1. Industry and Economic Development
Growth and diffusion of industrialization
The changing roles of energy and technology
2. Industrial Revolution Models of economic development: Rostow’s Stages of Economic Growth and Wallerstein’s World Systems Theory Geographic critiques of models of industrial location: bid rent, Weber’s comparative costs of transportation and industrial location in relation to resources, location of retailing and service industries, and local economic development within competitive global systems of corporations and finance

2. Economic Activities Review
Primary Sector
Extraction
Secondary Sector
Processing & manufacturing
Tertiary Sector
Services, sales & exchanging goods
Quaternary Sector
Exchange of information
Quinary Sector
High level decision-making & research

8. Basic vs. Non-basic
Basic industry – an industry critical to the health of an area’s economy.
Generates revenue from outside the local area
Non-basic industry – Industries that sell their products primarily to consumers in the community.
Generates revenue from within the community
Money is circulated between members of the community
Grocery stores, barbershops, etc.

9. Technology & Energy
“The combination of energy sources and technology greatly impacts the times and place of industrialization.”
Adrian Bailey, University of Leeds, England
Technology + energy = factors for industry
When
Where
Industrial Revolution began in rural areas
That had access to specific energy sources
Factories (mass-production) were largely urban
New technologies & energy allowed expansion

10. Origins of Industrial Revolution
Prior to the Industrial Revolution, we had the cottage industry
Manufacturing based in homes rather than in a factory, commonly found prior to the Industrial Revolution.
Northwest England, mid-late 1700s
Textile industry
New technology (mechanical looms)
More wealth = new inventions
Steam Engine
James Watt in 1769 (with help of toymaker & metal worker Matthew Boulton)
Impacted many industries, including: iron, coal, transportation, textiles, etc.

11. Origins of Industrial Revolution
Steam Engine
James Watt in 1769 (with help of toymaker & metal worker Matthew Boulton)
Impacted many industries, including: iron, coal, transportation, textiles, etc.
Link to DTM
One of the causes of MDCs shift to stage 2
Contributing factor to population growth
New technologies, more wealth, improved agricultural yield

12. Diffusion of the Industrial Revolution
Industrial Revolution spread to Europe & North America by the 19th century
Moving those countries into stage 2 of the DTM
Major Industrial Regions
Europe (East & West), North America & East Asia
Each accounting for 25% of total industrial output
But not every part of the country is as productive

13. Why England first? Comparative advantage
Those factors that give a country or region a competitive edge in industry
For England:
Food surplus and Population
Natural Resources and colonial markets
Other examples:
Education and technology
Location
Cheap labor
Soil and climate, etc.
**Comparative advantage can lead to “specialization”

14. Europe U.K.: technology production
Western
Eastern
U.K.: technology production
Rhine-Ruhr Valley (Germany, Belgium, Netherlands): iron & steel production (#1 industrial area)
Mid-Rhine (Germany, France): Steel, automobiles, chemical production (#2 industrial area)
Po Basin (Northern Italy): Textile
NE Spain (Catalonia, esp. Barcelona): Textile, automobiles
Moscow: Fabrics, skilled labor
St. Petersburg: Shipbuilding
Volga: Petroleum, natural gas
Urals: Mining, iron, steel
Kuznetsk (Central Russia): Coal, iron ore, steel
Donetsk (E. Ukraine): Iron, steel
Silesia (S. Poland & N. Czech Republic): Steel

15. North America New England: Cotton textiles (19th c.)
Middle Atlantic: Financial, communication & entertainment industry (#1 largest U.S. market)
Mohawk Valley (Hudson River & Erie Canal): Steel, food processing, aluminum, paper & electrochemical
Pittsburgh-Lake Erie: Steel (19th c.)
Western Great Lakes: Steel (now), automobiles
S. California: Textile, furniture, food processing
SE Ontario: Steel, automobile, aluminum, paper, flour, textile & sugar

16. East Asia Japan: Automobiles, ships, cameras, stereos, TVs
1950s & 60s = low wage work
Currently = very skilled, high-quality products
Two major regions
Tokyo-Yokohama
Osaka-Kobe-Kyoto
China: Textiles, steel & many other products
Many transnational organizations opened factories looking for low-wage workers
Three major regions
Guangdong & Hong Kong
Yangtze River valley (including Shanghai)
Gulf of Bo Hai (Tianjin to Beijing to Shenyang)

17. Energy & Technology Change
New technologies  new sources of energy  new industries
New sources of energy
Wind
Solar
Geothermal (heat from the earth)
Biomass (using organic matter for fuel)
Hydroelectric
As countries become more developed, they transition through the sectors of the economy.
Two models deal with this transition – World Systems Theory and Rostow’s “Stages of Development”

