Exam 2

manufacturing value added

changing a raw material into a usable good increases its use or value

North American Manufacturing Belt

1/3 of north American pop; midwestern states, new England, two-thirds of North American manufacturing employment, & one-half of its industrial output

Where is industry concentrated

Europe, North America, and East Asia

Canada Manufacturing

along Southern Ontario to Great lakes

produces: iron, steel, processed foods, pulp, paper

Moscow Industrial Region

• large, skilled labor pool

• machine building, chemical industries, flax, potatoes, cattle

• main water artery is the Volga Rive

Ukraine Industrial

rich coal deposits, iron, steel, big ag

Ural Mountains district

provides Russia with iron & steel, chem, machinery, metal products

East Asia Manufacturing

Japan, South Korea, Singapore, China

Japan

Automobiles, consumers, electronics, cooper, natural resource poor, strong human labor force

South Korea

Seoul based, electronics, automobiles, telecommunications

Singapore

electronics, chemicals, biomedical sciences, logistics & transport engineering, pro business, medical technology

China

1980s+, 2nd large economy, Steel, cotton, finance, tobacco, automobiles, beer

situation factors

transpo to and from the factory, firm seeks location that minimizes the cost of transport inputs to factory and consumers

site factors

result from the unique characteristics of a location. These are labor, capital, &land

bulk reducing industry

• inputs weigh more than final products

• minimize transport costs= locate near sources of inputs

bulk gaining industry

• makes something that gains volume or weight during production

• minimize transpo cost = locate near where product sold

single market manufacturers

• specialized manufacturer w/ only one or two customers

• location: close to proximity to customers

Automobile Major nodes of production

• has expanded in capacity: growing middle class in many developing countries seeks out cars

China, North America, Europe, Japan/Korea

Why do industries use different modes of transportation?

• lowest cost mode

• airplane: small and valuable most expensive

• boats: slow but cheaper with low cost per km

• train: limited but cheap

break of bulk points

location where transfer among transportation modes is possible

• Cost increases each time products are transferred from one mode to another

just in time (JIT)

• shipment of parts and materials to arrive at a factory moments before they are needed

• materials arrive frequently, daily, hourly

Just in time disruptions

weather, traffic, labor unrest, less flexibility, increased costs

Steel Industry changes

1980+ declines of production in Developed countries increases in developing countries

Mini mills

computerized technology, changes in steel production, automated, utilized scrap metal

labor

• most important site factor on global scale

• labor intensive doesn’t equal high wage

• ½ billion in industry

labor intensive industry

an industry in which wages and other compensation paid to employees constitute a high percentage of expenses

Fordist Production

• old days: each worker was assigned one task mass production

• simplified tasks

• high wages

• regional markets

Post Fordism/ Flexible Production

• workers organized into teams, variety of tasks and problem solving

• skills: computer literacy, college degrees

• lowest wage/cost

• distribution of production to mult locations

capital

funds to establish new factories or modernize existing ones

Factory Locations

early fact: inside cities, multistory, raw materials in upper floors, sent down building

now: 1 story, raw materials one end and move through, rural/burbs, highway junctions

Issac Singer

1st functional sewing machine

deindustrialization

• process by which manufacturing &related industries move out of a region

• movement from developed to developing countries mainly Asia and Latin A

Emerging Industrial Regions

• 1970: ½ world industry in Europe, 1/3 in NA now: ¼ each

• 1970 marks new industrial division of labor

Division of Labor

allocation of various parts of the production process to different places in the world

What was the cause of new international division of labor?

transnational corps made transition to low-cost labor in developing countries to remain competitive in global econ

modernization theory

best way for less developed countries to develop their economies is to try to copy Western Countries path to development

Rostow’s Five Stage Process of Development

traditional society, preconditions for takeoff, takeoff, drive to maturity, age of high mass consumption

Traditional society

subsistence farming (no countries at stage now)

Preconditions for takeoff

innovation paves the way for development

Takeoff

industrialization/ urbanization

Drive to maturity

technology diffuses & advances; workers more skilled and educated

Age of high mass consumption

large middle class: industrialization developed to the point where goods/services are ample no worrying about needs being met

Critiques of Modernization Theory

countries don’t develop in isolation from one another, ignores downside of capitalism

Dependency Theory

• idea that resources flow from a "periphery" of poor and exploited states to a "core" of wealthy states, enriching the latter at the expense of the former.

