1. Unit 5: Industrial and Economic Geography

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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)

10. 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

11. 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)

12. 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

13. 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)

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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