4. Industry and Services

5. Where did the Industrial Revolution begin, and How did it Diffuse?
Key Question:
Where did the Industrial Revolution begin, and How did it Diffuse?

6. 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

7. 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

8. The Industrial Revolution
European domestic markets were growing, and a labor force was lacking in England
The steam-driven engine made up for the lack of available labor

9. Flow of Capital into Europe, 1775
Needed flow of capital in order to fuel the industrial revolution.

10. The Industrial Revolution
Freed from charcoal use, iron smelters could be concentrated near British coal fields
Transportation and communications were affected

11. Textiles Production:
Liverpool and Manchester
Iron Production:
Birmingham
Coal Mining:
Newcastle

12. The Industrial Revolution
The first steam-powered ocean-going vessel emerged
England held a monopoly over products in world demand and the skills to make machines to manufacture them

13. Ironbridge, England World’s first bridge made entirely of cast iron,
constructed in late 1700s.

14. Iron Ore to Steel

15. 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

16. Diffusion of Industrial Revolution

17. How do Location Theories explain Industrial Location?

18. The Paris Basin is the Industrial base of France
The Paris Basin is the Industrial base of France. Rouen (pictured here) is at the head of navigation point on the Seine River.

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

20. Factors of Industrial Location
Raw Materials
Very few industries use raw materials
Most manufacturing is based on the further processing and shaping of materials already treated in
some fashion
Transportation costs affect
industry location

21. Power Supply (Energy)
Power supplies that are immobile or of low transferability may attract activities dependent on them
Current technology made less important
Industries requiring large amounts of energy still situated near the power source

22. Labor
Spatial variable affecting location decisions and industrial development
3 major traditional considerations
price, skill, and amount
Labor Flexibility: highly
educated workers able
to apply themselves to a
wide variety of tasks
and functions

23. Market Goods are produced to supply a market demand
Size, nature, and distribution or markets is important in industrial location decisions
Ubiquitous industries

24. Transportation Unifying thread of all factors of industrial location
Modern industry is immediately tied to transportation
Use many different form of transportation media

25. Alfred Weber
Created the classical model of industrial location theory in 1909
Least-Cost Theory
Explains the optimum location of a manufacturing establishment in terms of minimizing three basic expenses
Transportation cost, labor, agglomeration

26. Least Cost Theory
Transportation: the site chosen must entail the lowest possible cost of
A) moving raw materials to the factory
B) finished products to the market. This, according to Weber, is the most important.

27. Least Cost Theory
2) Labor: higher labor costs reduce profits, so a factory might do better farther from raw materials and markets if cheap labor is available
-ex: China – today

28. Least Cost Theory
3) Agglomeration: when a large number of enterprises cluster in the same area, they can provide assistance to each other through shared talents, services, and facilities
-ex: manufacturing
plants need office
furniture

29. 5 Controlling Assumptions
Area is uniform physically, culturally, and technologically
Manufacturing involves a single product to be shipped to a single market whose location is known
3. Inputs involve raw materials from more than one known source location

30. 5 Controlling Assumptions
Labor is infinitely available but immobile in location
Transportation routes connect origin and destination by the shortest path and directly reflect the weight of the items shipped and distance moved

31. Other Location Models Hotelling’s Model
Location of an industry cannot be understood without reference to other industries of the same kind.
Theory:
Locational interdependence:
indicates that locational decisions
are not made independently but
are influenced by the actions of others.

32. Other Location Models Losch’s Model
Manufacturing plants choose locations where they can maximize profit.
Theory:
Zone of Profitability

33. Major Industrial Regions of the World before 1950

34. Industrialization Through WWI
The four primary industrial regions:
Western & Central Europe
2) Eastern North America
3) Russia & Ukraine
4) Eastern Asia

35. Western and Central Europe
Late 18th Century:
Britain
France
Belgium
Netherlands
Germany: 3 districts?
Early 20th Century:
Italy: What area?
Spain: What area?
Sweden
Finland

36. Major Manufacturing Regions of North America
-Benefitted from overseas resources
-Large coal and gas reserves to provide energy to manufacturing plants
-US capitalized on industry after Western Europe destruction during WWI and WWII

37. Major Manufacturing Regions of Russia
-Many resources throughout the vast expanse of land
-Volga River provided an energy resource and transportation through canals -

38. Major Manufacturing Regions of East Asia
-Japan imported raw materials from it’s colonial empire into Korea, Taiwan, and China
-3 major belts in Japan?