• lasting effects of colonialism

world systems theory

• geography for dependency theory

• divides world into core, semi-periphery, and periphery nations

• core countries exploit peripheral countries for their natural resources and cheap labor

core countries (US/Europe)

tend to be wealthy, powerful power, and have diversified economies, strong government, good infrastructure

peripheral countries (Sub-Saharan Africa, Southeast Asia, Pacific Islands)

tend to not be wealthy and generally have poor institutions, poorly managed or non-existent infrastructure

Semi-peripheral countries (Brazil, Russia, India, & China)

developed their economies and institutions enough that they aren’t peripheral anymore but not core level

outsourcing

• delegating functions or tasks to a third-party vendor

• reduce costs, scale processes, expand operations

offshoring

getting work done in a different country

Trade Agreements

USMCA, European Union, ACFTA, RCEP

special economic zones

area in a country that is designed to generate positive economic growth

export processing zones

industrial estates that are fenced in for producing manufactured goods for export

Factors leading to deindustrialization

• cost or wages higher in Europe/NA vs developing countries

• tech changes in manufacturing= reduces # of workers needed for output

• research and development weren’t properly funded leading to diminished productivity in house vs abroad

• inadequate public investment in education, infrastructure

Deindustrialization in MDC leads to

increases in manufacturing and output in LDC, furthering process of uneven development

services

production and consumption of intangible inputs and outputs

producer services

• primarily sold to and consumed by corporations

• ex: banking, insurance, real estate, legal, advertising, computer, pr

transportation and communication services

electronic media, shipping, rrs, airlines, local transport

wholesale and retail services

intermediaries between producers and consumers

consumer services

eating and drinking places, personal, repair and maintenance

Government services

Public servants, armed forces, education, healthcare, fire dept

nonprofit services

charities, churches, museums, nonprofit healthcare

• Play influential roles in local economies

tertiary sector

providing basic services to consumers and businesses includes services such as transportation, travel, and retail services

quaternary sector

differ from those of the tertiary sector by including services that required advanced training, such as software development, it

quinary sector

services provided by the highest levels of organization in a society, including publicly supported services such as government, military, education, and healthcare

Location of Tertiary

location shaped by those of primary and secondary industries

retail/food near consumers

Location of Quaternary

• more diverse

• some tied to particular locations, near businesses they serve

• across globe

Quinary

• concentrate on seats of gov, uni, corp headquarters

• large metro areas, small towns

postindustrial societies

society marked by transition from a manufacturing-based economy to serviced based one

Demands for Services

• increased with greater GDP

• increased with increased value of time

• people live longer= more healthcare needed

• increasing demand for educational services

• government employment has increased steadily

• indirectly: laws, rules, restrictions, (i.e., tax/ antidiscrimination laws)

The Externalization Debate: when to externalize &how much?

• Severe in-house technical limitations

• Firm is independently owned

• Firm is sophisticated relative to competitors

wage gap

rapidly growing income inequality in the US, declining middle class, haves/have nots, working poor

polarized income distribution in service industry

• well-paying, white-collar managerial/professional jobs require university education

• unskilled, low-paying jobs that require little to no higher education

Gender Composition

• Manufacturing: mostly males, but some in textiles &garment manufacturing

• Industrial economies: low rates of female labor participation

• increase in women's work participation serves as a strategic compensation to declining male incomes in the face of deindustrialization

knowledge based economy

higher ed is important for national &local economic competitiveness

comparative advantage

how a business lowers costs to gain leverage against its competitors

competitive advantage

company's ability to outperform its competitors

Digital revolution

eliminates costs of capital transactions and transmissions

electronic funds transfer systems

form the nervous system of the international financial economy

back office

unskilled or semiskilled labor mostly women, 24 hrs., few links to clients/suppliers, computer capacity, telecommunications networks

range

maximum distance people are willing to travel to use a service

threshold

the minimum # of people needed to support the service

language

system of communication based on symbols that have an agrred upon meanings

tonal

meaning of word can change depending on rise or fall in pitch of one’s voice

artificial language

intentionally constructed by people for international communication or fictional purposes

natural language

have emerged and evolved with in living/historic human communities

language families

a collection of languages that share a common but distant ancestor

hearth

a place or region where an innovation, idea, belief, or cultural practice begins

Indo-European

largest geographic distribution, # of speakers, all share proto–Indo European

Kurgan Hypothesis

series of conquests → carried proto-Indo European to the east and west

Anatolian Hypothesis

• began in turkey diffused peacefully through agricultural trade

• led to development of Indo-European languages

Indo-European

Indo-Iranian, Romance, Germanic, Slavic

diffusion of language via

economics, religion, colonization

Linguistic dominance

a situation in which one language becomes comparatively more powerful than another language

loanword

a word that originates in one language and is incorporated into the vocab of another language

pidgin

a language that combines vocabulary or grammar practices from 2+ languages that have come in contact

creole

language that develops from a pidgin and is taught as a 1st language

lingua franca

language that is used to facilitate trade or business between people who speak different languages

linguistic diversity

assortment of languages in a particular area

endangered language

a language that is no longer taught to children by their parents and is not used for everyday conversation