Unit 6:Industrial and Economic Development

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Unit 6Industrial and Economic Development

• Chapters 10,12 and 14
• 20-22 Days

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Unit Concepts

• What factors account for uneven economic
  development across the globe?
• What is the relevance of the growth theories of
  economic development?
• How has globalization affected labor, finance and
  markets around the world?

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What does Development Mean?

• Development implies progress
• Progress in what?
• Do all cultures view development the same way?
• Do all cultures value the same kinds of
  development?

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Main Points

• Geographically, the single most important feature
  of economic development is that it is highly
  uneven.
• Geographical divisions of labor have evolved with
  the growth of the world-system of trade and
  politics.
• Regional cores of economic development are
  created cumulatively.
• Spirals of economic development can be arrested
  in various ways.
• The globalization of the economy has meant that
  development is much more open to external
  influences.

Per Capita GNI
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Patterns of Economic Development

• Economic development refers to processes of
  change involving the nature and composition of
  the economy.
• These processes can involve three types of
  changes
• Changes in the structure of the regions
  economy
• Changes in forms of economic organization within
  the region
• Changes in the availability and use of
  technology within the region.

Guangdong Province, near Shenzhen
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Measuring Development
Gross National Product (GNP) Measure of the total
value of the officially recorded goods and
services produced by the citizens and
corporations of a country in a given year.
Includes things produced inside and outside a
countrys territory.
Gross Domestic Product (GDP) Measure of the total
value of the officially recorded goods and
services produced by the citizens and
corporations of a country in a given year.
Gross National Income (GNI) Measure of the
monetary worth of what is produced within a
country plus income received from investments
outside the country. Most common measurement
used today.
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Gross National Income Per Capita
GNI per capita is one of the best single measures
of economic development.
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Issues with Measuring Economic Development

• All measurements count the
• Formal Economy the legal economy that
  governments tax and monitor.
• All measurements do not count the
• Informal Economy the illegal or uncounted
  economy that governments do not tax or keep track
  of.

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Other Ways of Measuring Development

• Occupational Structure of the Labor Force
• Productivity per Worker
• Transportation and Communications
• Facilities per Person
• Dependency Ratio

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Dependency Theory The political and economic
relationships between countries and regions of
the world control and limit the economic
development possibilities of poorer areas.

• -- Economic structures make poorer countries
  dependent on wealthier countries.
• - Little hope for economic prosperity in poorer
  countries.

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Stages of Economic Development
According to Walt Rostows view, now regarded as
overly simplistic, places and regions can be seen
as following parallel courses within a world that
is steadily modernizing.
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Three Tier Structure
Core Processes that incorporate higher levels of
education, higher salaries, and more technology
Generate more wealth in the world economy
Periphery Processes that incorporate lower
levels of education, lower salaries, and less
technology Generate less wealth in the world
economy
Semi-periphery Places where core and periphery
processes are both occurring. Places that are
exploited by the core but then exploit the
periphery. Serves as a buffer between core and
periphery
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Barriers to Economic Development

• Low Levels of Social Welfare
• Trafficking
• Foreign Debt
• Structural adjustment loans
• Political Instability
• Widespread Disease
• Malaria

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Process of Regional Economic Growth

• Geographical path dependence
• Initial advantage
• External economies
• Localization economies

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Regional Economic Decline

• Spread effects
• Import substitution
• Deindustrialization

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The Global Assembly Line

• Transnational corporations
• Conglomerate corporations

lt The annual sales figures of many of the
worlds largest corporations exceed the Gross
National Income of some countries.
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Toyotas Global Assembly Line
Toyotas global production strategies
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Flexible Production Systems

• The strategies of transnational corporations are
  an important element in the transition from
  Fordism to Neo-Fordism in much of the world.
• Fordism
• Neo-Fordism
• Flexible production systems
• Just-in-time production

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Industry and Services

• Chapter 12

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• Industrial Revolution
• a series of inventions that brought new uses to
  known energy sources, new machines to improve
  efficiencies and enable other new inventions.
• eg. steam engine
• iron smelting
• water pump

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Beginning of Industrial Revolution

• When and where did the industrial revolution
  begin?
• In Great Britain in the mid to late 1700s
• Why Great Britain?
• Flow of capital
• Second agricultural revolution
• Mercantilism and cottage industries
• Resources coal, iron ore, and water power

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• Diffusion to Mainland Europe
• In early 1800s, innovations diffused into
  mainland Europe.
• Location criteria proximity to coal fields
• connection via water to a port
• flow of capital
• Later Diffusion
• In late 1800s, innovations diffused to some
  regions without coal.
• Location criteria access to railroad
• flow of capital

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• Diffusion of Industrial Revolution

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Location Theory

• Location Theory predicting where business will
  or should be located.
• Considers
• Variable costs
• Friction of distance

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Location Models
Webers Model Manufacturing plants will locate
where costs are the least (least cost
theory) Theory Least Cost Theory Costs
Transportation, Labor, Agglomeration
Hotellings Model Location of an industry cannot
be understood without reference to other
industries of the same kind. Theory Locational
interdependence
Loschs Model Manufacturing plants choose
locations where they can maximize
profit. Theory Zone of Profitability
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Loschs Model Zone of Profitability
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Major Manufacturing Regions of North America
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Major Manufacturing Regions of Russia
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Major Manufacturing Regions of East Asia
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Post-Fordist

• Fordist dominant mode of mass production during
  the twentieth century, production of consumer
  goods at a single site.
• 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.

