1. Roger Hayter (1997). The Dynamics of Industrial Location Chapter 3 The Geography of Manufacturing Location Presentation to Class “Local and Regional Development” Katharina Handler Reinhard Haller 09/04/2008

2. (1) Introduction Industrialization and its geographic component: dynamic process, involving tensions and ‘creative destruction’ –Example: term “new industrial places” (Scott, 1988)  label for newly emerged industrial regions, e.g. Silicon Valley, Emiglia- Romagna (Northern Italy) –‘Older’ industrial regions were “new industrial places” once, too Tensions: –“Law of circular and cumulative causation” (Myrdal, 1957)  industrial development is locked into existing industrial regions (pools of skilled labour, infrastructure etc.) –New regions: easier to implement new technologies, forms of organisation Relative advantages of established vs. new places determine process of industrialization –Since beginning of Industrial Revolution, even stronger today (mobility of capital, inputs, labour)

3. (2) Historical view 1750–today Prior to Industrial Revolution: –Manufacturing evenly spread around world (i.e. following population distribution) –¾ of production in „Third World“ countries Until 1950s: –Share of Third World decreases –Causes: differential growth, replacement of Third World production through imports from industrialized countries (e.g. India/cotton) Since 1960s / 5th Kontradieff wave (ICT) –Rising share of Third World Individual countries dominated world industry production in different phases –UK: until end of 19th century –US: dominant power in first half of 20th century –After World War II: rise of followers Germany, Japan  reduction of hegemony

4. (2a) Manufacturing Production 1750–1990, developed countries and Third World Source: Bairoch (1982, 1993), cited in Hayter (1997)

5. (3a) Contemporary global patterns in production (1/2) Industrial production is very unevenly distributed in the world –Established countries (US, Europe, Japan, rest of OECD) dominate Question of distribution is sensitive to measures used: –Value added  OECD domination even stronger –Employment  somewhat less concentrated pattern ( Trends in manufacturing production –Rise of Japan to 2nd industrial power after World War II –Loss of US hegemony (in association with rise of Japan) –Industrial decline of UK (1963: rank 2  1990: rank 5) Trends in employment –Industrialized countries: peak in 1980s/1990s –Exception: Japan Increasing share of Third World countries NIC (newly industrialized countries)

6. (3b) Contemporary global patterns in production (2/2) Trends in employment –Industrialized countries: peak in 1980s/1990s –Exception: Japan Third World countries –Share of manufacturing production rises since 1950s –Some countries have experienced particularly high growth rates  newly industrialized countries (NIC)

7. (4) Contemporary global patterns of trade Strong link between production and trade –Specialized industries depend on trade (exports) –Patterns of trade inform about competitiveness in production –OECD dominates trade, too Imports are „mirror image“ of exports Global trade dominated by most industrialized countries –Third World countries recently increase share –Third World exports mainly low-value/“low-tech” (e.g. clothing) Some observations on trade: –“Continental” dimension –Importance of trade links depends on country size –Strong sectoral differences Trade as source of tensions: –Imports as threat/substitute to domestic production –Counter-measure: protectionist policies (e.g. US auto market and Japanese car imports)

8. (4a) Global imports and exports, year 1990 Source: GATT (1992), cited in Hayter (1997)

9. (5) Regional dimension of industrialization Beginning of Industrial Revolution: –Industrialization close to coal fields (energy) –Industrial regions in this phase: Axial belt (UK), Ruhrgebiet (GER), Manufacturing Belt (US) 2nd Kontradieff wave (railway): –Reinforced position of established industrial regions –Specialisation within industrial regions (consumer goods, machinery, lower-value goods) Until 1950s/1960s: –No fundamental shift in regional patterns –Development seemed to confirm law of circular and cumulative causation 1970s/1980s: –extensive and unexpected de-industrialization –emergence of “new industrial places” –even before, industrial growth stronger in new than established places

10. ( 5a) Distribution of Industry in Europe, 1875 Source: Pollard (1981), cited in Hayter (1997)

11. ( 6) Example: Manufacturing Geography in the US Intra-metropolitan shift –Core cities lose employment to suburban regions, especially in the 1970‘s, e.g. New York, Miami Non-metropolitan shift –Higher growth rates of manucturing employment in all rural areas from the 1960s until early 1980‘s –More varied employment trajectories over the past decade, e.g faster growth of rural manufacturing in the South and West Non-predictability (several developments not anticipated by regional theories) –(1) Factors depend on time and spatial scale; (2) variations in local/global factors; (3) different action of different actors (firms, …) Trends elsewhere –Shift of manufacturing to rural areas: global trend with regional variations (UK: more pronounced; Japan: less, production mainly around Tokio and Osaka )

12. (6a) Sunbelt, intra-urban and non- metropolitan shift in figures Sunbelt Changes in manufacturing employment in the US:

13. ( 7) The Manufacturing Sector in Economic Development Since the Industrial Revolution the most powerful and wealthy countries are the most industrialized(OECD) As they developed economically their manufacturing output increased steadily  Since 1973 share of manufacturing employment in OECD countries has fallen Three-sector stage model (Fisher/Clark): each sector dominates the economy during different stages of economic development 1.Agriculture 2.Manufacturing 3.Services

14. (8a) Manufacturing employment as a percentage of total employment

15. ( 8) The Importance of Manufacturing in the Post-Industrial Society (1/2) Interdepency between sectors Manufacturing continues to stimulate economic development by generating (new) demands in various sectors, e.g. construction, transportation or business services industries Manufacturing itself is driven by and drives knowledge accumulation, leading to the creation of high income, intellectually demanding jobs Significance of manufacturing should also be measued in terms of value added and income and not only in employment

16. (9) The Importance of Manufacturing in the Post-Industrial Society (2/2) Decline in industrial employment in OECD countries is (partially) offset by increases in Third World/NIC countries Manufacturing job losses due to greater technological efficiency; neglect of manufacturing still not a viable option Policy makers still concerned about manufacturing, both in developed and developing countries

17. (10) National policies towards industrialization 2 major approaches to industrialization –Anglo-Saxon model: based on economic liberalism (Smith) –„Economic nationalism“ model (List) Main differences: –degree of dependencies among firms, sectors, etc. varies –state influence in industry –attitude towards foreign direct investment (FDI) (economic nationalism : no effective technology transfer but stronger R&D base, domestic control over economy) Example: Sweden (economic nationalism) vs. Canada (liberalism)

18. ( 11) NICs NICs confirm link between industrialization and economic development (e.g. Singapore, Hong Kong, South Korea, Taiwan) –Strongly activist roles of governments –Large NICs (Taiwan, S.Korea) are strong and still growing export centers –Particularly Singapore and Hong Kong are now high-wage economies and suppliers of expertise and investment Can others imitate NIC development? –Optimistic vs. pessimitic views (emphasis on dynamics vs. ‚immobility‘) Established core-periphery distinction may be too crude  instead „global mosaic of regions“