Key Issue 3 Where is Industry expanding Chapter 11 Key Issue 3 Where is Industry expanding
Industrial Expansion Changing distribution within MDCs Intraregional shifts in manufacturing Interregional shifts in manufacturing New industrial regions Asia Latin America “Central” Europe
Changing Distribution Within MDCs Various reasons for a shift of manufacturing plants Intraregional shifts Interregional shifts
Intraregional Shifts in Manufacturing Factories used to locate inside cities Situation Proximity to market & convenience of shipping by rail Site Proximity to supply of labor and capital Land became less available Space for large machinery suburban or rural areas More space & highways for trucking (not rail)
Interregional Shifts in Manufacturing United States: Shifts South and West Northeast lost 1 million manufacturing jobs over last 3 decades (NY & PA) Industrial growth in South stimulated economy Lack of unions made South enticing for industries Workers in south willing to work for lower wages Gulf Coast: oil & natural gas Los Angeles: harbor for shipping & low-pay workers from Mexico & Asia
Interregional Shifts in Manufacturing Western Europe: shifts toward undeveloped areas Diffused from industrial centers in NW Europe toward South & Eastern Europe Government policies encourage relocation: incentives Spain: has become 2nd largest motor vehicle industry in Europe
New Industrial Regions China: new leading industrial center Steel production: 1980 80% in MDCs, now LDCs is 55% ASIA China: largest manufacturer or textiles, apparel, steel & household products Largest supply of low cost labor & largest market for consumer products 1990s opened China to transnational corporations
New Industrial Regions China: 3 main industrial areas along east coast Only ¼ of China’s population But, ½ of China’s wealth, ¾ of foreign investment, 5/6 of foreign trade
New Industrial Regions Latin America Mexico: Mexico City & Brazil: Sao Paulo 1960s, Latin American countries decreased imports of foreign goods through regulations Foreign companies could only operate in Lat America if most parts/materials were domestic 1980s Lat Amer hit hard from oil shortages, inflation, etc
New Industrial Regions Mexico: far north, not population center Increase in manufacturing, large US market Maquiladora plants established on border Regulations decreased to open foreign trade, NAFTA Mexican manufacturing wages not as low as China (400/month vs 100/month) Maquiladora plants closing as plants move to China
“Central” Europe Fall of Communism, early 1990s Poland, Czech Republic & Hungary More industrial development Abundant labor and market proximity Less skilled, cheaper labor than W Europe