Unit 7.2 HGAP KBAR
Economic sectors: A group of similar industries that produce similar goods and perform similar activities.
Primary Sector- A sector that focuses on the extraction of natural resources. Examples include: fishing, mining, farming, lumberjacks, etc
Secondary Sector- A sector that focuses on turning those natural resources into finished products- (manufacturing of furniture, chicken into canned chicken, chocolate into bars, steel into cars).
Tertiary Sector- A sector that focuses on providing services to customers. This is such a wide sector that many have categorized it into three smaller buckets: transportation/communication services, producer services, and customer services. Examples can vary, like supermarket clerks, doctors, yoga teachers, and lawyers.
Quaternary- A sector found in many core countries, this sector focuses on intellectual and research positions, engineers and researchers are often found here. It is the sector of innovation, research, and invention.
Quinary- This sector focuses on the most powerful positions that often impact the world: CEOs, Presidents, Prime Ministers. These people make high-level business decisions.
Primary sectors are often associated with lower levels of development and the tertiary, quaternary, and quinary are associated with higher levels of development. Relatively few economies possess fully expanded quaternary and quinary sectors, but these countries are global players on the world stage: USA, Germany, Japan, etc. In contrast, developing nations typically have a larger proportion of their economic activities within the primary and secondary sectors, reflecting their ongoing progress towards advanced economic structures. Some observers rank a country’s level of development according to the percent of its workforce in the different sectors.
Before, industrial zones were organized in such a way that manufacturing was found in core countries but primary sector activities were found in the periphery countries. Steelmaking is a good example. The raw materials needed, such as coalfields were often found in periphery areas while the factories themselves were found in core areas.
One can categorize steelmaking as the base industry, an industry of disproportionate economic importance and whose existance other industries depend on. For example, steelmaking factories can attract new industries of secondary and tertiary sectors, such as warehouses, car manufacturing, and even schools and hospitals to provide to the mass workforce of the factories. You can begin to see a pattern, disproportionately many periphery areas are involved in primary activities while core areas host more secondary and tertiary sectors.
Another example is Great Britain’s textile industry which similarly sourced raw materials like cotton from colonial periphery regions while establishing factories in urban core areas. This reinforced a global trade network that relied heavily on the exploitation of resources and labor from the peripheries. Countries like Egypt and India participated in this dynamic by serving as significant suppliers of raw materials, particularly cotton and textiles, while their economic development was often stunted due to colonial powers controlling industrial processes in the core regions.
Around the 20th century, a new category of countries known as the semi-periphery emerged. The importance of manufacturing to the economies of core countries diminished as they began to pursue the quinary and quaternary sectors. Many manufacturing facilities moved towards the periphery countries and new semi-periphery countries such as Mexico, Brazil, and India had their workforce move into the secondary and tertiary sectors.
There are MANY factors that determine locations of manufacturing, including energy, labor, markets, and transportation. As a general rule, many corporations weigh these factors against each other while trying to gain the biggest profit.
Energy- every manufacturing process needs access to a reliable and cheap source of energy. For example, early aluminum manufacturing plants were located near hydroelectric facilities near Niagara Falls. Advancements in technology sometimes lead to shifts in manufacturing locations.
In the past, early British textile mills were site-tied, because they depended on falling water.
Situation- costs associated with infrastructure
Site- Costs resulting from unique characteristics of the land.
Materials- factories that produce manufacturing inputs (steel industry’s output in the auto industry’s material input)
TRANSPORTATION- MOST IMPORTANT- break of bulk points, airports and ports. (Iron ore shipments in Minnesota near Lake Superior Ports), railroads. Modern Day examples- jet planes in the 1950s were designed to specficallly carry large amounts of cargo. Today, about 1/3 of the world’s trade value is shipped by air. These are good with goods with high value-weight rations.
Another example is standard shipping containers and containerization. About 90% of the world’s non-bulk cargo is transported in containers. These containers not only protected products but now container boxes were standarized and cranes could directly pick them up and move them to other locations. This efficiency has significantly reduced shipping times and costs, making global trade more accessible and streamlined.
Moreover, advancements in logistics and supply chain management have optimized routes and reduced delivery times, further enhancing the efficiency of air freight and container shipping.
Labor Costs- Most companies work to employ workers in areas with low wages in order to maximize profit. These ares are often in perpihery areas (connects to the International Division of Labor) where labor is plentiful and less expensive, allowing companies to reduce overall production costs while still maintaining efficiency.
ON A GLOBAL SCALE, LABOR IS THE MOST IMPORTANT FACTOR ON A GLOBAL SCALE.
HIGH LABOR COSTS REDUCE PROFIT. THIS IS WHY SO MANY OUTSOURCING OCCURS IN THE USA, IN A LABOR INTENSIVE FIELD, it is better to outsource that if cheap labor can make up for added costs (since its international)
However, this will not also work for industries that require specially-skilled and highly- educated employees such as a software company. In these cases, companies will have to pay higher wages and salaries in order to attract the educated people they need. Sometimes, you will find facilities like these near universities with ample amounts of graduating students who are looking for jobs. (For example, Pittsburgh PA is located to major universities like UPEN and Carnegie Mellon)
The Least Cost Theory, proposed by Alfred Weber, states that there were two key variables that were important to location: distance and weight. Transportation, he argued, was the most important factor of them all. He created an abstract model known as the location triangle, which showed that higher costs were often associated with increased distance and heavier loads.
Bussinesses at the end of the day try to minimize costs of production while maximizing their profit margins, which often leads to strategic decisions regarding their location in relation to both transportation routes and the availability of skilled labor.
He imagined two cases: one where the weight of the final product is greater than the raw materials and another where the weight of the final product is smaller than the raw materials. In the first case, Weber said that firms would choose to be closer to the market. (soda bottling) However, in the second scenario, Weber said that firms would choose to be closer to the raw material source to reduce transportation costs, as the weight of the raw materials would make shipping them over long distances less economical.
When a variety of materials is needed, the production point moves closer to the heaviest material. This approach ensures that transportation costs are minimized while taking into account the logistics of handling multiple inputs.
You can see this in action with the location of soft-drink bottling plants in Georgia, because the main input, water, can be widely sourced and isn’t as heavy, while the final product, soda, is more specialized and heavy. This causes most facilities to be closer to the market rather than the water sources.
As with every model in AP Human Geography, the theory and model aren’t perfect. Three modern-day limitations include: the abstract nature doesn’t replicate real-world conditions, transportation isn’t as important (especially for high-skilled manufacturing and services), and that the model assumes that the decision makers have perfect knowledge of ALL the factors, which as we know, is never the case.
Single Market Manufacturing Specializers with only 1-2 customers
Located as close to customers as possible- Ford Steel Materials located near Ford factory plant
Perishable product manufacturers- located close to market (fruits and milk)
Increasing importance of proximity to markets rather than imports
Motor vehicles are built near markets.