GEOG 2811 Industry and Cultural Landscapes

LECTURE 1: INDUSTRY CHAPTER 11, CULTURAL LANDSCAPES GEOG 2811

Introduction

  • According to Rubenstein (2019), industry previously clustered in a few developed communities but has diffused into various developing countries over recent times.

  • Definition of Industry: Refers to any form of economic activity and is classified into several categories:

    • Primary Industry: Extraction of raw materials (e.g., agriculture, fishing).

    • Secondary Industry: Manufacturing and processing of raw materials into finished goods.

    • Tertiary Industry: Includes retail, wholesale, and public services.

    • Quaternary Industry: Relates to services such as administration, finance, research, and information processing.

  • This classification aligns with the new economic structures that evolved in the 20th century.

Key Issues on Industry (As Raised in Text)

  • Where is Industry Distributed?

  • Why are Industries Changing Locations?

  • Why do Industries Face Energy Challenges?

  • Why do Industries Face Pollution Challenges?

1. WHERE IS INDUSTRY DISTRIBUTED?

The Hearth of Modern Industry: Manufacturing of Goods

  • The heart of modern industry is found in Northern England and Southern Scotland during the late 18th century.

  • Industry diffused to Europe and North America in the 19th century and subsequently to other global regions.

The Industrial Revolution (IR)

  • Timeframe: The Industrial Revolution (IR) began between the 1700s and 1800s and marked a watershed event in human history.

  • Industrial production began prior to the European IR on the Silk Routes between India and China around the 11th century, with cottage industries and community workshops existing around the world.

  • The catalyst for the IR was technological advancement, particularly the steam engine invented by James Watt in 1769.

  • A series of improvements in industrial technology underpinned the growth of manufacturing, leading to:

    • Significant population growth.

    • Expanded productivity.

    • Advances in medicine and sciences.

  • The UK emerged as the world's dominant industrial power in the 19th century.

First Industries Impacted by the Industrial Revolution

  1. Iron Industry:

    • The first to benefit from Watt's steam engine, crucial for the transformation of countries despite the difficulty in production due to constant heating requirements.

  2. Textile Industry:

    • Transitioned from a dispersed cottage industry to a concentrated factory system in the late 18th century; Richard Arkwright invented machines in 1768 to prepare cotton for spinning, with factories built near power sources.

  3. Chemical Industry:

    • Developed for bleaching and dyeing clothing; John Reebok and Samuel Garbett established a factory in 1749 using sulfuric acid for bleaching.

  4. Food Processing:

    • In 1810, Nicolas Appert canned food using sterilized glass bottles, providing food for factory workers who were far from farms.

Misleading Term 'IR'

  • The term 'Industrial Revolution' implies a singular transformation but was instead a gradual diffusion of ideas and techniques.

  • The changes encompassed new social, economic, and political inventions, not just industrial ones.

2. COMPONENTS OF THE SPACE ECONOMY

Industrial Concentration and Spatial Economics

  • Spatial Patterns:

    • Differentiation of economic patterns based on various industries beyond primary.

    • Differences in secondary, tertiary, quaternary, and quinary activities.

  • Space Economy involves:

    • Regions of industrial concentration.

    • Areas of employment and functional specialization.

    • Specific factory and store locations.

Industrial Location Theory in Market Economies

  • Simplifying Assumptions:

    1. Economic Rationality: Individuals make locational decisions based on cost-effectiveness and overall advantage.

    2. Profit Maximization: The primary goal of industries is to maximize profit.

    3. Supply/Demand and Price Relationship:

      • Demand exceeding supply drives prices up, thus enhancing profitability.

      • The higher the price, the greater the supply offered in the market.

  • Geography's Role:

    • Costs can be spatially fixed or variable affecting location decisions.

    • The least-cost location is synonymous with maximum profit location.

Three Approaches to Industrial Location

  1. Least Cost Approach (Weberian Analysis):

    • This model focuses on minimizing transport, labor, and other costs, factoring in agglomeration and deglomeration benefits.

  2. Locational Interdependence:

    • The choice of location is influenced by competitors' choices.

  3. Profit Maximization:

    • Considerations of agglomeration, supply source, energy access, and market are crucial in deriving profit.

3. SECONDARY ACTIVITIES: MANUFACTURING

Calculating Locational Pulls: Costs and Profit Prospects

  • Demand Side: Population distribution and purchasing power lead to market opportunities.

  • Supply Side: Related to:

    • Resource costs,

    • Market distances,

    • Wage structure,

    • Fuel costs,

    • Capital availability.

Behavioral Basis of Economic Decisions

  1. Profit Maximization: Determinants for producers and sellers.

  2. Market Mechanism: Defined by price and influenced by supply and demand.

  3. Market Equilibrium: Occurs at a price point where supply meets demand, satisfying both consumers and suppliers' needs.

