Industrial and Economic Development Notes
Industrial Revolution
A series of inventions brought new uses to known energy sources and new machines to improve efficiencies and enable other new inventions.
Examples:
Steam engine
Iron smelting
Water pump
Powered by foot-pedal or water force initially.
Some industries developed before the Industrial Revolution.
Beginning of the Industrial Revolution
When and where?
Great Britain in the mid to late 1700s.
Why Great Britain?
Flow of capital
Second Agricultural Revolution (enclosure)
Mercantilism and cottage industries
Resources: Coal, iron ore, and water power
Burning coal in a vacuum creates coke (pure burning fuel).
Diffusion to Mainland Europe
Early 1800s: Innovations diffused into mainland Europe.
Proximity to coal fields (N France > N/C Germany > Czech > S. Poland).
Connection via water to a port and flow of capital.
Later Diffusion:
Late 1800s: Innovations diffused to some regions without coal.
Location criteria: Access to railroads and flow of capital.
Paris Basin
Industrial base of France.
Rouen is at the head of navigation point on the Seine River.
Diffusion of the Industrial Revolution
Railroad construction in the UK and Europe reflects the diffusion of the Industrial Revolution.
Political issues in Europe impeded railroad diffusion.
Cooperation among small neighboring states was essential for building an efficient rail network and raising money.
Lack of cooperation delayed railroads in some parts of Europe by 50 years compared to Britain.
Where is Industry Distributed?
Primary Industrial Regions:
Industry is concentrated in four regions:
Europe
North America
East Asia
Russia & Ukraine
Each region accounts for roughly ¼ of the world’s total industrial output.
Largest agglomeration of Industry
Steel: Changing Inputs – Changing Distribution of the Steel Industry
Two changes in situation factors have influenced changes in the distribution of steel mills within the United States and world.
Changes in relative importance of main inputs- iron ore and coal.
Increasing importance of proximity to markets rather than proximity to inputs.
From the mid-19th through the early 20th century, steel mills were located near inputs.
Since the mid-20th century, proximity to markets has become more important than proximity to inputs.
Post-Fordist
Fordist - Form of mass production in which each worker is assigned one specific task to perform repeatedly.
Post Fordist – Current mode of production with a more flexible set of production practices in which goods are NOT mass-produced.
Production is accelerated and dispersed around the globe by multinational companies that shift production, outsourcing it around the world, this is global division of labor.
The Post War Economy
Fordism, 1950s-1970s
Mass production/mass consumption
Little product differentiation
Big companies
Big unions
Steady growth
Sometimes called the “Golden Age” of capitalism
New Influences on the Geography of Manufacturing
Transportation on industrial location
Break of Bulk points like LA, NYC, Rotterdam, Shanghai etc.
Regional and global trade agreements
WTO, EU, NAFTA etc.
Energy in industrial location
Core – High Tech
Semi-Periphery -
Periphery = Labor Intensive
Why are Situation and Site Factors Changing?
Changes within Developed Regions – Shifts within the U.S.
Industrialization during the late 19th and early 20th centuries largely bypassed the South because they lacked the needed infrastructure.
e.g., transportation network and electricity.
More recently, manufacturers have been lured by right-to-work laws- legislation that requires a factory to prohibit workers from being forced to join a union.
Essentially, industry in the U.S. has shifted from the Northeast toward the South and West."
Deindustrialization
A process by which companies move industrial jobs to regions with cheaper labor, leaving the newly deindustrialized region to switch to a service economy and work through a period of high unemployment.
Industrial Midwest is targeted
High union activity
Resistance to change
New Influences on Location:
Information technologies
Less tied to energy sources
MARKET ACCESSIBILITY IS MORE RELEVANT for some and less relevant for others because of telecommunications
Presence of Multinational Corporations
High-Technology Corridors
An area designated by local or state government to benefit from lower taxes and high-technology infrastructure with the goal of providing high-technology jobs to the local population.
e.g. Silicon Valley, California
Technopole - An area planned for high technology where agglomeration built on a synergy among technological companies occurs.
e.g. Route 128 corridor in Boston
NEAR UNIVERSITIES
EAST COAST "TECHNOPOLE" LOCATION - HI-TECH >> BOSTON
Weber’s Least Cost Locational Theory of Industrial Location
Principles of location:
Raw materials
Labor supply and cost
Processing costs
Markets
Transport costs
Government policies
Human behavior
Resource dependency
("Banana Republic," "Oil state,” etc.)
New International Division of Labor
Specialization in particular kinds of economic activities …
… of different people
… of different regions
Geographic division of labor
“Spatial justice”
How fairly are the world’s resources distributed geographically?
Deindustrialization in the Core
Relative decline in industrial employment
Automation and “runaway shops”
Reinvestment in higher profit areas
Sunbelt states (non-union)
Semi-periphery and Periphery
The spiral of deindustrialization
Local agglomeration diseconomies
(congestion, land price, or inflation, etc.)