18. Immanuel Wallerstein World Systems Theory
Theory of a global core, periphery and semiperiphery
Economic & political
Development occurred faster in global core due to exposure to new technologies
Core Periphery Model maps level of development
Underdeveloped countries (periphery) dependent on…
Developed countries (core)
Still exists and can be spatially examined

19. Polar Projection

20. Characteristics Low GDP per capita High GDP per capita
Core
Periphery
Low GDP per capita
Primary/secondary sector
Low literacy rates
High CBRs
Out-migration
Gender roles
Not democratic
Colonies/colonized
High GDP per capita
Tertiary sector or above
High literacy rates
Low CBRs
In-migration
Gender equality
Democratic
Colonizers

21. Examples Countries Regions Countries Regions Peru
Periphery
Core
Countries
Peru
Democratic Republic of Congo
Yemen
North Korea
Afghanistan
Regions
Sub-Saharan Africa
Countries
United States
U.K.
Belgium
Germany
France
Canada
Regions
North America
Western Europe

22. Semiperiphery?
Wallerstein’s theory called for core, periphery & semiperiphery
Over time, the semiperiphery has grown, as the periphery has dwindled
Semiperiphery shares characteristics of both core & periphery
Countries: BRIC
Brazil
Russia
India
China
Others
Mexico
South Africa
Indonesia

28. Exchanges From periphery to core Examples From core to periphery
Medical technology
Money/loans
Aid
Technology
Pop culture
Transnational Corporations
Expensive products
Armies
Military supplies/arms
Aid (e.g. food supplies)
From periphery to core
Examples
Immigrants
Raw materials
Cheap labor
Luxury crops
Plantation crops
Disease
Drugs
Culture (e.g. music)

29. Dependency Theory
Wallerstein’s World Systems Analysis/theory is a kind of “Dependency Theory”
Argues that LDCs are locked into a cycle of underdevelopment by the global economic system that supports an unequal structure
Political and economic relations among countries limit LDCs opportunities to modernize
MDCs are dependent upon LDCs to remain at the top of the world economy (production/extraction of raw materials, off season agriculture, etc.)
LDCs are dependent on MDCs for economic and financial support
“many countries are poor today because of their colonization by Europeans
Extracted resources but did not leave behind a infrastructures that would benefit colonized people when Europeans left.

31. Rostow’s Stages of Development
1960
Attempt to explain and predict the stages that a country goes through as it moves from LDC/periphery to MDC/core
5 stages
The traditional society - LDC
The preconditions for takeoff - LDC
The takeoff - LDC
The drive to maturity -MDC
The age of mass consumption - MDC

32. Stage 1: The traditional society
Description
Economic
Predominantly primary sector (esp. subsistence agriculture)
Limited production High percentage devoted to “nonproductive” activities such as military & religion
Social
Hierarchical & rigid social structure
Political
Based on regional decision-making
Landowners
Cultural values
Resistant to change
Focus on tradition
Country
Afghanistan
U.S.
Pre-Independence
Impetus for Change:
External influence
External interest
External markets

33. Stage 2: Preconditions for takeoff
Description
Country
India
U.S.
First half of 1800s
Impetus for Change:
Infrastructure
Emerging political/social classes
Economic
Surplus of agriculture
Expanding secondary sector
More trade
Social
Emerging commercial classes
Some urbanization
Political
Centralized national government
Cultural values
Progress & openness

34. Stage 3: Takeoff Country U.S. Impetus for Change: Barriers to change:
Description
Economic
Rapid growth of industry, but few activities
New technologies in few sectors
Shift to commercial agriculture
Social
Entrepreneurial class emerges as dominant
Political
Factions push for modernization
Cultural values
Investment of capital for profit
Country
Thailand
U.S.
Middle of the 1800s
Impetus for Change:
Manufacturing > 10% national income
Emergence of modern social, economic & political institutions
Barriers to change:

35. Stage 4: Drive to Maturity
Description
Economic
New technologies emerge in all sectors
Labor-saving devices emerge
Social
Urbanization
More skilled & professional positions
Political
Industrial leaders increasingly influential
Cultural values
Emphasis on new technologies
Expectation of progress
Country
South Korea
U.S.
Late 1800s
Impetus for change:
Exploiting advantage in international trade

36. Stage 5: Age of Mass Consumption
Description
Country
Japan
U.S.
Early 1900s
Economic
Increased production & consumption of “durable goods”
Tertiary sector dominant
Social
Emergence of middle class & suburbs
Low NIR, stabilizing population growth
Stage 4 DTM
Political
Push for social welfare
More resources devoted to military & security
Cultural values
Increased demand for consumer goods

37. Problems with Rostow’s Model
Developed in 1960s based on U.S. & Europe
Not applicable everywhere or in the modern economy/industry
Ignores many outside factors to influence development
War, politics, culture, physical geography & climate, outside influences of MDCs
Automatically connects advanced development with mass consumption
Environmentalists, in particular, dispute this
More development can lead to more awareness about the dangers of mass consumption and more social welfare and sustainable activities
Does not account for deindustrialization process by which companies move industrial jobs to other regions with cheaper labor, leaving the newly deindustrialized region to switch to a service economy and to work through a period of high unemployment.

