Unit 6:Industrial and Economic Development Chapters: 10,12 and 14 20-22 Days

Unit Concepts What factors account for uneven economic development across the globe? What is the relevance of the growth theories of economic development? How has globalization affected labor, finance and markets around the world?

What does Development Mean? Development implies “progress” Progress in what? Do all cultures view development the same way? Do all cultures “value” the same kinds of development?

Main Points Geographically, the single most important feature of economic development is that it is highly uneven. Geographical divisions of labor have evolved with the growth of the world-system of trade and politics. Regional cores of economic development are created cumulatively. Spirals of economic development can be arrested in various ways. The globalization of the economy has meant that development is much more open to external influences. Per Capita GNI

Patterns of Economic Development Economic development refers to processes of change involving the nature and composition of the economy. These processes can involve three types of changes: Changes in the structure of the regions’ economy; Changes in forms of economic organization within the region; Changes in the availability and use of technology within the region. Guangdong Province, near Shenzhen

Measuring Development Gross National Product (GNP) Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year. Includes things produced inside and outside a country’s territory. Gross Domestic Product (GDP) Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year. Gross National Income (GNI) Measure of the monetary worth of what is produced within a country plus income received from investments outside the country. ** Most common measurement used today.

Gross National Income Per Capita GNI per capita is one of the best single measures of economic development.

Issues with Measuring Economic Development All measurements count the: Formal Economy – the legal economy that governments tax and monitor. All measurements do not count the: Informal Economy – the illegal or uncounted economy that governments do not tax or keep track of.

Other Ways of Measuring Development Occupational Structure of the Labor Force Productivity per Worker Transportation and Communications Facilities per Person Dependency Ratio

Dependency Theory The political and economic relationships between countries and regions of the world control and limit the economic development possibilities of poorer areas. -- Economic structures make poorer countries dependent on wealthier countries. - Little hope for economic prosperity in poorer countries.

Stages of Economic Development According to Walt Rostow’s view, now regarded as overly simplistic, places and regions can be seen as following parallel courses within a world that is steadily modernizing.

Three Tier Structure Core Periphery Semi-periphery Processes that incorporate higher levels of education, higher salaries, and more technology * Generate more wealth in the world economy Periphery Processes that incorporate lower levels of education, lower salaries, and less technology * Generate less wealth in the world economy Semi-periphery Places where core and periphery processes are both occurring. Places that are exploited by the core but then exploit the periphery. * Serves as a buffer between core and periphery

Barriers to Economic Development Low Levels of Social Welfare Trafficking Foreign Debt Structural adjustment loans Political Instability Widespread Disease Malaria

Process of Regional Economic Growth Geographical path dependence Initial advantage External economies Localization economies

Regional Economic Decline Spread effects Import substitution Deindustrialization

The Global Assembly Line Transnational corporations Conglomerate corporations < The annual sales figures of many of the world’s largest corporations exceed the Gross National Income of some countries.

Toyota’s Global Assembly Line Toyota’s global production strategies

Flexible Production Systems The strategies of transnational corporations are an important element in the transition from Fordism to Neo-Fordism in much of the world. Fordism Neo-Fordism Flexible production systems Just-in-time production

Industry and Services Chapter 12

Industrial Revolution: a series of inventions that brought new uses to known energy sources, new machines to improve efficiencies and enable other new inventions. eg. steam engine iron smelting water pump

Beginning of Industrial Revolution When and where did the industrial revolution begin? In Great Britain in the mid to late 1700s Why Great Britain? Flow of capital Second agricultural revolution Mercantilism and cottage industries Resources: coal, iron ore, and water power

Diffusion to Mainland Europe In early 1800s, innovations diffused into mainland Europe. Location criteria: proximity to coal fields connection via water to a port flow of capital Later Diffusion In late 1800s, innovations diffused to some regions without coal. Location criteria: access to railroad

Diffusion of Industrial Revolution

Location Theory Location Theory – predicting where business will or should be located. Considers: Variable costs Friction of distance

Location Models Weber’s Model Hotelling’s Model Losch’s Model Manufacturing plants will locate where costs are the least (least cost theory) Theory: Least Cost Theory Costs: Transportation, Labor, Agglomeration Hotelling’s Model Location of an industry cannot be understood without reference to other industries of the same kind. Theory: Locational interdependence Losch’s Model Manufacturing plants choose locations where they can maximize profit. Theory: Zone of Profitability

Losch’s Model Zone of Profitability

Major Manufacturing Regions of North America

Major Manufacturing Regions of Russia

Major Manufacturing Regions of East Asia

Post-Fordist Fordist – dominant mode of mass production during the twentieth century, production of consumer goods at a single site. Post-Fordist – current mode of production with a more flexible set of production practices in which goods are not mass produced. Production is accelerated and dispersed around the globe by multinational companies that shift production, outsourcing it around the world.

Time-Space Compression Through improvements in transportation and communications technologies, many places in the world are more connected than ever before.