Markets for product of local industry
and/or become saturated
Loss of jobs in major local industry: “Deindustrialization”
Loss of market share through competition from firms located in places with lower factor costs
Loss of jobs in local construction, service industries
Loss of jobs in ancillary industries
Shrinking local tax base and tax yield
Deteriorating infrastructure and quality of life
Creative destruction
Deindustrialization: A Manifestation of Creative Destruction
Creative destruction: the process of industrial transformation that accompanies radical innovation.
So what….
Deindustrialization in one location suggests that growth is occurring in a separate location
Capital is not destroyed, it is displaced.
Joseph Schumpeter – the Father of Creative Destruction
Economic Sectors and Patterns
Weber’s Least-Cost Theory —One of his core assumptions is that firms will choose a location in view to minimize their costs.
Alfred Weber formulated a theory of industrial location in which an industry is located where the transportation costs of raw materials and final product is a minimum.
Bulk-Reducing Industry
In one, the weight of the final product is less than the weight of the raw material going into making the product.
This is the weight losing or BULK-REDUCING industry. Ex: Copper production steel production
Bulk-Gaining
In the other, the final product is heavier than the raw material that requires transport.
Usually, this is a case of a raw material such as water being incorporated into the product.
This is called the weight-gaining or BULK – GAINING industries.
Transportation
Raw materials (inputs) to the factory
Finished goods (outputs) to market
Distance and weight are the most important factors.
Why Are Situation and Site Factors Important?
Geographers attempt to explain why one location may prove more profitable for a factory than others.
Companies ordinarily face two geographic costs.
Situation factors
costs associated with the established transportation networks accessible from a specific place. (infrastructure)
Site factors
costs resulting from the unique characteristics of a location. (land, labor, capital)
Specialized Industries
Single-Market Manufacturers
Specializers with only 1-2 customers
Located as close to the customer as possible
Ex. Motor vehicle parts
Perishable Product Manufacturers
Located close to market to maximize product time on sale
Ex. Milk
Geography of Transportation
Truck - short-distance, best for one-day delivery
Train - Longer distance, no need for stops, better for large objects
Ship - Low cost, cross-continental
Air – High cost, for small, high-value packages
Pipeline - Only used for liquids and gasses
Site Factors – Labor
Most important factor on a global scale.
Minimizing labor costs, which vary around the world, is extremely important to some industries.
A labor-intensive industry is an industry in which wages and other compensation paid to employees constitute a higher percentage of expenses.
Weber’s Least Cost Theory
Alfred Weber (1868-1958) formulated a theory of industrial location in which an industry is located where it can minimize its costs and therefore maximize its profits.
Based on 3 costs: Transportation, Labor, and Agglomeration
Analyzing Patterns in Levels of Development
What are the social and economic indicators of development?
Literacy Rate
HDI
Life Expectancy
TFR
IMR
GNI
Economic Activities
What are the environmental indicators of development?
Carbon Emissions
Energy consumption from renewable resources
Less developed – Country that has poverty, unstable economy, and/or poor nutrition and health.
Newly Industrialized – Country that has improved and is moving out of poverty, with an unstable economy and increased overall health and nutrition.
More developed – Country that has high technology, a large middle class, and superior nutrition and health among its people.
Measures of Development
HDI (Human Development Index):
Life Expectancy at Birth
Average Education Level
Standard of Living (GNP per capita)
Gender Inequality
To measure the extent of inequality, the UN created the Gender Inequality Index
Combines multiple measures, including empowerment, labor, & reproductive health
Empowerment - % of seats held by women in national legislature & % who have completed high school
Labor – female participation rate
Reproductive health – maternal mortality ratio (# who die giving birth per 100,000) & adolescent fertility rate (# per 1000 women 15 – 19)
The GII ranges between 0 and 1. Higher GII values indicate higher inequalities between women and men and thus higher loss to human development. There is no country with perfect gender equality.
Theories of Development
Rostow’s Stages of Development (Modernization Theory)
Written during the 1960s – anti-communist development
Tradition is the greatest barrier to economic development
Development can only happen if countries modernize (westernize), giving up emphasis on kinship and community and focusing more on the individual
For a country to develop economically, they must follow the path of the countries already developed
Dependency Theory: Wallerstein’s Capitalist World Economy
Based on the capitalist world economy – a global economic system based in high-income nations with market economies
Traced economic inequality among nations to the colonial era (colonialism) when Europe benefited from the access to the world’s resources
Divides countries into three groups: Core, Periphery, and Semi-periphery
Self-Sufficiency Model
Encourages domestic development of goods and resources and discourages foreign influence and investment.
International Trade Model
Nations should use local resources and industries to sell scarce or needed resources globally through international trade.
Money that comes back to the country increases the nation’s GDP, which can then be used to improve the development of infrastructure, invest in education and healthcare, and improve a country’s standard of living.