps of this process are obvious, andthere is evidence to show that [this is] ... a new
form of exploitation with dangerous
consequences." Innis, 1930.
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• orthodox economic theories presume progress
and equilibrium
• for Innis (like Polanyi), markets have to be
organized
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• non-market institutions are foundation of
economics rather than abstract laws of supply
and demand
• Innis brings together three concerns ignored in
neoclassical economics
• triad of concepts
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• 1. Geography
• a) natural resources and physical geography
• b) spatial relationships- forces of centralizationand decentralization
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• 2. Institutions
• a) role of government: i.e. infrastructure
provision
• b) structure of firm: ownership, control,
competition
• c) institution of market: price mechanism of
less importance
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• 3. Technology
• law of comparative advantage a theory
developed in terms of the interests of
metropole
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British Columbia as a staples
economy: the forest sector
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• Canada, 1996 resource industries only 4.6
percent of employment
• but half of all merchandise exports
• many communities dependent on resources
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• B.C. 43 million hectares of forest
• Under British North American Act of 1867,
forests are provincial jurisdiction
• over 90 percent of B.C. forest land is owned by
the Crown
• this land is leased to forest companies, who
pay a royalty payment- the stumpage fee
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• B.C. a staples economy, dominated by fur
trade, gold, copper, coal, forestry
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• “British Columbia was for a while a rich
periphery, but a periphery none the less. And
peripheries are just regions with nothing to
keep them going when the centre stopswanting their products or finds it more
profitable to invest elsewhere” (Pat Marchak).
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• Innis’ triad
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• 1. Geography
• a) resources- abundance untapped timber
• b) spatial relations- reliance on export markets
• 2. Institutions: role provincial government, low
stumpage rates
• long term leases, open-door policy
• reliance on R&D in donor country
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• Cyclone / Crisis in the sector from 1970s
• Since 1997, 27 mills closed, 13,000 jobs lost
• government revenues have declined by $600
million since 1997
lb i l ( ill l d l /
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Port Alberni, Employment (MacMillan Bloedel /
Weyerhaeuser)
• 1980 1986 1991 1996 2001
• Woodlands 1700 1090 1060 853 521
• Somas Sawmill 1064 588 509 450 350
• APD Sawmill 650 533 476 541 505
• Plywood mill 450 377 0 0 0• Pulp and paper 1522 1316 1340 948 860
• Source: Barnes, Hayter and Hay, 2001
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• Current Challenges
• 1. Foreign Direct Investment- Help or
Hindrance?
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• Question of who gets to cut the harvest?
• Rights are auctioned by the province through a
Tree Farm License (TFL) scheme.
• A license is usually for about 25 years, some
conditions apply
• TFLs generally go to large corporations,
generally foreign
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• a) foreign firm as catalyst
• i) financial and managerial inputs
• ii) access to international markets
• iii)leading technological know-how
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• b) Limitations to the catalytic effect
• i) emphasis on existing facilities
• ii) access to domestic markets
• iii) little innovation or higher value added
production
• preempts indigenous development
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• 2. Problems of scheduling the harvest
• sustained yield- where annual cut is less than
or equal to annual increment of growth over
five year average
• however, problems of estimating annual
growth
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• until 1970s, neither private or public sector
responsible stewards according to Barnes and
Hayter, 1997.
• Recognition now that past estimates were notaccurate
• falldown: decline in timber harvests resulting
from overharvesting, and to lower volumesavailable through second growth stands
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• Clapp: all resources (renewable and non-
renewable) pass through resource cycle
• three phases
• a) exploration and boom
• b) large-scale exploitation
• c) collapse
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Overcut: measure of AAC (allowable annual cut)-
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( )
LTHL (Long term harvesting level). A measure of how
much greater the cut is than the resource.
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• 3. U.S. trade dispute
• stumpage rates on softwood seen as a subsidy
because too low
• claimed dumping
• U.S. levied import duties
• WTO, NAFTA rulings find anti-dumping levyand countervailing duties illegal
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• adapting to new specifications
• boom and bust cycles in housing market in
Japan
• in pulp and paper- increasing competition from
Sweden, Norway, and tropical hardwoods
from S.E, U.S., S. America, S.E. Asia
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• 5. Environmental Movement
• protests over old growth forests, boycotts and
lobbying
• more recently certification schemes to reassure
consumer
• 6. Native land claims
• cover large portions of province
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Conclusion
• staples theory a theory adapted to Canadian
context
• B.C. a staples economy in classic sense
• unique geography, institutions, technology
• left the region vulnerable to cyclonic winds
• forests a contested space- subject to multiplecompeting claims
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