Oh Industry Industrialization and Economic Development -the past 300 years

Industrialization That is the process of economic activities on the earth’s surface evolved from producing basic goods to using factories to mass produce goods for consumption Industry is Secondary Economic Activities: those that transform raw materials into usable products-useful Involves advanced sources of energy Machinery Specialized labor Involve both assembly, processing, and distribution

Economic Development Were talking about improving material conditions of people through diffusion of knowledge but MOSTLY technology Primary Sector Secondary Sector Tertiary Sector Newly industrializing countries-between MDC and LDC Compressed Modernity-rapid economic and political change that stabilizes a country (South Korea)

Economic Indicators Gross Domestic Product and GDP Per Capita 20 K for MDCs and 1 K for LDCs Differences between MDC’s and LDCs Types of Jobs Worker Productivity (value added) Access to Raw Materials Availability of consumer goods There are strong correlations between economic development and social development (literacy, education, healthcare)

Manufacturing Value Added

Theories of Economic Development Modernization (Westernization) Model: to be successful follow model of industrialized nations Tradition greatest barrier to economic development Dependency Theory: global poverty is the fault of rich nations and their historical and contemporary exploitation of LDC’s. Marxism-class theory

Rostow’s Theory: Extension of Modernization Theory 4 Stage Theory Traditional Stage Take-off Stage Drive to Technological Maturity High Mass Consumption Modernization Theory encourages LDC’s to control population growth, increase food production, and take advantage of industrial technology.

Wallerstein’s Capitalist World Economy-Outgrowth of Dependency Theory Divided by role in global economy (role determined by colonial period dominated by Europeans) Core Countries-rich nations that fuel world economy- take raw materials from around the world (starbucks coffee commercials) Countries of the Periphery-poor nations, continue to support rich nations with raw materials, inexpensive labor, market to buy products Countries of the Semi-Periphery-between poor and rich, still dominated by Core

A Brief History of Industrializtion Britain-coal-steam engine-textiles-the rest of Europe- mass production-North America-more inventions- New York port After WWI-industry needs fuel/energy starts exploring periphery for it-America most successful

Location Theory of Industry Primary Industry-develops around location of natural resources but when transport improves Secondary Industry-develops without dependence on resource location Variable costs-energy labor transport less expensive Friction of distance-costs go up as distance from source increases Distance decay-industries are more likely to serve markets nearby

Weber’s Least Cost Theory of location of industry Location of Industry influenced by 3 factors Transportation-site chosen partly based on cost of moving raw materials to factory to market Labor-cheap labor may allow an industry to make up for higher transport costs Agglomeration-if several industries cluster in a city, they can provide supporting services (truck factory, furniture company, restaurant) Can backfire and cause deglomeration-exodus from an areas

Locational Interdependence Theory Dependent on locations of competition Variable Revenue Analysis-a company’s ability to capture a market that will earn more customers and money than competitors Ice Cream on the Beach

Worldwide Steel Production 2005

Situation and Site Remember them? Situation factors of development: mainly deal with transportation (locate factory as close as possible to buyers and sellers) Bulk Reducing-copper heavy expensive to transport closer to factory Bulk Gaining-canned food and beverages, weigh more after processed closer to market Single Market-clothing cluster near market (buyers)

Situation and Site Remember them? Site factors are particular to a specific geographic location and focus on varying costs of land, labor and capital Climate, land costs, access to cultural or sporting events, labor costs, willingness of banks to invest

Globalization patterns and impact of industrialization Factories are still placed in places that have hard infrastructure (if not some industries may invest because labor is so inexpensive) Industrial Regions of the World: Primary Industrial Regions (areas w/largest agglomeration- called the Industrial Belt) Western and Central Europe Eastern North America Russia and Ukraine Eastern Asia (Japan, China, Singapore, South Korea, Hong Kong, Taiwan)

Manufacturing Eastern Europe and Russia

Manufacturing in North America

Manufacturing in East Asia

Globalization cont. Secondary Industrial Regions: VenezuelaArgentinaBrazil South Africa Nigeria Coastal Areas of India, Malaysia Southern Austrialia

Let’s talk about Mexico The US, Canada, and Mexico have a special relationship that allows for free trade among the three countries called NAFTA North American Free Trade Agreement On the border between US and Mexico regions called Maquiladora-workers produce goods primarily for US consumers in US based plants Mexico faces a dilemma-Maquiladora jobs taken elsewhere where labor is even cheaper (Mexico to China)

What about outsourced India? India has some advantages Government policies encouraging industrialization Growing urban centers Hydroelectric potential, coal, iron ore Large labor force Midway between Europe and Pacific Rim Global access to Information Technology Outsourcing jobs (call centers) Tertiary sector growth

Globalization equals global inequality? Industrial Revolution set in motion global inequality Increasingly global economy provides challenges for all countries both MDC’s and LDC’s Challenges for MDC’s Trading Blocs-trade among countries North America, EU, East Asia Transnational Corporations and Conglomerate Corporations Deindustrialization (decreasing manufacturing)

Labor Cost Per Hour MDC’s and LDC’s

Globalization equals global inequality? Challenges for LDC’s Distance from Markets Inadequate infrastructure Competition with existing manufacturers in other countries Transnational corporations set up low cost jobs in LDC’s-keeps global inequalities in place

Industry and the Environment Coal replaces wood as leading source of energy- New energy: coal, petroleum and natural gas will run out (fossil fuels) Fossil Fuel reserves Proven-discovered not extracted Potential-undiscovered Petroleum is being consumed faster than it is being found MDC’s with ¼ world’s population consume ¾ world’s fossil fuels

Industry and the Environment Industrial Pollution Air, H20, Land Global Warming-reduce ozone layer, world gets hotter Called the Greenhouse effect Acid Rain-sulfur dioxide nitrogen released into air by burning fossil fuels Get into lakes and streams Sustainable development Environment cannot sustain industrial demands on it Current populations should not impair future ones

Possible Solutions to Environmental Problems Prevention-changing governmental policies Technological change-pollution capturing filters for industrial runoff and recycling of industrial wastes Alternate energy sources-wind, solar Mitigation-reduce damage by replacing or cleaning Compensation-political bodies could compensate companies and industries who are more responsible in practices and business