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Econ Geog


Econ Geog Economic Geography: study of flow of goods and services across space Look at ways in which people provide for themselves across the globe – PowerPoint PPT presentation

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Title: Econ Geog

Econ Geog
  • Economic Geography study of flow of goods and
    services across space
  • Look at ways in which people provide for
    themselves across the globe
  • Geographic patterns of inequality at different
  • Globalization is a MAJOR thread throughout econ trade, intnl trade, international econ
    alliances, etc.

Industrial Revolution
  • Industry manufacturing goods in a factory
  • Industrial Revolution
  • GB late 1700s diffused to W. Eur and U.S.
  • Technology and mechanization led to unprecedented
    increase in production
  • Iron and textiles 1st to industrialize

Where is Industry Distributed?
  • For 200 yrs industry was limited to
  • N. Europe GB, France, Russia, Germany
  • E. Asia Japan
  • N. America U.S.
  • These countries dominated ind production/innovatio
    n until mid 20th C

Where is Industry Distributed
  • In recent yrs shift in geography of
  • Major corporations have moved factories to LDCs
    (cheap labor)
  • Older industrial countries have shifted to
    service based economies research and
    development, marketing, tourism, sales,
    telecommunications, etc.)
  • Service jobs are safer, more pay, less pollution,
    and overall higher satisfaction

Where is Industry Distributed?
  • BUT service jobs require more education/training
    than factory work
  • i.e. difficult transition factory lose jobs as
    factories outsource, must go back to school or
    switch careers in mid life
  • Mill towns/factory towns ghost towns or
    reinvent themselves with new econ niche

Where is Industry Distributed?
  • Deindustrialization when industrial factories
    leave an area and take that regions econ base
    with them
  • Ex Rust Belt Great Lakes region was home to
    all auto manufacturing but GM and other companies
    have relocated debilitating for the economy of
    the region and the workers there
  • Backwash Effect when one regions econ gain is
    anothers loss

The Rust Belt
Where are industries distributed and why there?
  • All industries seek to maximize profits by
    minimizing production costs
  • Critical question Where is the most profitable
    place to locate a factory??
  • Alfred Weber Least Cost Theory firms look at
    the following to decide where to locate..

Least Cost Theory
  • 1.) Transportation Costs must move raw
    materials (inputs) to plant and finished product
    to market
  • Market Orientation Firms if finished product
    weighs more or is perishable, then locate the
    plant closer to the market than the raw
    materials.4 types of market orientation

Least Cost Theory Market Oriented Firms
  • A.) Bulk Gaining Industry product gains volume
    or weight during production (TV, refrigerator,
    soft drinks)
  • B.) Single Market Manufacturer product sold
    mainly in one location
  • C. Perishibility fresh fruits, milk, bread,
    newspaper must be near market
  • D.Ubiquitious Industry industry distr is in
    direct proportion to the distr of the population
    (i.e. near large metro areas with people labor
    and market) i.e. hospitals, big business

Least Cost Theory Material/Resource Orientation
  • Material/Resource Orientation raw materials
    (inputs) weigh more (or are perishable) than the
    finished product so locate plant closer to raw
    materials than to market. These are called Bulk
    Reducing Industries final product weighs less
    than the inputs
  • (i.e. paper mills, steel, copper most mining,
    tomato cannery, etc.)

Least Cost Theory Other transportation variables
  • Footloose firms industries w/ products that are
    lightweight and valuable and can locate anywhere
    (i.e. diamond of computer chips)
  • Spatially fixed cost cost of product does not
    change no matter where factory is located
  • Spatially Variable cost price of product varies
    depending on where factory is located and where
    product is produced

Least Cost Theory - Transportation
  • Longer distance is cheaper per mile
  • Ships best for longest distances
  • Air most expensive but fastest
  • Break of Bulk Points cost of transport for some
    inputs is cheaper than another type of transport
    so you use multiple methods of transport. BBP
    transfer point (usually a seaport or airport)

Least Cost Theory - AGGLOMERATION
  • Agglomeration when many companies of the same
    industry cluster together in a small area to draw
    from the same set of collective resources (i.e.
    computer companies in Silicon Valley, motion
    picture industry in LA, fashion in Paris)

Least Cost Theory - AGGLOMERATION
  • Multiplier Effect as more firms from same
    industry locate in an area, more resources become
    available and cements that regions specialty
    even more (ex CA became known for high tech
    firms, it attracted more computer experts, which
    attracted more high tech firms, etc.)

