Unit 5: Industrial and Economic Geography

More Developed Countries High standard of living (income, education, food, clothing, shelter) Mostly Middle and Upper Class Economically mixed with Industry, Agriculture, but a growing Services sector Examples United States, Western Europe

Developing Countries Moderate standard of living Small Upper class, growing Middle Class and significant Lower Class Economically mixed with heavy Industry and Agriculture with some Services Examples China, Mexico

Less Developed Countries Low standard of living Small Upper and Middle Class, Large Lower Class Small Industry and Services, Large dependence on Agriculture Examples Afghanistan, Nigeria, Somalia

Economic Basics Formal Economy Informal Economy Outsourcing A legal economy established within a nation that governments regulate and tax Informal Economy Non-regulated or taxed economy (barter system, black market, personal garden you give to friends) Outsourcing Contracting a portion of a business to a foreign state (DVD disks made in Mexico but programming and distribution is in the United States) Global Sourcing Shopping all aspects of production and care around the world Microsoft Programmers – United States, Game Disk – Mexico, Xbox One – China, Call Center – India

Economic Basics GDP – Gross Domestic Product GDP (per capita) The total value of goods produced and services provided IN a country during one year GDP (per capita) Average citizen wealth indicator based on an even distribution of wealth Labor Force Number of potential workers available Unemployed Number of workers not employed but are counted in the labor force Underemployed Employed workers who are active in a job where their skills are not being utilized properly

Wallerstein’s World-System’s Theory Assumes that all nations are a part of a world economic system void of independent economies and based on capitalism Create a world-economy of control and dependency Core: High wealth, political and economic control Semi-Periphery: economically strong and growing, influence over the periphery but follows the core Periphery: Dependent and responsive economically and politically to core and, to an extent, semi- periphery nations

Three-Sector Economic Theory Jean Fourastié State economies progress through a series of stages where the base of their economy is centered in one of the three main economic sectors. The sector their economy is based on then indicates and is indicated by the per capita income based on GDP Primary Based – Low per capita income Secondary Based – Moderate per capita income Service Based – High per capita income

Modern Economic Sectors Primary Turning natural resources into raw materials Secondary Turning raw materials into finished goods Tertiary Providing services to people (physical skills) Quaternary Information Services (skill and knowledge sharing) Quinary Interpretation and Delegation Services (ideas and management)

New International Division of Labor The movement of jobs, manufacturing and low skill services, from MDCs to DCs and LDCs Core – Headquarters and sites for sales of the product Semi-Periphery or Periphery – site of manufacturing US business wants to cut production costs to increase profits and keep consumer costs low The factory here pays workers $20 an hour plus benefits. The same number of workers in Mexico require only $6 an hour and no benefits, plus NAFTA removes import tariffs US business decides to move the factory to Mexico increasing profits and keeps consumer cost low while reducing US workforce

Time-Space Compression As technology advances, travel distance of raw materials to industrial centers and distance to market for finished products shrinks* *This implies a shrinking of both the time it takes to travel the distance and the distance itself due to warehousing and global distribution lines using modern transportation methods Impact on the World-Systems Theory and NIDL Increases the global division of labor between the core and the periphery which creates economic dependence on a global scale due to the ease and speed of mass transportation of raw materials and finished goods thus shrinking the global economy (communication + transportation = ease of access to markets)

American Industrial Regions Rust Belt Former manufacturing zone stretching from Minnesota to Massachusetts in the Northeast Economic decline begins in the 1970s and continues as secondary jobs are relocated domestically or via offshoring (outsourcing and global sourcing) Sun Belt Current service sector zone stretching along the Pacific coast and traditional South from Dallas to the Gulf coast and the piedmont along the Appalachian base Home to the majority of major service industries today

Capitalism – “You get what you put in” Limited to non-existent government involvement where markets regulate themselves – free market Basics Industry regulates itself thus promoting competition to create balance in the economy Low taxes therefore limited government funded programs Modern Example United States (to an extent), China (to an extent)

Socialism – “Lets find a middle ground” Moderate government control of the market to regulate the distribution of wealth Basics High taxes prevent “super wealthy” and pay for social programs to prevent poverty Heavy government involvement in all aspects of life Modern Example Great Britain, France, Canada

Communism – “Equality is the law” Government controls all sectors of the economy to ensure even distribution of wealth Basics Government mandated equality from dress, food, housing to wage scales and how much a factory can produce The group is promoted over the individual Modern Example North Korea

Site and Situation Factors Site – inside the factory Location factors related to the cost of production inside of a factory – factors of production Land – Physical location of the factory Labor - People who do the work Capital - Money to pay for expenses Situation – outside the factory Labor and resource costs outside the factory Transportation and Raw Material costs

Labor-Intensive Industry The cost of labor (workers) is a significant percentage of the cost of production US business wants to cut production costs to increase profits and keep consumer costs low The factory here pays workers $20 an hour plus benefits. The same number of workers in Mexico require only $6 an hour and no benefits, plus NAFTA removes import tariffs US business decides to move the factory to Mexico increasing profits and keeps consumer cost low while reducing US workforce

Marshall/Porter Location Theory Known as Industrial Clusters or Agglomeration, they state that industry will cluster together for three reasons: Increasing productivity of the companies via competition Driving innovation in the field via competition and idea sharing Stimulating new business in the field via inspiration

Weber’s Least Cost Theory Industry will locate where transportation, labor, and agglomeration reduce costs and increase potential of profits Bulk-Gaining Industry The final product weighs more than any of the individual pieces used to create it; EX: Car Manufacturing Bulk-Reducing Industry The final product weighs less than any of the individual pieces used to create it; EX: Aluminum Can Manufacturing

Modern Industry Break-of-Bulk Point Just-in-time Delivery Reshoring The point where goods are transferred from one type of transportation to another Just-in-time Delivery Raw materials delivered to the manufacturing plant at the moment they are need for production Reshoring Returning business back to the country of origin Right-to-Work Law Laws forbidding requirements that workers must join a union to hold their jobs

Alternative Areas of Development Islands of Development – areas of investment created specifically to foster economic activity Government created – Government investment in construction of new places to create new economic zones (typically a new capital city – forward capital) Corporate created – Private corporations invest in a nation or community to mine their resources and promote economic vitality Non-Governmental Organizations (NGOs) An organization run independently from a government entity (typically a non-profit) for the purpose of providing services