39. How has Industrial Production Changed?

40. 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.

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

42. 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.

43. New Influences on the Geography of Manufacturing
Transportation on industrial location
Development of infrastructure: containers, refrigeration
Intermodal connections
Regional and global trade agreements
NAFTA, EU
WTO: ~150 countries, promotes free trade to eliminate quotas
Proximity to Energy sources in industrial location less important
Pipelines and tankers deliver fuel to far away places
2.5 million miles of pipelines in NA

45. Where are the Major Industrial Belts in the World Today and Why?

46. 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.
The former Gautier rolling mills of Bethlehem Steel Corp. in Johnstown, PA
Abandoned street in Liverpool, England, where the population has decreased by one-third since deindustrialization

47. Newly Industrialized East Asia South East Asia
Also known as the Pacific Rim.

48. Newly Industrialized China – major industrial growth after 1950
1. Industrialization in the 1960s was state-planned:
-Northeast district
-Shanghai and Chang district
2. Today, industrialization is spurred by companies that move production (not the whole company) to
-take advantage of Chinese labor
-special economic zones (SEZs).
ex: Shenzhen

49. As China’s economy continues to grow, old neighborhoods (right) are destroyed to make room for new buildings (below).
Beijing, China

50. Newly Industrialized East and Southeast Asia 1. Four Tigers
South Korea
Hong Kong
Tiawan
Singapore
A map showing the Four Asian Tigers     Hong Kong     South Korea     Singapore     Taiwan

51. What is the Service Economy, and Where are Services Concentrated?

52. Service Economy Service Industry – Tertiary
1. Economic activity associated with the provision of services
– such as transportation, banking, retailing, education, and routine office-based jobs.
2. As services become more developed specific divisions are used:
ex: Quaternary – exchange of information…ex?
Quinary – complex decision making…ex?

53. Service Economy Postindustrial:
a society in which an economic transition has occurred from a manufacturing based economy to a service based economy
Examples:
United States, Canada, Japan, and Western Europe

54. 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

55. Geographical Dimensions of the Service Economy
Sunbelt: southern region of the US stretching from the southeast to the southwest
- secondary industrial regions moving into Atlanta, Phoenix
- high-tech industry

56. 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?

57. 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.

58. 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.

59. High-Technology Corridors
An area designated by local or state government to benefit from lower taxes and high-technology infrastructure with the goal of providing high-technology jobs to the local population.
eg. Silicon Valley, California
Technopole – an area planned for high technology where agglomeration built on a synergy among technological companies occurs.
eg. Route 128 corridor in Boston

60. Plano-Richardson, Texas Telecom Corridor is just north of Dallas

61. Development

62. How do you Define and Measure Development?

63. 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?

64. 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.

65. 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.

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

67. Non-Economic Measures of Development
Education: LDC’s 2/3 illiterate, DC 1%
Public Services: access to safe drinking water ( /40%)
Health Services: ratio of people to doctors
DC 1:350, LDC 1:5,800, Sub Saharan 1:18,500

68. Differences in Communications Connectivity Around the World

69. Dependency Ratio by Country, 2005
A measure of the number of people under the age of 15 and over the age of 65 that depends on each working-age adult.