Least Cost Theory - AGGLOMERATION
  • Ancillary Activities agglomeration results in
    ancillary activities i.e. the supporting cast.
    Economic activities that surround/support the
    primary industry of the region. These can
    include a range of activities shipping, food
    services, etc.

Least Cost Theory - AGGLOMERATION
  • Agglomeration leads to regionalization unique
    specialization from region to region
  • Deglomeration opposite of agglomeration when
    a firm leaves an agglomerated region to start up
    in a new place

Least Cost Theory AgglomerationRegional
Specialization Silicon valley
Least Cost Theory LABOR
  • Labor intensive industry one where the cost of
    labor is a high percentage of production (ex
  • Outsourcing move production abroad for cheap
    labor. Youre willing to pay more for
    transportation b/c of cheap labor. Outsourcing
    usually goes to semi-periphery cheap labor,
    decent infrastructure, no environmental regs

Least Cost Theory LABOR
  • Textiles has followed cheap labor originally in
    NE b/c of cheap immigrant labor, late 1800s/early
    1900s moved to SE to avoid unions, post WW II
    moved overseas to LDCs in Asia (50s in Hong Kong
    and Japan, 70s in China and Korea, today in
    Indonesia, Bangladesh

Least Cost Theory Other things a firm may
  • Land
  • Factories today usually rural or suburban
  • Need large tracts of land (1 story more
  • Amenities climate, cost of living, re
    opportunities (i.e. Sun Belt)
  • Communities engage in bidding wars zoning, tax
    breaks, environmental conditions, etc. to offer
    most attractive package (i.e. Dell in NC)

Least Cost Theory Other things a firm may
  • Capital
  • Money available to expand or open new factories
  • May go to area where banks are willing to make
    high risk loans (i.e. Silicon Valley)

Factory Work
  • Fordism mass production and assembly lines
    (each worker assigned one specific task to
    perform repeatedly). Started by Ford in early
    20th C

Factory Work
  • Post-Fordism more flexible work in teams and
    often master a wide array of tasks

Webers factors to consider site and situation
  • Site Factors land, labor, capital
  • Situation Factors transportation costs i.e.
    relative location to inputs/raw materials and to

Summary of Location Principles
  • Access to materials for production
  • Adequate supply of cheap labor
  • Proximity to shipping and market
  • Decrease production costs (cheap land, cheap
    labor, and favorable govnt policies)
  • Natural factors, climate
  • Firms history and personal inclinations

Industrial Problems
  • Over production global capacity to produce
    manufactured goods has increased more rapidly
    than demand
  • Consumption leveled off since 1970s b/c
  • No population increase
  • Wages have not risen as fast as prices
  • Market Saturation everyone already has one (TV,
    cars, microwaves, etc.)
  • Higher quality goods last longer

Industrial Problems in MDCs
  • Must protect markets from new competitors
  • Trading Blocs industrial competition in MDCs is
    betwn blocs, not countries
  • Cooperation within bloc, competition betwn
  • Seek complementary trade within bloc

Industrial Problems in MDCs
  • Transnational Corporations locate aspects of
    production in various countries. i.e. take
    advantage or regional diff in wages, tax laws,
    labor laws, natural resources, etc.
  • Ex Nike HQ in Oregon, but factories span the

Industrial Problems in MDCs
  • Most transnational corp are conglomerate
    corporations firms that consist of many smaller
    firms that serve different functions (ex GM
    many smaller firms that operate all over the
    world, and produce a wide variety of goods and

Industrial Problems in LDCs
  • Distance from markets far from wealthy
    consumers in MDCs
  • Poor infrastructure (roads, technology,
    communication, etc.)
  • Cheap labor best drawing card for industry.
    Intnl division of labor low paid, low skilled
    work done in LDCs, high skilled work in MDCs

