Industry and Development Study Guide APHG

I.                    Industry: Geographic Factors

              Site Factors: physical features that relate to the cost of production and transport (the beach)

              Situation Factors:  features of the surrounding area that are related to the cost of production and transport (Teddy, the competitor)

              Basic Industry:  main focus of a region’s economy (Detroit = Cars, LA = film, SF = Tech, DC = Gov)

              Non-Basic Industry: businesses that support the work of the basic industry (Steel, electronics, etc, that support making Cars) (Food and shops that support people or gov)

              Multiplier Effect: how the previous two operate to grow the economy with non basic and basic industries

II.                  Fixed and Variable Costs:

              Fixed:  costs that do not fluctuate ex: rent                        

Variable:  costs that fluctuate, ex: energy bill, tips

III.                Transportation Systems

              Modern manufacturing tries to compress time and space (decrease time and distance obstacles) (Friction of distance) (the longer you are in a car, the more chances you can be in a car crash)

              Greater distance and weight = more cost; how to overcome?

Trucks: high mobility and flexibility; high fuel cost and wear and tear

Trains: low mobility and flexibility; very efficient over long distances; dependent on break of bulk points (cargo must be loaded and unloaded at different transportation)

Airplanes: fast, flexible, high cost, and limited weight carrying

Pipelines: great for fluids; bad for everything else

Ships:  low cost; slow; need port (most bulk)

IV: Location of Industry

              Agglomeration: clustering of similar businesses that can provide assistance and efficient labor and skill management (ex: Los Angeles, Detroit, NYC,  San Fran, Orlando, Vegas).  Cumulative causation is the continued growth due to agglomeration

              Deglomeration: the market becomes too saturated with similar businesses

V.                Weber’s Least Cost Theory: The location of a factory is dependent on

1)      raw materials cost (least expensive; least control)

2) labor cost (most expensive)

3) transportation cost. (most under your control)

              Weight Gaining (ex: cars):  finished good weighs more than raw materials; located closer to market

              Weight Reducing (ex: potato chips):  raw materials weigh more than finished goods; located closer to materials

V.                  Foreign Production of Goods

              Outsourcing is a controversial part of the increasing Globalized economy.   Many manufacturing jobs have left richer countries to go to poorer ones; Why?

                             Ex: Maquiladoras = factories just inside Mexico that make goods for US and Canadian markets; big increase since NAFTA was passed (1994)

Footloose Industries do not have a strong preference for being in a certain location; ex: high-tech, textiles

VI: Main Global Industrial Zones

1)      North America:  

a.       Ontario, CAN (Toronto; Ottawa, Montreal)

b.       NE USA (Boston-DC)  

c.       Eastern and Western Great Lakes (Rust Belt);

d.        SE I-85 (NC, SC, GA),

e.       Seattle-Portland;  SF Bay Region;  LA/SD; 

f.        Northern Mexico and Mexico City

2)      Russia and Ukraine

3)      Western Europe (Britain, France, Germany)

4)      China: export processing zones and special economic zones (SEZs)

a.       Beijing Zone

b.       Shanghai Zone

c.       Hong Kong Zone

5)      Japan:  Kanto Plain (Osaka, Kyoto, Tokyo)

6)      “Asian Tigers”:  S. Korea, Taiwan, Singapore, Hong Kong

VII:  Economic Development: Measurements and Theories

              Measures of Development:       

                             Gross Domestic Product (GDP)/Per Capita

                             Life Expectancy

                             Education Levels

                             HDI (Human Development Index; UN 1990)

                             GDI (Gender Development Index)

VIII: Types of Jobs: Economic Sectors    

              Primary =  extraction and harvesting of natural resources (ex: farming, fishing, mining)

              Secondary = processing raw materials into manufactured goods (industrial production)

              Tertiary = service-based economic activity (ex: sales, customer service, teachers)

              Quaternary =  creation and distribution of knowledge (tech; research; finance; medicine)

