Patterns of Industrial Development

Patterns of Industrial Development

Overview

• Industrial development is influenced by multiple factors including labor, transportation, production methods, and economic theory.

Labor Categories

Skilled Labor

• Requires technical skills or specialized training.

• Not synonymous with white-collar work; relates more to expertise.

• Examples: Electricians, Plumbers, Law Enforcement Officers, Administrative Assistants.

• Highly skilled occupations (4-year degree or more): Lawyers, Doctors, Architects, Teachers, Financial Consultants.

• Shortages in tech-related skilled labor often lead to generous compensation packages.

Unskilled Labor

• Does not require special training or skills.

• Displaced by technology; e.g., waste segregation automated.

• Examples: Farm laborers, Cashiers, Grocery Clerks, Cleaners, Child Care Workers.

• Unskilled positions generally pay minimum wage or less (informal economy).

• Informal economy definition: unregulated work, often cash-based, not counted in GDP/GNP.

• Informal work examples include babysitting, garage sales, illegal activities.

Transportation Costs

Types of Costs

• Line Costs: Fuel, insurance, wages for operators, maintenance, infrastructure costs.

• Terminal Costs: Costs related to the endpoints (airports, ports) like facility maintenance and labor.

• Costs are summarized by dividing total costs by units (usually pounds) for freight.

Modes of Transportation

1. Ocean Liners

   • Low line costs due to capacity, high terminal costs.

   • Slow speed; long shipping times may be unsuitable for perishable goods.

2. Rail Transport

   • Moderate costs; efficient for long distances over land.

   • Infrastructure includes rail yards, lower complexity than ports.

3. Tractor Trailers (Trucks)

   • Low terminal costs; high line costs due to fuel and limited cargo capacity.

   • Flexible for both short and long distances.

4. Delivery Cars/Vans

   • High-cost per unit; primarily for local delivery with minimal terminal costs.

5. Air Transport

   • Most expensive mode; high costs in both realms but fastest.

   • Best for urgent shipments (overnight deliveries).

Break-of-Bulk Points

• Locations where goods transfer between transport modes (cities, airports).

• Necessary due to limitations on how far ocean liners can travel to ports.

Containerized Shipping

• Also known as intermodal shipping, it enhances efficiency and reduces costs.

• Goods packed into large containers at origin, transferred seamlessly at ports.

• Less labor required due to automation; need for unskilled laborers decreases.

Entrepôt (Transshipment Port)

• Places for importing, storing, and re-exporting goods.

• Examples: Singapore, known for high volumes of international trade.

• Small but economically significant; second busiest port globally.

Least Cost Theory

• Developed by Alfred Weber; focuses on minimizing transportation, labor, and agglomeration costs.

• Businesses seek locations that balance these costs for efficiency.

• Agglomeration example: tire factory near car manufacturer to minimize costs.

• Key considerations include market location and raw material source.

Bulk-Gaining vs. Bulk-Reducing Production

Bulk-Gaining Production

• Finished products weigh more than raw materials.

• Example: Soft drinks (syrup + water).

• Locations are near markets due to high transportation costs for heavy products.

Bulk-Reducing Production

• Finished products weigh less than raw materials (waste is removed).

• Factories located near raw material sources to save on transportation costs.

• Example: Steel production; involves processes like smelting iron ore.

Agglomeration Benefits

• Companies cluster production facilities to streamline processes and reduce warehousing costs.

• Movement from mass production to lean production (just-in-time delivery).

• Example: Japanese car manufacturers adopting lean production to optimize efficiency.

Global Production Shifts

• Production moves to Newly Industrialized and Less Developed countries for cheaper labor.

• Leads to a new international division of labor; significant economic impacts on old industrial hubs.

World Systems Theory

• Developed by Immanuel Wallerstein outlining global economic inequalities.

• Core Countries: Dominant nations exploiting labor and resources from periphery countries.

• Periphery/semiperiphery dynamics: Rising economies like BRIC and MINT countries.

• Examples of core countries: Western Europe, North America, Japan, Australia.

• Significant impact on global trade structures.