Industrial Problems in LDCs
  • Export Processing Zones zones officially
    designated for manufacturing have accessible
    facilities, lax environmental regs, and tax
    exemptions, cheap labor. Ex Maquiladoras along
    US/MX border. Pros jobs for MX, cheap labor
    for US. Cons often plagues w/ high crime,
    govnt corruption, pollution

Industry today..
  • Outsourcing
  • Export processing zones - maquiladoras
  • Tourism
  • All of these exploit LDCs/periphery.
    Neocolonialism econ and political controls are
    exercised by developed states over the economies
    and societies of independent countries in the
    developing world

  • Development process of improving material
    conditions of people w/ diffusion of knowledge
    and technology continuous process of trying to
    improve health, living conditions, and prosperity
  • Wallersteins World Systems Model
  • N/S Divide (see handout)

Development Varies Across Space
  • Dev can be broken into econ, social, or
    demographic factors
  • Human Development Index (HDI) created by UN to
    look at all 3
  • Life exp, educ (literacy rate and amnt of ed),
    income (GDP)
  • Highest possible 1.0 (100)
  • Norway highest - .944
  • U.S. never first, but always high
  • Lowest - sub Sahara Africa (Sierra Leone .275)

Economic Factors of Development
  • GNP and GDP (omits investments abroad)
  • Per capita (divide by population)
  • Annual per capita GDP more than 20,000 in MDCs
    and _at_ 1,000 in LDCs this gap is widening

Economic Factors of Development
  • Types of jobs.
  • Primary activities w/ land fishing, farming
  • Secondary manufacturing, industry
  • Tertiary service
  • Quaternary research and development
    generating/exchanging knowledge (teaching,
    banking, law, accounting, etc.)
  • Quinary high tech scientific research

Types of Jobs/Econ Activities
Economic Factors of Development
  • All countries have all types of econ activities.
    The higher up you go, the more educ required and
    the better pay. MDCs mostly in tertiary or
    higher. LDCs mostly in primary. Semi-periphery
    mostly in secondary.
  • Human Res and productivity increase in MDCs
    (workers produce more w/ less effort).higher
    educ, skilled, machinery and technology

Economic Factors of Development
  • Energy Consumption per capita correlates w/
    technology and dev.
  • MDCs 10X more per capita than LDCs
  • MDCs consume sign more energy than they produce
  • MDCs use coal, natural gas, hydropower
  • LDCs use firewood, dung, peat, and domestic fuels
    to cook and keep warm
  • Wood 60 of fuel use in LDCs and 90 in poorest

Social Indicators of Development
  • MDCs use money for schools, hospitals, that
    provide better educ and healthier longer lives
    this is cyclical b/c better educated and
  • healthier pop can be more productive and make
    more money

Social Indicators of Development
  • Education MDCs have greater quantity and
    quality of educ
  • Student teacher ratio (2X as many students to 1
    teacher in LDC)
  • Literacy Rate (over 95 in MDCs, less than 35 in
  • Avg student attends school 10 yrs in MDC and a
    few yrs in LDCs (varies)

Social Indicators of Development
  • Health
  • MDCs better ratio of people to hospitals,
    doctors, and nurses
  • MDC consume greater calorie consumption. In LDCs
    many get less than daily recommended allowance
  • Different problemsMDCs problems w/ obesity,
    elderly population, etc.

Demographic Indicators of Development
  • Life Expectancy avg if yrs a newborn can
    expect to live (early 40s in LDCs, 70s in MDCs)
  • Infant Mortality die b/f 1st b-day (less than 1
    in MDCs, 10 in LDCs)
  • CBR higher in LDCs but dropping
  • Maternal Mortality Rate sign higher in LDCs

Gender Issues in Development
  • Gender inequality exists in every country
  • Two composite measures to look at

GDI Gender Related Development Index
  • GDI looks at same measure as HDI but to
    highlight disparity betwn men and women
  • Complete equality is 1.0
  • Penalized for greater diff betwn men and women
  • Highest GDIs in Europe and N. America lowest in
    Sub Sahara Africa
  • Even in MDCs womens average income is less than

