Economic Sectors and Industrial Location Theory

Railroads and Urban Areas in Colonial Mozambique

  • Mozambique was colonized by Portugal from the early 1500s to 1975.
  • The relationship between railroads and urban areas highlights the development patterns during colonial times.

Economic Sectors

Overview

  • Economic activities are divided into five distinct sectors based on their characteristics:

Primary Economic Activities

  • Involves extraction of raw materials from the earth.
  • Examples: Mining, fishing, agriculture, forestry.

Secondary Economic Activities

  • Engages in processing and manufacturing raw materials into finished products.
  • Examples: Factories and manufacturing industries.

Tertiary Economic Activities

  • Focuses on services such as moving, selling, and trading products from primary and secondary sectors.
  • Examples: Retail, marketing, restaurants, and shipping.

Quaternary Economic Activities

  • Knowledge-based sector concentrating on research and information creation and transfer.
  • Examples: Investment banking, real estate, education, software development.

Quinary Economic Activities

  • Involves the highest levels of decision making in both government and businesses.
  • Examples: Congress, CEOs; decisions impact millions.

Development Patterns and Economic Growth

  • As countries develop, the primary sector declines with increased industrialization.
  • Lesser developed countries predominantly feature primary sector economies.

Industrial Location Theory

Basic Concept

  • Also known as "Least-Cost Theory" or "Weberian Analysis."
  • Focuses on optimum manufacturing location for cost minimization.

Key Factors

  1. Transport costs (relative location concern)
  2. Labor costs (site concern)
  3. Agglomeration effects (site concern)

Assumptions of Theory

  • Area is uniform in cultural and technological aspects.
  • A single product is shipped to a single market.
  • Raw materials come from multiple locations.
  • Transportation cost dependent on weight and distance.

Criticisms

  • Transport costs involve additional factors beyond weight and distance.
  • The theory's assumptions may not reflect real-world variables such as land and labor costs.

Bulk-Reducing vs Bulk-Gaining Industries

  • Bulk-Reducing Industries: Lose weight during production (e.g., copper, lumber).
  • Bulk-Gaining Industries: Gain weight during production and need to be close to markets (e.g., beverages, furniture).