38. Factors of Industrialization
Many factors in where industrialization takes place
Technology & energy
Site Factors
Land, labor, capital
Capital – the monetary assets that a business possesses.
Must have access to materials
Must have access to labor
Site factors need to minimize production costs
Cheap labor, cheap materials, cheap land
Situation factors
Must be close to markets
Physical geography
Not all business can exist EVERYWHERE (agriculture)

39. Theories of Industrialization
Location Theory
a logical attempt to explain the locational pattern of an economic activity and the manner in which its producing areas are interrelated.
Von Thünen
Least-Cost Theory
model developed by Alfred Weber according to which the location of manufacturing establishments is determined by the minimization of three critical expenses: labor, transportation, and agglomeration.
Alfred Weber was a German economist, geographer, sociologist and theoretician of culture who invented the Least-Cost Theory.
Varignon frame
a system of weights and pulleys used by geographers to help determine optimum location. For example, the weights might represent the relative cost of transporting particular goods to or from a particular location, to help a firm decide the most cost effective site to locate a prospective production facility.

40. Least Cost Theory
Must weigh the cost of transportation, labor & advantages of agglomeration
Agglomeration - a process involving the clustering or concentrating of people or activities. The term often refers to manufacturing plants and businesses that benefit from close proximity because they share skilled-labor pools and technological and financial amenities.
Transportation
Must account for transportation of raw materials & finished product
Based on weight
Bulk-gaining industry
Finished product heavier than input parts
Locate close to market
Automobiles
Bulk-reducing industry
Finished product lighter than input parts
Locate close to raw materials
Lumber  sawdust

41. Varignon frame Pierre Varignon Locational triangle
French mathematician
Locational triangle
Balance the cost between the market & two raw materials

42. Economic Development Terms
Gross Domestic Product (GDP)
Total value of goods & services within the borders of a country during a specific time period, usually one year
Per capita = Latin “by head;” average per person
U.S GDP = $15.09 trillion; per capita = $48,112
China GDP= $7.3 trillion; per capita = $5,445
Gross National Income (GNI)
Total value of GDP plus net receipts of primary income from abroad (calculated in much the same way as Gross National Product [GNP])
The World Bank now uses GNI rather than GNP
Net National Product
Measure of all goods & services produced by a country during a specific time period, usually one year, including production from its investments abroad, minus loss of capital (or degradation of natural resources) as a result of productivity
Purchasing Power Parity (PPP)
Monetary measurement of development that takes into account what money buys in different countries
Can be misleading (e.g. ox cart)
U.S. GDP (PPP) = $15.66 trillion
China GDP (PPP) = $12.38 trillion

45. Human Development Index (HDI)
Measure of development conducted by the UN
Measures development in terms of human welfare rather than money
3 dimensions (four indicators)
Health
Life expectancy at birth
Education (average of two indices)
Mean years of schooling (at 25)
Expected years of schooling (at start of schooling)
Living Standards
GNI per capita (NOT GDP)

47. Interactive HDI Map
Interactive HDI Map

48. HDI by Region Japan: 0.96 North America: 0.95 Europe: 0.93
MDCs
LDCs
Japan: 0.96
North America: 0.95
Europe: 0.93
Oceania: 0.90
Russia: 0.73
Latin America: 0.82
East Asia: 0.77
SW Asia & N. Africa: 0.74
SE Asia: 0.73
Central Asia: 0.70
South Asia: 0.61
Sub-Saharan African: 0.51

49. Brandt Line Also known as the North/South divide
Divides the more developed North (generally core) with the less developed South (periphery)
Major notes of division:
Separates U.S. & Mexico
All Central Asian former Soviet republics are south of the Brandt line, while Russia and Eastern European former republics are north
Japan & Oceania are “north” of the Brandt line, though geographically that isn’t the case
Some maps include South Korea as “north” of the Brandt line, while North Korea is “south”
Not always the case. In other cases the entire Korean peninsula is south of the Brandt line

51. Variations in Levels of Development
Within a region
Korean Peninsula: North vs. South Korea
Europe: West vs. East
Africa: Extreme North & South vs. Interior (Sub-Saharan)
Within a country
Brazil
Coastal, urban areas more developed than interior
Mexico
Northern areas more developed then southern
China

55. Deindustrialization
Deindustrialization – process by which companies move industrial jobs to other regions with cheaper labor, leaving the newly deindustrialized region to switch to a service economy and to work through a period of high unemployment.
Examples:
Rust Belt
Effects:
Shift to tertiary sector
Improved environment
High unemployment (temporarily)

