Economic Development and Patterns Notes
Economic Sectors and Patterns
This module explores the evolution of national economies and the emergence of geographically uneven economic development as new economic sectors are established. It also investigates the factors influencing manufacturing locations.
Main Economic Sectors
Economic sectors are groupings of industries based on production and workforce activities. These sectors include:
Primary Sector
The primary sector involves industries that extract natural resources. Examples include fishing, hunting, farming, logging, oil extraction, quarrying, and mining. This sector extracts both renewable (e.g., timber) and nonrenewable (e.g., coal) resources.
Secondary Sector
The secondary sector processes raw materials from the primary sector into finished products. This includes converting ore into steel, logs into lumber, and processing fish. It is often categorized as "manufacturing" and can be divided into "light" (e.g., furniture) and "heavy" (e.g., automobile) industry.
Tertiary Sector
The tertiary sector provides services to businesses and consumers, including transportation and delivery of goods. It includes jobs from supermarket checkout clerks to lawyers and college professors. Subtypes include transportation/communication, producer, and consumer services.
Quaternary Sector
The quaternary sector deals with intellectual and informational services, focusing on innovation, invention, scientific research, and development. Examples include computer software development and biomedical research.
Quinary Sector
The quinary sector involves high-level management decisions in business, government, education, and science, with global-scale significance. Examples include decisions made by CEOs regarding investments, research, and product development.
Patterns of Economic Development
The organization of economic sectors implies a hierarchy of economic development. An economy based mostly on the primary sector is considered the least developed. As economies grow, the relative importance of each sector shifts, with more of the workforce involved in the tertiary sector and above.
A workforce mix of primary-secondary-tertiary sectors at percent indicates a more advanced economy than one with a percent mix.
National Economic Core Areas
Industrial regions consist of zones dominated by specific labor and industry types. The core area is the location of manufacturing, while peripheral areas are sources of natural resources. Steelmaking, for example, benefits from proximity to nearby coalfields.
A base industry is of disproportionate economic importance, attracting new industries and employment. The base steelmaking industry attracts enterprises providing supplies, services, and facilities. The workforce in a core area is largely in the secondary and tertiary sectors, while the peripheral area's workforce is primarily in the primary sector.
Global Economic Core States
The core-periphery model applies globally. Great Britain, dominating the textile industry, became a core state by controlling industrial technology and extracting resources from peripheral states like India and Egypt. These policies consigned much of the world's workforce to the primary sector, positioning many nations as peripheral economies to Europe.
Semi-Periphery
In the late 20th century, a new category of nation-states emerged: the semi-periphery. These countries, like Mexico, Brazil, and India, have elements of both core and periphery, with manufacturing relocating from core states to these regions while core economies shift towards tertiary, quaternary, and quinary sectors.
Factors Influencing Manufacturing Location
The distribution of manufacturing reflects various factors:
Common Factors
Businesses aim to minimize production costs, considering energy, materials, labor, markets, and transportation.
Energy
Manufacturing requires a reliable, low-cost energy source. Early aluminum plants located near hydroelectric sources like Niagara Falls.
Materials
Proximity to suppliers is crucial. Seaports and airports often serve as break-of-bulk points where cargo is transferred between transport modes, reducing costs.
Labor
Low wages are often a key factor, driving companies to peripheral areas with lower education levels and higher unemployment. However, specialized, skilled labor may override wage considerations.
Markets
Locating near consumer bases minimizes transportation costs.
Transportation
Access to ports, waterways, and railroads is crucial. Innovations like cargo jets and shipping containers have enabled global-scale manufacturing location decisions.
Cargo jets are cost-effective for goods with high value-to-weight ratios.
Containerization simplifies freight transport, allowing firms to move manufacturing to peripheral economies.
Location Theory
Least-Cost Theory
Alfred Weber's least-cost theory suggests manufacturers locate where transportation costs are minimized. This involves a location triangle with two material sources and one market. The heavier the load and greater the distance, the higher the costs.
If the final product weighs less than the raw materials, firms locate closer to the material source.
If the final product weighs more than the raw materials, firms locate closer to the market, as seen with soft-drink bottling plants.
Limitations of Least-Cost Theory
The model is an abstraction, assumes perfect knowledge, and undervalues labor costs relative to transportation, especially for high-skilled manufacturing and services.
Theories and Measures of Development
This module examines theories and measures of development, understanding how industrialization has contributed to geographically uneven development.
Theories of Economic Development
The concept of economic development emerged post-World War II, focusing on living standards in different regions.
Rostow's Stages of Economic Growth
Walter W. Rostow proposed that all countries progress through five development stages, ending in wealthy, mass-consumption societies.
Traditional Society: Based on agriculture and extraction.
Transitional Stage: Specialization, surpluses, and infrastructure development.
Take-Off: Industrialization, investment, and regional growth.
Drive to Maturity: Diversification, innovation, and reduced reliance on imports.
Age of High Mass Consumption: Flourishing consumer durables and a dominant service sector.
Rostow's model suggests uneven development occurs because national economies are at different stages, with all countries eventually reaching high mass consumption.
Criticisms include the model's isolation of countries and neglect of interdependencies, as well as the assumption that economies develop without obstacles.
Wallerstein's World Systems Theory
Immanuel Wallerstein's theory views world history as a series of socioeconomic systems, culminating in the modern capitalist world economy rooted in nation-state economies. It uses the core-periphery-semi-periphery model.
Core: Industrialized regions like Western Europe, North America, and Japan with advanced technologies and high consumption.
Periphery: Countries focused on agriculture and extraction with low consumption.
Semi-Periphery: Mediates politically and economically between core and periphery.
Unlike Rostow, Wallerstein suggests countries do not inevitably march through stages. Regions are incorporated into the world economy through imperialism and colonialism, creating unequal relationships. A global division of labor places the periphery's workforce in the primary sector, the core in the tertiary and above, and the semi-periphery in a mix.
Core regions exploit less-developed regions for resources, actively underdeveloping them to maintain economic superiority. Criticisms focus on the theory's global scale, glossing over regional and local complexities.
Dependency Theory
Originating from observations of South American economies, dependency theory focuses on the core and periphery, arguing poverty results from exploitative core regions. Peripheral countries are economically dependent on the core due to colonialism and imperialism.
The theory initially emphasized trade relations where the periphery supplied raw materials, inhibiting growth. Later, it focused on profits siphoned off to core countries rather than reinvested. Solutions involve