70. Development Models Rostow Modernization Model
Walt Rostow’s model assumes all countries follow a similar path to development or modernization, advancing through five stages of development, climbing a ladder of development.
- traditional
- preconditions of takeoff
- takeoff
- drive to maturity
- high mass consumption

71. Rostow Modernization Model
Traditional: dominant activity is subsistence farming
Rigid social structure, resistance to change
Preconditions of Takeoff: progressive leadership moves the country toward openness and diversification

72. Rostow Modernization Model
Takeoff: Industrial Revolution, Urbanization, Mass-Production
Drive to Maturity: Tech. Diffusion, industrial specialization, international trade, modernization of core,pop. Decline

73. Rostow Modernization Model
5. High Mass Consumption: high income, widespread production of G&S, Service Sector

74. Many nations are past Stage 5
Many nations are past Stage 5. Create your own column entitled High Technology, depicting the modern world. Use the chart above as a source.

75. Rostow’s Ladder of Development

76. Rostow Modernization Model
1. What does Rostow not take into consideration with his model?
2. Criticisms?

77. Structuralist Theory Based on neo-colonialism
Economic disparities are built into the system by people’s action, and it will not change easily
Assumes all countries will not go through the same development process

78. 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.

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

80. Wallerstein’s World-Systems Theory
Explain the theory
Compare and contrast Rostow’s ladder of development with Wallerstein’s three-tier structure of the world economy.

81. Development in Dubai

86. What are the Barriers to and the Costs of Economic Development?

87. Barriers to Economic Development
Low Levels of Social Welfare
High dependency ratio (many under 15)
Low number of Doctors per patient
Lack of access to education (girls not attending as long as boys)
WHY??
What are peripheral countries doing about this?
Trafficking: adults and children
How is this different from slavery?
Why does this happen?

88. Barriers to Economic Development
Foreign Debt
After decolonization, peripheral countries need funds for development
Structural adjustment loans
Provided by IMF and World Bank
Loans with strings attached
Privatization of industry
Foreign trade, Reduced tariffs
Foreign direct investment
Free elections
Stricter laws on corruption
Debt becomes hard to pay off and invest in more development
Argentina, 2001

89. Foreign Debt Obligations
Total interest payments compared to the export of
goods and services.

90. Foreign Debt Obligations
Foreign Debt and Economic Collapse
in Buenos Aires, Argentina, 2001

91. Barriers to Economic Development
Political Instability
Foreign influences
Decolonization left gov’t unstable
Groups competing for power
Military coups, dictators, and liberal democracies
Disenfranchisement of the poor
Corruption of gov’t, cut off from foreign aid
ex: Zimbabwe, 2002

92. Barriers to Economic Development
Widespread Disease
Poor conditions in water, sewage, and access to health care
Vectored Diseases spread by an intermediate host (ex: mosquito)
Continue to plague the Tropics
Malaria (Silent Tsunami)
2-3million deaths per year
DDT spraying in Sri Lanka dropped death rate by ¾ from 1945
GMO mosquitos?

93. Widespread Disease
Malaria kills 150,000 children in the global periphery each month.
Tamolo, India
This baby sleeps under a mosquito net distributed to villagers by UNICEF workers.

94. Global Distribution of
Malaria Transmission Risk

95. Costs of Economic Development
Industrialization
Export Processing Zones (EPZs)
maquiladoras along USA/Mexico border
special economic zones (SEZs)
Shenzhen in China, near Hong Kong

96. Export Processing Zones

97. Costs of Economic Development
Agriculture
Small plots, outdated tools
Constant debt, no ability to by new fertilizers, pesticides
Desertification
Lack of education on soil concervation
Dry lands of Africa are growing

98. Areas Threatened by Desertification

99. Costs of Economic Development
Tourism
Pros
Provides income, wealth, and employment
Cons
Large investments into industry, not into needed areas
Local economies not benefited
Devastation of local culture
Multi-national corporations outbid local entrepreneurs

100. Why do Countries experience Uneven Development within the State?

101. How Government Policies Affect Development
Governments
get involved in world markets
price commodities
affect whether core processes produce wealth
shape laws to affect production
enter international organizations that affect trade
focus foreign investment in certain places
support large-scale projects

102. Governments and Corporations can create Islands of Development
Places within a region or country where foreign investment, jobs, and infrastructure are concentrated.

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

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

105. 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.