4. Principles of Location

Costs Associated with Location

  • Spatially Fixed Costs: Minimum prices that must be paid for the production inputs, unchanged by location.

  • Spatially Variable Costs: Additional costs incurred at alternative locations, depending on the geographical advantages such as cheap labor or taxes.

Determinants of Location Decisions

  1. Profit Maximization Longevity: In competitive environments, least-cost locations yield the highest profit.

  2. Variables: Spatial interdependencies and linkages between firms contribute to industrial agglomeration.

  • Material Orientation: The placement of unprocessed materials nearest to primary inputs minimizes transport costs.

5. Geography of Supply, Demand, and Costs

Key Considerations

  • Geography of Demand: Involves the distribution of populations, purchasing power, and marketing opportunities.

  • Geography of Supply: Factors include distance and costs associated with raw materials and labor.

  • Geography of Costs: Input costs heavily influence manufacturing location decisions.

Weber's Minimum Transport Cost Location Theory (1909)

  • Factors significant to location decisions include:

    • Raw materials

    • Power supply

    • Market access

    • Labor availability

    • Political interventions

6. Material Orientation & Market Orientation

Definitions

  • Material Orientation: Tendency for industries to locate near the raw material source, relevant when material costs heavily influence product pricing.

  • Energy Orientation: Industries that require significant energy inputs often locate closer to energy sources (e.g., aluminum manufacturing).

  • Market Orientation: Industries position themselves near market areas when transportation costs substantially impact final prices (e.g., the beer industry).

Material Index (MI)

  • Formula for Material Index (MI):
    MI = \frac{\text{Weight of Localized Materials}}{\text{Weight of Final Product}}

  • A MI greater than 1 indicates weight loss during production (suggests material orientation);

  • A MI less than 1 suggests weight gain (indicating market orientation).

  • Central to Alfred Weber's theory on least-cost industrial location, based on major assumptions.

7. Tapering Principle & Short Haul Penalty

Tapering Principle

  • Refers to the phenomenon where transportation costs per mile decrease as the distance increases. Fixed costs are spread over longer hauls and average costs decline with distance.

Short Haul Penalty

  • Two short hauls are costlier than one long haul due to dual sets of fixed costs being incurred over interrupted transport cycles.

8. Weber's Locational Triangle

Explanation

  • It illustrates cost consequences regarding the fixed location of materials, markets, and movements of commodities at constant weights.

  • The optimum production point within the triangle would yield the lowest transport costs, influenced by weight loss characteristics of the inputs involved.

9. Solutions to Plant Location Problem

  • Location at Market:

    • Raw material cost and transportation implications considered.

  • Location at the Fuel Source:

    • Examination of total transportation costs for feasibility.

  • Location at the Raw Material Source:

    • Evaluated by substantial transportation costs.

10. Industrial Shifts and New Industrial Division of Labor

Why are Industries Changing Locations? (Rubenstein, 2019)

  • Emerging Industrial Regions: Regions adapting to new industrial standards.

  • Outsourcing and Trade:

    • Mexico as a focal point for industries due to proximity to the US and trade agreements.

  • NIDL (New Industrial Division of Labor): Indicates a shift of manufacturing from developed nations to places with low labor costs, retaining high-skill operations in developed regions.

The Role of Transnational Corporations (TNCs)

  • TNCs utilize outsourcing to optimize production in low-wage countries while outsourcing steps is crucial for efficiency.

  • Notable companies like Apple establish complex networks in lower wage markets (e.g., Foxcomm's employment of 1 million people).

BRICS Countries

  • Represents Brazil, Russia, India, China, and South Africa, expected to shape future manufacturing landscapes with their vast resources and workforce. BRICS nations hold substantial land areas and populations yet contribute relatively to global GDP.

11. Emerging Market Countries (EMCs)

Importance of EMCs

  • Classification is based on market performance and potential profits, showing fast growth rates in comparison to advanced countries.

  • EMCs yield investment opportunities bolstered by neoliberal reforms and attract foreign investors seeking profitability.

Characteristics of EMCs

  • Emerging market economies classified by income and structure, including advanced and secondary tiers of EMCs such as Brazil, Poland, and India.

  • Attractiveness stems from high returns and substantial growth potential.

  • IMF Future Predictions: Expectation that EMCs will generate significant portions of global GDP growth in the coming decade.

12. G20 Overview

Composition

  • Formed in 1999 to discuss global socio-economic issues, comprising Google-leading economies and the EU, which together accounts for a large share of global economic output.

Member Countries (as of 2021)

  • Argentina, Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, United Kingdom, South Korea, USA.