1. Industrialization and Economic Development
Unit VI

2. Intro
Economic geographers study the locations and reasons for economic patterns in the world’s human landscape
Fast Fact
Almost half of the people in the world live on the equivalent of less than $2 a day, and about 20% live on less than $1 a day
People in the 20 richest countries on average earn 37 times more than people in the 20 poorest countries

3. Economic Classifications
ECONOMY
The system of production, consumption, and distribution
PRIMARY SECTOR
SECONDARY SECTOR
TERTIARY SECTOR
QUATERNARY SECTOR
Assemble, assemble, and process information
Ex. University research and investment analysis
QUINARY SECTOR
Highest levels of decision making
Ex. Legislature or presidential cabinet

4. Industrialization
The growth of manufacturing activity in the economy or a region
Usually occurs alongside a decrease in the number of primary economic activities
Fast fact
The amount of world trade since 1950 has increased 20 fold, from $320 billion to $6.8 trillion
This increase in the trade of manufactured goods is three time larger than the increase in the rate of the production of those goods

5. The Industrial Revolution
Began in England in the 1760s
Later diffuses to other parts of western Europe
During this period… machines replaced human labor and new energy sources emerged (Coal)
At beginning it was textile focused industry

6. Cont…
England’s Industrial Revolution defined by the rise of assembly line manufacturing
Industries powered by coal so they clustered around coal fields
Led to development of a clear industrial landscape and working class housing area
Along with industrial growth… transportation infrastructure grew to allow improved shipping supplies to urban factories

7. Cont… Farming also mechanized COMMODIFICATION
Factory owners looking at their human labor as commodities (objects for trade) with price tags per hour
As opposed to seeing them as people

8. In the beginning… Factory like labor first started in households
Growth of factories initially by water sources which supplied the energy
Then factories grew near coal and could move farther away from water
Away from water, factories could build out rather than up
By the 1960s, oil replaced coal
US, Russia, Venezuela were big oil suppliers prior to the 60s
Middle east emerged in the 60s

9. Diffusion of Industrialization
By 1825 the technology had diffused to N. America and Western Europe
Thrived in places with coal deposits
Ex. Ohio and Pennsylvannia
By the 1920s production breaks down into differentiated processes
FORD PRODUCTION METHOD (FORDIST)
Build out rather than up
Only one floor so the product could by transported throughout the assembly line without problems

10. WEBER’S LEAST COST THEORY
ALFRED WEBER
Predicted where industries would locate based on the places that would be the lowest cost to them

11. Assumptions of Weber’s model
Assumes the cost of transportation is determined by the weight of goods being shipped and the distance to the market
The heavier the good and/or the longer the distance, the more expensive it is to ship
Assumes industries try to minimize costs
Assumes markets are in fixed locations
Assumes labor is in fixed locations
Like Von Thunen… assumed soil and political/cultural landscape is uniform

12. Four factors of model Industry location driven by Transportation Labor
Agglomeration
Deglomeration

13. Transportation and Distance
Must consider weight and distance
Not just distance to market… but from raw materials or energy sources to the industry
During Industrial revolution, factories locate near coal (energy), after invention of electricity they were no longer tied down to the energy source
Also had to locate near raw materials

14. Cont… SPATIALLY VARIABLE COSTS WEIGHT LOSING PROCESSES
Costs that varied or changed based on location
Ex. Using heavy raw materials you might build closer to the raw material
WEIGHT LOSING PROCESSES
Ex. Paper production
MATERIAL ORIENTATION

15. Cont… WEIGHT GAINING PROCESSES Locates near market Ex. Soda Industry
MARKET ORIENTATION

16. Cont… SPATIALLY FIXED COSTS
Some industries maintain the same costs no matter where they are
Usually light products with high value
Ex. Computer chips
May be called FOOTLOOSE INDUSTRIES

17. Labor Costs
Not only human costs but machinery and money to purchase tools
SUBSTITUTION PRINCIPLE
When an industry substitutes labor costs for transportation costs
Labor costs decrease… Transportation costs increase… in the long run they will save

18. Agglomeration Industries that clump together for mutual advantage
Can share costs
AGGLOMERATION ECONOMICS
Saving money for both industries and consumers
HIGH TECH CORRIDOR
TECHNOPOLE
BACKWASH EFFECT
When other regions suffer a drain of resources and talent
LOCATIONAL INTERDEPENDENCE
Industries choose locations based on where the competitors are located
Ex. Off highway exits… Gas stations AGGLOMERATE based on LOCATIONAL INTERDEPENDENCE
Allows them to share the market

19. Deglomeration
When an agglomeration becomes too clustered/too crowded in negatively affect the industry so they split up for more space
“unclumping” of industry

20. Criticisms of Weber’s Model
Does not identify the fact that markets and labor are often mobile
Labor force varies by
Skill
Age
Gender
Language
Etc…
Some transportation costs are not necessarily proportional to distance