Time-Space Compression Just-in-time delivery rather than keeping a large inventory of components or products, companies keep just what they need for short-term production and new parts are shipped quickly when needed. Global division of labor corporations can draw from labor around the globe for different components of production.

Deindustrialization This derelict steel mill in New Jersey is testament to the downward economic spiral.

Deindustrialization – a 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 work through a period of high unemployment. Abandoned street in Liverpool, England, where the population has decreased by one-third since deindustrialization

Geographical Dimensions of the Service Economy New Influences on Location: Information technologies Less tied to energy sources Market accessibility is more relevant for some and less relevant for others because of telecommunications Presence of Multinational Corporations

Wal-Mart Requires producers of goods to locate offices in the Bentonville, Arkansas (Wal-Mart’s headquarters) area in order to negotiate deals with Wal-Mart. Proctor & Gamble put their office in nearby Fayetteville, Arkansas. How does the presence of these companies in the region change the region’s economy and its cultural landscape?

Nike Headquartered in Beaverton, Oregon, Nike has never produced a shoe in Oregon. Beginning in the 1960s, Nike contracted with an Asian firm to produce its shoes. Skopje, Macedonia The swoosh is ubiquitous, but where is the shoe produced? Nike has a global network of international manufacturing and sales.

Modern Production Outsourcing – moving individual steps in the production process (of a good or a service) to a supplier, who focuses their production and offers a cost savings. Offshore – Outsourced work that is located outside of the country.

Globalization and the Geography of Networks Chapter 14

What is Globalization? A set of processes that are: increasing interactions deepening relationships heightening interdependence without regard to country borders. A set of outcomes that are: unevenly distributed varying across scales differently manifested throughout the world.

Globalization Geographer Andrew Kirby explains that with globalization, we are living “not so much in a world without boundaries, or in a world without geography – but more literally, in a world, as opposed to a neighborhood or a region.”

Networks Manuel Castells defines networks as “a set of interconnected notes” without a center. Time-Space Compression Global Cities

World Cities most Connected to New York City This map shows the 30 world cities that are the most connected to New York City, as measured by flows in the service economy.

Networks in Development Nongovernmental Organizations (NGOs) have created a web of global development networks. Participatory Development – idea that locals should be engaged in deciding what development means for them and how to achieve it. Gets back to “What is development and how do we measure it?”

Nongovernmental Organizations (NGOs) entities that operate independent of state and local governments, typically, NGOs are non-profit organizations. Each NGO has its own focus/set of goals. Microcredit program: loans given to poor people, particularly women, to encourage development of small businesses.

Dollarization – Abandoning the local currency of a country and adopting the dollar as the local currency. El Salvador went through dollarization in 2001

Maquiladora Centers Cheap labor and tax breaks for firms manufacturing and assembling good for re-export have made many Mexican border towns attractive to U.S. companies.

Globalized Office Institutionalization of savings; large pools of capital Banks with overseas branches (i.e., OPEC) Print more money, causing inflation Governments lift restrictions and regulations in banking and finance U.S. trade deficits (the debt ceiling has been raised to $9 trillion) “Hot” money is globally laundered A call center in Bangalore, India Hyundai Maquiladora, Tijuana, Mexico

Government-created Island of Development Malaysian government built a new, ultramodern capital at Putrjaya to symbolize the country’s rapid economic growth.

Corporate-created Island of Development The global oil industry has created the entire city of Port Gentile, Gabon to extract Gabon’s oil resources.

Networks in Media Vertical integration – a corporation that has ownership in a variety of points along the production and consumption of a commodity chain. eg. Media Companies Goal is synergy, the cross promotion of vertically integrated goods.

Networks in Media

Networks of Retail Corporations Horizontal integration – ownership by the same firm of a number of companies that exist at the same point on a commodity chain. eg. The Gap (Banana Republic, Old Navy) Global retail corporations have more connections to the local around the world than global manufacturing corporations. Retail stores create a local presence.

Identities in a Globalized World Identity – how we make sense of ourselves We have identities at different scales. Globalized networks interlink us with flows of information and global interaction. In a globalized world, a growing number of people are “making sense of themselves” within the context of the globe.

Personal Connectedness When a tragedy occurs somewhere in the world, people have the desire to: personalize it. localize it. In the process of personalizing and localizing a tragedy, a new global awareness can be created.

Personal Connectedness When a death or tragedy happens, how do people choose a local space in which to express a personal and/or global sorrow? Short term = spontaneous shrines Longer term = permanent memorials

Landscapes of Violence and Tragedy Geographer Ken Foote draws from extensive fieldwork to understand how Americans memorialize tragedy. Arlington National Cemetery (right) where thousands came to pay respects to Jacqueline Kennedy Onassis, who had recently died.

The Process of Memorializing Place Whether and how quickly a place is memorialized depends on: funding debate over what to build who to remember whether people want to remember the site