(Module 54) Economic Sectors and Patterns
Economic Sector: Grouping of industries based on what is produced and activities of the workforce.
Primary Sector: Industries that extract natural resources from the environment.
Secondary Sector: Industries that process the raw materials extracted by primary industries, transforming them into finished, usable forms.
Tertiary sector: Industries that provide services businesses and consumers, including all the different types of work necessary to transport and deliver goods and services.
Quaternary Sector: The portion of the economy dedicated to intellectual and informational services, such as scientific research and development.
Quinary Sector: The portion of the economy where the highest-level management decisions are made in the ares of business, government, education, and science.
Patterns of Development:
The organization of economic sectors implies a hierarchy of economic development, the primary sector constituting a larger percentage of the workforce in developing countries all the way up to the quaternary and quinary sectors which are more common in developed countries.
National Economic Core Areas:
Base Industry: An industry of disproportionate economic importance and whose existence industries and employment sectors depend the workforce of an establishes core area is largely engaged in the secondary and tertiary sectors.
Global Economic Core Cities:
The core-periphery model may be applied at the global scale. A global pattern of uneven development emerged, with most countries national economies dominated by the primary sector (peripheral countries) and a few national economies with the majority of their workforces in the secondary and tertiary sectors (core countries).
Semi-Periphery: Countries or regions whose economies have elements of both the core and the periphery.
Location of Manufacturing:
Energy:
Every manufacturing process needs a reliable source of energy at the lowest possible cost.
The relative costs of energy sources change as technologies change, sometimes leading to shifts in the location of manufacturing.
Materials:
The location of factories that manufacturing inputs will influence the location of the factories that need the.
Break-of-Bulk Point: A location where cargo is transferred from one mode of transportation to another.
If manufacturing is located near a break-of-bulk point, transfer costs are lowered.
Markets:
Generally, manufacturing is located near its consumer base, which minimizes transportation cost.
However, lower transportation costs must be weighed against other costs, such as those for labor or energy sources.
Transportation:
Transportation innovations have allowed businesses to make manufacturing location decisions on a global scale.
Shipping Containers: Standardized, stackable, intermodal metal boxes used to transport goods by ship, railroad, or truck.
Containerization: The system of intermodal fright transport using shipping containers.
Least-Cost Theory: Alfred Weber’s theory that transportation costs and labor costs plays a strong role in determining the location of manufacturing facilities.
Weber’s location triangle illustrates how firms make manufacturing location decisions.
It represents a situation in which a factory needs access to two materials sources and one market.
If the weight of the final product is less than the weight of the of the raw material used in manufacturing the product, firms would choose location closer to the material’s source (e.g., steel manufacturing).
If the weight of the final product is more than weight of the raw material is more than the weight of the raw material used in manufacturing the product firms would choose locations closer to the market (e.g., coke bottling).
Limitations of the Least-Cost Theory:
The model is an abstraction used to represent real-world conditions.
It assumes that decision makers have perfect knowledge of all possible factors.
Transportation costs, while significant, are less important today than other production costs, such as labor, especially for high-skilled manufacturing jobs.