21. Contemporary Patterns and Impacts of Industrialization and Development

22. Development
Process of improving the material condition of people through the growth and diffusion of technology and knowledge
MDCs vs. LDCs
On an economic spectrum…
Not just wealth…may have additional social, economic, demographic factors involved

23. UN Human Development Index
HDI
Used to compare various development regions
Three factors
Life expectancy
Average educational levels
Standard of Living
On a score from 0-1
Norway tops at .965
US around 8th place – 0.91
Democratic Republic of the Congo in last at .286

25. Economic component of HDI
Gross Domestic Product (GDP)
The value of total outputs of goods and services produced in a country usually over 1 year
Per capita = per person
In US… GDP per capita is around 35,000 or $10-15 an hour vs. $0.50 in LDCs

26. PPP Purchasing Power Parity
Calculating the exchange rates required for each currency to buy an equal amount of goods
BIG MAC INDEX
“Apples to Apples”

27. In comparison IN US… rich about 15 times more wealthy
IN Guatemala… rich about 75 times more wealthy that the poorest 10%

28. Informal Sector Data not reported They are “off the books”
Not included in GDP
May limit the usefulness of GDP

29. Development Gap The widening gap between MDCs and LDCs
GDP tripled in MDCs within the last decade
GDP only double in LDCs within the last decade
Rate of Natural Increase (RNI) dropped 85% in MDCs in the last decade… only 5% in LDCs
NORTH – SOUTH GAP
Northern Hemisphere is more developed

30. Structuralist Reasons for the Development Gap
Argue LDCs are locked into a vicious cycle of entrenched underdevelopment by the global economic system
DEPENDENCY THEORY
Says political and economic relations among countries limit the ability of LDCs to modernize and develop
Countries are INTERDEPENDENT
IMMANUEL WALLERSTEIN’S THEORY
WORLD SYSTEMS ANALYSIS
CORE, PERIPHERY, SEMIPERIPHERY
Core depends on the Periphery
If there is a core there is a periphery
The core exploits the periphery
Ex. Europe and Africa

31. Liberal theories of Development: ROSTOW’S MODERNIZATION MODEL
Says all countries can develop
MODERNIZATION MODEL
“ladder of development”

33. Criticisms of Rostow’s Model
Based on Anglo American and Western European Development
Does not account for “roadblocks” to development like neocolonalism
Considers each country independent rather than interdependent

34. Reducing the Development Gap: The self-sufficiency approach
The ability to provide for its own people, independent from foreign economies
Investments should be spread over the entire economy
Ex. China, India, E. Europe, Africa all tried it… didn’t work
Corruption and inefficiency limited gains
India never improved products
Governments paid failing businesses to stay open

35. Reducing the Development Gap: International Trade
Pushes a country to identify its unique set of strengths in the world and to channel investment toward building on those strengths
COMPARATIVE ADVANTAGE
Japan and High tech products

36. Globalization
The increasing sense of interconnectedness and spatial interaction among governments, cultures, and economies
Originally just used to describe economics… now it is more broad
Ex. Spread of MTV
May lead to resentment
Disneyification… McDonoadlization

37. Multinational Corporations
MNCs
Or Transnational Corps… TNCs
Headquarters in one country and production facilities in others
CONGLOMERATE
One massive company that owns and operates smaller companies
Ex. A soda company also owns the bottling company and food coloring company

38. Outsourcing
Practice of an MNC to relocate a piece or all of its manufacturing in other countries

39. Newly Industrialized Countries
NICs
Asian Tigers
Taiwan, S. Korea, Hong Kong, Singapore
Make up the Pacific Rim economic region

40. Foreign Direct Investment
Investment in LDCs
SPECIAL ECONOMIC ZONES
EXPORT PROCESSING ZONES
FREE TRADE ZONES

41. Maquiladoras Special economic zones in Mexico along the US border
Part of NAFTA
Used to create jobs

42. New International Division of Labor
Breaks up manufacturing process among many countries

43. Free trade vs. Fair Trade

44. Structural Adjustment and Privatization
Stipulations that require the country receiving a loan to make economic changes in order to use the loan
Privatization
The selling of publicly operated industries to market driven corporations

45. Non governmental organizations
To assist in boosting economic development and human rights throughout the world’s peripheral regions
NGOs supply resources and money

46. Globalization and the Environment
Resources are being depleted
Travel has increased
ECOTOURISM
Costa Rica has turned a huge percentage of its land into protected areas that can be used for ecotourism
“Jungle Swing”
Only damage to environment is the guidewires

47. Cont… Sustainable development
A rate of growth and resource-consumption that can be maintained from one generation to another
UN called for conservation and careful use of resources
Avoid overfishing
Care for the soil
Preserve forests
Protect species from extinction
Reduce air pollution
Recycle
Use alternative fuels

48. Greenhouse effect Caused by CFC, CO2, Methane
Causes world temp to rise
Kinda like what happens in a car on a hot day
Related to OZONE LAYER DEPLETION
Global Warming
May cause sea levels to rise