56. Maquiladoras Maquiladoras Mutually beneficial Issue: outsourcing
Factories built by U.S. companies in Mexico near the U.S. border to take advantage of much lower labor costs
Low-wage workers
Foreign-owned factories
Import raw materials/components (do not use local resources, beyond labor)
Export finished goods
Mutually beneficial
Workers earn higher wages then they otherwise would
Factories pay lower wages than they otherwise would
Issue: outsourcing
a decision by a corporation to turn over much of the responsibility for production to independent supplies.
U.S. workers lose manufacturing jobs with U.S. companies decide to move factories to Mexico for lower-wage labor

57. EPZs
Export processing zones (EPZs) – zones established by many countries in the periphery and semi-periphery where they offer favorable tax, regulatory, and trade arrangements to attract foreign trade and investment.
Attempt to attract foreign business with favorable business climates
Maquiladoras are EPZs in Mexico
Situated at/near the border
Free of import tariffs
Special Economic Zones are EPZs in China
Situated near major port cities

58. 2004 FRQ
The map above shows the main maquiladora centers in Mexico in the year
A. Define a maquiladora.
B. Refer to the map above to explain the spatial distribution of maquiladoras within Mexico.
C. Discuss FOUR factors that explain why Mexico has emerged as an important location in the current global system of industrial organization.

59. Maquiladora FRQ Rubric
This question is concerned with the manifestation of changing global economies on the landscape.
A. Define a Maquiladora: (2 points)
1 point for any 2 bulleted items, 2 points for 3-4 bulleted items
Foreign owned plants located in Mexico (outsourcing)
Advantage of cheap labor (sweatshops can serve as a synonym for cheap labor)
Export of assembled products to the US (export processing zones)
Import of product components (not acceptable: manufacturing without assembly and use of raw materials)
B. Refer to the map to explain the spatial distribution of maquiladoras within Mexico: (2 points) 1 point for location on the border of the US (e.g., Ariz., Calif., New Mexico, Texas) & Mexico, 1 point for explanation why maquiladoras are located on the border
Acceptable:
Close to major cities/ points of entry to the US
Ease of transportation into the US
Mexican government originally insisted that maquiladoras be within 35 miles of the US border
Not acceptable:
Low cost labor
Ocean ports
Physical environmental factors
C. Discuss FOUR factors that explain why Mexico has emerged as an important location in the global system of industrial organization: (4 points) 1 point for each factor
Labor:
Inexpensive labor costs in Mexico: New/global international division of labor
Political/Economic:
NAFTA
Weak environmental regulations in Mexico
Tax incentives/ No Mexican tariffs on imported parts or for exported products
Mexico’s stable government
Mexico’s stable economy
Mexico’s proximity to US market
Mexico’s expanding middle class/ urbanization/skilled labor
Exploitation of less developed countries/ core-periphery model
Rise of transnational corporations
Use of oil as leverage in international market (equity for international loans)
US shift to a tertiary economy
Tourism as a source of foreign currency
Location/Infrastructure - Mexico/US:
Transportation connections between US and Mexico
US transportation structure
Not Acceptable:
Landlocked countries/land bridge to South America
Abundant labor source
Climate
Maintaining a global inequality of income (dependency theory argument)

60. Four Asian Tigers Hong Kong Singapore South Korea Taiwan
A.k.a. The Four Asian Dragons, The Four Little Tigers, The Gang of Four
Pursued export driven economic development in the 1960s, which leveled off in the 1990s
International Trade Approach
Emerging Tigers?
China
India
Increasing education & export levels are leading to rapid economic development

61. National Development Strategies
Self-Sufficiency
International Trade Approach

62. Facts/Positives/Examples
Self-Sufficiency
Facts/Positives/Examples
Problems
Spread investment across as many sectors as possible
Modest but fair
Development more evenly distributed
Limits imports (limits competition)
High tariffs
Quotas on imports
Example: India & China
Most countries don’t use self-sufficiency any more
Protection of inefficient businesses
Need for large bureaucracy

63. International Trade Approach
Facts/Positives/Examples
Problems
Must identify unique economic assets
Must produce better quality at lower price then other countries
Examples
Four Asian Tigers
Arabian Peninsula countries
Uneven resource distribution
Increased dependence on MDCs
Market decline

64. Gender & Development Gender Development Index (GDI)
Gender National Empowerment Index (GNEI)
Gender Empowerment Measure (GEM)

65. Gender Development Index (GDI)
Use the same indicators as the HDI
Compare the differences between men and women
Penalizes countries that have a large disparity between the welfare of men and women

70. Gender Empowerment Measure (GEM)
Measure to gauge how involved women are in improving their status
Economic power
Female income as % of male income
% of professional & technical jobs held by women
Political power
% of administrative jobs held by women
% of national parliament that are women