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• Time-Space Compression
• Through improvements in transportation and
  communications technologies, many places in the
  world are more connected than ever before.

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Time-Space Compression

• Just-in-time delivery
• rather than keeping a large inventory of
  components or products, companies keep just what
  they need for short-term production and new parts
  are shipped quickly when needed.
• Global division of labor
• corporations can draw from labor around the
  globe for different components of production.

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Deindustrialization
This derelict steel mill in New Jersey is
testament to the downward economic spiral.
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• Deindustrialization
• a process by which companies move industrial
  jobs to other regions with cheaper labor, leaving
  the newly deindustrialized region to switch to a
  service economy and work through a period of high
  unemployment.

Abandoned street in Liverpool, England, where the
population has decreased by one-third since
deindustrialization
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Geographical Dimensions of the Service Economy

• 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

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Wal-Mart Requires producers of goods to locate
offices in the Bentonville, Arkansas (Wal-Marts
headquarters) area in order to negotiate deals
with Wal-Mart.
Proctor Gamble put their office in nearby
Fayetteville, Arkansas. How does the presence
of these companies in the region change the
regions economy and its cultural landscape?
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Nike Headquartered in Beaverton, Oregon, Nike has
never produced a shoe in Oregon. Beginning in the
1960s, Nike contracted with an Asian firm to
produce its shoes.
Skopje, Macedonia The swoosh is ubiquitous, but
where is the shoe produced? Nike has a global
network of international manufacturing and
sales.
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Modern Production
Outsourcing moving individual steps in the
production process (of a good or a service) to a
supplier, who focuses their production and offers
a cost savings.
Offshore Outsourced work that is located
outside of the country.
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Globalization and the Geography of Networks

• Chapter 14

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What is Globalization?

• A set of processes that are
• increasing interactions
• deepening relationships
• heightening interdependence
• without regard to
• country borders.

• A set of outcomes that are
• unevenly distributed
• varying across scales
• differently manifested
• throughout the world.

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Globalization
Geographer Andrew Kirby explains that with
globalization, we are living not so much in a
world without boundaries, or in a world without
geography but more literally, in a world, as
opposed to a neighborhood or a region.
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Networks

• Manuel Castells defines networks as a set of
  interconnected notes without a center.
• Time-Space Compression
• Global Cities

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World Cities most Connected to New York City
This map shows the 30 world cities that are the
most connected to New York City, as measured by
flows in the service economy.
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Networks in Development

• Nongovernmental Organizations (NGOs) have created
  a web of global development networks.
• Participatory Development idea that locals
  should be engaged in deciding what development
  means for them and how to achieve it.
• Gets back to What is development and how do we
  measure it?

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Nongovernmental Organizations (NGOs)entities
that operate independent of state and local
governments, typically, NGOs are non-profit
organizations. Each NGO has its own focus/set of
goals.
Microcredit program loans given to poor people,
particularly women, to encourage development of
small businesses.
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Dollarization Abandoning the local currency of
a country and adopting the dollar as the local
currency.
El Salvador went through dollarization in 2001
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Maquiladora Centers
Cheap labor and tax breaks for firms
manufacturing and assembling good for re-export
have made many Mexican border towns attractive to
U.S. companies.
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Globalized Office

• Institutionalization of savings large pools of
  capital
• Banks with overseas branches (i.e., OPEC)
• Print more money, causing inflation
• Governments lift restrictions and regulations in
  banking and finance
• U.S. trade deficits (the debt ceiling has been
  raised to 9 trillion)
• Hot money is globally laundered

A call center in Bangalore, India
Hyundai Maquiladora, Tijuana, Mexico
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Government-created Island of Development

• Malaysian government built a new, ultramodern
  capital at Putrjaya to symbolize the countrys
  rapid economic growth.

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Corporate-created Island of Development
The global oil industry has created the entire
city of Port Gentile, Gabon to extract Gabons
oil resources.
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Networks in Media

• Vertical integration a corporation that has
  ownership in a variety of points along the
  production and consumption of a commodity chain.
• eg. Media Companies
• Goal is synergy, the cross promotion of
• vertically integrated goods.

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Networks in Media
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Networks of Retail Corporations

• Horizontal integration ownership by the same
  firm of a number of companies that exist at the
  same point on a commodity chain.
• eg. The Gap (Banana Republic, Old Navy)
• Global retail corporations have more connections
  to the local around the world than global
  manufacturing corporations. Retail stores create
  a local presence.

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Identities in a Globalized World

• Identity how we make sense of ourselves
• We have identities at different scales.
• Globalized networks interlink us with flows of
  information and global interaction.
• In a globalized world, a growing number of people
  are making sense of themselves within the
  context of the globe.

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Personal Connectedness

• When a tragedy occurs somewhere in the world,
  people have the desire to
• personalize it.
• localize it.
• In the process of personalizing and localizing a
  tragedy, a new global awareness can be created.

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Personal Connectedness

• When a death or tragedy happens, how do people
  choose a local space in which to express a
  personal and/or global sorrow?
• Short term spontaneous shrines
• Longer term permanent memorials

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Landscapes of Violence and TragedyGeographer
Ken Foote draws from extensive fieldwork to
understand how Americans memorialize
tragedy.Arlington National Cemetery (right)
where thousands came to pay respects to
Jacqueline Kennedy Onassis, who had recently died.
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The Process of Memorializing Place

• Whether and how quickly a place is memorialized
  depends on
• funding
• debate over what to build
• who to remember
• whether people want to remember the site