aphug unit 7.2, 7.6, 7.7, 7.8

complementary advantage

When 2 regions specifically meet each other’s needs through exchange of raw materials and/or finished goods

least cost theory

Suggests that location of a manufacturing industry is dependent on the following factors:

1. Transportation cost (MOST IMPORTANT)

2. Labor cost

3. Agglomeration economics (industries that share similar materials)

least cost theory

Goal is to locate point of manufacturing where it will cost the LEAST in terms of transportation and labor

• Transportation of both raw materials and finished product must be considered

bulk gaining

Final product is HEAVIER than raw materials

-Production plant will be CLOSER TO MARKET

ex) Automobiles, bottled drinks, DASANI

bulk reducing

Final product is lighter than raw materials

-Production plant will be CLOSER TO RAW MATERIALS

ex) Notebook paper, diamond rings

break of bulk point

A location where the transfer of goods is possible form one mode of transportation to another

• Ship→Train→Truck→Market

-Manufacturing plants may locate near break of bulk points to reduce transportation costs

global development

Whether a country is categorized as core, semi-periphery, or periphery can also impact the location of a manufacturing plant

• Core: Uses LDCs for manufacturing

• Semi-periphery: Gives core manufactured goods

• Periphery: Exploited for raw materials

comparative advantage

The ability to produce a good or service at a lower cost than others

ex) China vs US

free trade

Laws that reduce barriers to trade

tariffs

Taxes imposed on imported products to promote domestically produced goods

outsourcing

Contracting work to noncompany employees or other companies

offshoring

A decision by a corporation to turn over much of the responsibility to independent suppliers

special economic zones

Specific area within a country in which tax and investment incentives are implemented to attract foreign and domestic businesses and investment

export processing zones

Areas in developing regions of the world that provide incentives for foreign companies to conduct business there, providing income to developing country through investment and employment opportunities to locals

new international division of labor

Transfer of some types of jobs, specifically low-paid, from more developed countries to workers in less developed countries

post fordism

Flexible set of production practices where components of goods were made in different places around the world and brought together as needed to meet market demand

multiplier effect

The potential of a job to produce addition jobs

agglomeration

Localized economy in which large number of companies cluster and benefit from sharing costs and customers

ex) Atlanta Airport

just in time delivery

System in which inputs in assembly process arrive at the assembly location when they are needed, reduces costs for extra inventory

ex) Florists, bakers

footloose industry

Headquarters is not as important as access of transportation and communication systems

ex) Real estate

high technology industries

Newer classification of industry that focuses on high-tech products and services

growth poles

Concentration of innovative and technically advanced industries that stimulate economic development, can benefit from being located in different areas

ex) Progress in agricultural technology can benefit an agribusiness anywhere

sustainable development

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

natural resource depletion

Consumption of natural resources faster than it can be replenished

pollution

Introduction of harmful materials into environment, includes land, water, and air

carbon neutrality

Operations of a business or national economy emit same amount of carbon dioxide in atmosphere that offsets something else

climate change

Long-term shift in global or regional climate patterns; often specific to rise in global temperature

ecotourism

Form of tourism, based on the enjoyment of natural environments, that aim to provide an experience of nature or culture in an environmentally sustainable way