Chapter 9 Economic Geography: Manufacturing and Services

9.1 Components of the Space Economy

• In the economic sphere recognize:
  • Regions of industrial concentration
  • Areas of employment and functional specialization
  • Specific factory sites
  • Store locations
  • Tourist destinations
• Basic Economic Concepts
  • Intensity of spatial interaction decreases with increasing the separation of places
  • Observed importance of complementarity and transferability in the assessment of resource value and trade potential

9.2 Secondary Activities: Manufacturing

• Secondary Activities are transforming raw materials into products that can be used to pour iron and steel to produce plastic toys, assembling computer components, or sewing jeans
• Principles of location
  • Spatially fixed costs
  • They are relatively unaffected no matter where the industry is located within a regional or national setting
  • Spatially variable costs
  • They show significant differences from place to place
• Locational Decisions in Manufacturing
  • Require multiple spatial scales of analysis
  • International
  • Regional
  • Local/Specific to individual enterprises
  • Power Supply
  • Power supplies with low transferability may serve to attract energy-intensive activities
  • Raw materials
  • All manufactured goods have their origins in the processing of raw materials
  • Labor
  • Labor costs are highly variable across space, increasingly affecting location decisions and industrial development
  • There are 3 important considerations for labor:
    • Price
    • Skill
    • Amount
  • Transportation modes
  • Essential factor of industrial location that it is difficult to isolate its separate role
  • Market
  • Everything is produced to supply a market demand
• Transportation and location
  • Freight rates
  • Charges made for loading, transporting, and unloading of goods
  • Terminal Costs
  • The charges for paperwork, loading, packing, and unloading of a shipment
  • Break-of-bulk points
  • Sites where goods have to be transferred or transshipped from one carrier to another
• Industrialization Location Theory
  • Industrial locational decisions are based not on a single factor, but on the interplay of a number of considerations
  • Each type or branch of industry has its own specific set of significant plant siting conditions
• Contemporary Industrial Location Considerations
  • The behavior of individual firms seeking production sites under competitive market conditions
  • It does not account for the locational behaviors that are uncontrolled by “factors,” directed by national or regional economic development planning goals or influenced by new production technologies and corporate structures
  • Political Considerations
  • Political factors affect the location decision process
  • Agglomeration Economies
  • Are benefits that firms enjoy due to factors outside the firm
  • Just-in-Time and Flexible Production
  • Comparative Advantage, Offshoring, and the New International Division of Labor
  • The capitalist division of labor from individual workers to the economies of entire regions and countries
• Transnational Corporations (TNCs)
• Businesses are increasingly stateless and economies borderless as giant transnational corporations (TNCs)
• There are 3 ways high-tech industries impact the patterns of economic geography
  • High-tech activities are major factors in employment growth, manufacturing output, and the total gross value added (GVA)1 for many individual countries
  • High-tech industries have tended to become regionally concentrated in centers of innovation, frequently forming self-sustaining, highly specialized agglomerations
  • The offshoring of less-skilled production and assembly tasks has spurred the economic development of newly industrializing countries

9.3 High-Technology Manufacturing

• The old fashion location theories are less effective for explaining the location of high-technology research, development, and manufacturing activities

9.4 World Manufacturing Patterns and Trends

• Mexico, Brazil, China, and others of the developing world have created industrial regions of international significance
• Deindustrialization
  • Declining relative share of manufacturing in a nation’s economy
  • Got worse during the past two decades

9.5 Tertiary Activities

• Tertiary activities consist of business and labor specialties that provide services to the primary and secondary sectors, to the general community, and to individuals
• Types of Service Activities
  • Tertiary and service are broad and imprecise terms that are not limited to the number of activities
  • Whoever purchases the services, we distinguish between consumer services and producer services
• Locational Interdependence Theory for Services
  • The locational controls for tertiary enterprises are simpler than those for the manufacturing sector
• Consumer Services
  • Supply of consumer services must match the spatial distribution of effective demand
  • Tourism
  • The growth of tourism is part of a broader shift
  • The tourism industry has experienced a post-Fordist transition
  • Gambling
  • Fast-growing industry that draws large numbers of tourists and in the process remakes places and local economies
• Producer Services
  • Specialized activities performed for other businesses

9.6 Services in World Trade

• Service activities have been major engines of national economic growth
• They become an increasing factor in international trade flows and economic interdependence

\