              Quinary = management of the other 4 areas (executives, politicians, CEOS) 

Country A =                                                                      

P = 85%, S = 10%, TQQ = 5%

Country B =  

P = 2%, S = 10 %, TQQ = 88% 

Country C=     

P = 15%, S = 45%, TQQ =  40%

VIX: Theories of Economic Development (Capitalist vs Socialist)

A)      Immanuel Wallerstein’s World Systems Theory (Dependency Model) (Liberal Approach)

              3-Level Global Hierarchy

1)      Core:  USA, W. Europe, Japan,  (most developed, MDC)

a.       They “rig the system” and exploit…

2)      Semi-Periphery: China, India, Latin Amer (developing)

a.       Exploited by Core, but also exploited periphery

3)      Periphery: Africa (least developed) 

a.       Exploited by 1 and 2

The Core-Periphery Model can be used at smaller scales to look at economic differences within countries and regions (ex:  USA, Core: Coasts, Semi-Periphery:  Great Lakes,  Periphery: Appalachia

Solution:   Wealth transfers and fairer trade deals

B)      Walt Rostow’s Model “Ladder” of Development (Conservative Approach)

              Societies progress through 5 Stages of Development

1)      Traditional Society =  most jobs are primary

a.       Poorest developing nations (Niger, South Sudan, Laos)

2)      Preconditions for takeoff = transitional phase to early industrialization

a.       Nigeria, Kenya, Bangladesh, Guatemala

3)      Takeoff = rapid growth; agriculture changes to large-scale and industrial, huge industrial/tech growth, most jobs in the secondary sector, but growth in tertiary sector

a.       China, India, Vietnam, Brazil

4)      Drive to maturity = rapid tech growth;  jobs moving out of secondary

a.       Russia, Poland, Saudi Arabia

5)      Mass Consumption = most jobs are in TQQ sectors;  high energy and tech use; outsourcing of industry and increased automation

a.       USA, Japan, Australia, South Korea

X: Global Resource Land Use

Oil:  Most important energy resource

              OPEC: Organization of Petroleum Exporting Countries

The Cartel of developing nations was formed in 1960 with large oil reserves, mainly from the Middle East, but now includes some African states and Venezuela.  Try and control supply and demand (seta price for oil)

Main Producers: USA, Saudi Arabia, Russia, Iran

Main Consumers: USA, China, EU

Natural Gas:  heating cold regions

Main Producer: Russia, Canada, USA

Main Consumers: EU, USA

Coal: a cheap energy source but very polluting

              Main Producers: China, India, USA

              Main Consumers: China, India, USA

Forestry and Timber: building resource

              Main Producer: Canada, Russia, USA, Brazil, China

              Main Consumer:  China, USA

Fishing:  food resource

              Main producer: China, Indonesia, India, Vietnam

              Main Consumer: China, Vietnam, Japan, USA

Alternative Energy Producers:

Hydroelectric: China, Canada, Brazil, USA

Solar: China, USA, Japan, Germany

Wind: China, USA, Germany, India

Nuclear:  USA, France, China, Russia

Biomass: (high use in developing countries)

Geothermal: USA, Indonesia, Philippines

Pollution:   China, USA, India, Russia

XI: Globalization:

              The term began to be used in the late 1990s and early 2000s to describe the rapid changes due to technology in the interconnectedness of the global community.

3 Main Forms:

1)      Economic:  outsourcing and offshoring of production and services.  Tech makes it easier, more efficient, and faster  (eliminates the friction of distance)

2)      Political:  Supranationalism and increased multilateral organizations

3)      Cultural:  mass migration and immigration, and the internet connect more people to more places (McDonaldization)

Costs:

              Rise in pollution

              Rise in reactionary nationalism

              Loss of some jobs in richer nations

              Rise in energy use

              Rise in environmental degradation

Benefits:

              Rise in wealth in developing states

              Rise in life expectancy

              Rise in literacy and education

              Increased gender rights

              Increased democracy