  • In LDCs women less likely to attend school and
    have lower literacy rates (99/100 women to men in
    MDC high school 60/100 in LDC high schools)
  • (remember this affect on pop growth)
  • Globally women outlive men, but outlive men much
    longer in MDCs than in LDCs (mostly b/c of
    maternal mortality rate)

Gender Empowerment Measure (GEM)
  • Measures econ and political power
  • 4 factors.
  • Income
  • Professional jobs
  • Managerial jobs
  • Elected positions (no country has a natnl
    Congress w/ majority womenhighest in Eur w/ _at_
    30....U.S. has _at_ 15)

  • Every nation has a higher GDI and lower GEM i.e.
    means women possess a greater share of a nations
    resources than power over allocation of those
  • Even in MDCs womens average income is less than

LDCs Obstacles to Development
  • While LDCs have improved, gap betwn MDC and LDC
    has increased.
  • WHY? Circular/cumulative causation process
    where tendency for econ growth are
    self-reinforcing.i.e. it takes money and
    development to foster money and development
  • Solution? LDCs must dev at a faster rate, but
    how? Two prominent options.

Self Sufficiency/Balanced Growth Approach China
and India
  • Country should invest across all sectors of the
    economy and all regions
  • Limit imports (tariffs)
  • Internal businesses encouraged to produce for own
    people not export

Problems w/ Self-Sufficiency Model
  • Protects inefficient businesses in own country
    (protect from international competition, but has
    little incentive to improve quality or lower
  • HUGE govnt bureaucracy to manage econ leads to
    abuse and corruption Govnt red tape

Option Two International Trade Model
  • Develop through international trade (look
    outward). Look outward. Identify a unique econ
    asset and export globally. Use funds and profit
    to finance other development
  • Done in Arabian peninsula and E/SE Asia

W.W. Rostow Dev Model
  • Rostow advocated intnl trade approach with a 5
    step model towards development. He created the
    model in the 1950s and based it on the pathway
    the U.S. and Eur followed
  • Stage 1 Traditional Society country dominated
    by primary econ activities low prod, low tech,
    low per capita income

Rostow Intnl Trade
  • Stage 2 Preconditions to Takeoff preconditions
    to econ dev are commercialization of AG and
    exploitation of raw materials
  • Stage 3 Takeoff foreign investment jump starts
    econ. Rapid growth in a limited number of
    sectors other sectors still dominated by tradntl
    methods. Country uses profits to pour into
    infrastructure (roads, canals, etc.)

Rostow Intnl Trade
  • Stage 4 Drive to Maturity Dev and modern tech
    diffuse to wider variety of the econ. Workers
    become more skilled and specialized
  • Stage 5 high levels of mass consumption and per
    capita income. Shift from heavy industry to
    services and producing consumer goods.

Criticisms of Rostow
  • Not all countries will pass through stages
  • Model doesnt account for.
  • Global politics
  • Colonialism
  • Physical geog
  • War
  • Culture
  • Ethnic conflict
  • All of these may affect progression and cause
    different pathway

Example of INtnl Trade Model
  • 4 Asian Tigers/Dragons S. Korea, Singapore,
    Taiwan, Hong Kong
  • all poor in natural resources
  • Promoted dev by focusing on a handful of econ
    goods (esp clothing and electronics). i.e. find
    comparative advantage produce item for which
    you have the greatest advantages in comparison to
    other countries
  • Low labor allowed them to sell products cheaply
    in MDCs

Map Asia -
  • India China initially self/sufficiency and
    balanced growth model
  • 4 Asian Tigers International Trade Model

  • South Korea
  • Taiwan
  • Hong Kong
  • Singapore

Problems w/ Intnl Trade Model
  • May hinder other LDCs from following this path.
  • 1.) Uneven resource distr many country's niche
    faced lower price on world market (ex Zambia and
    copper world prices for copper have been
  • 2.) Market stagnation market for consumer goods
    slowing down in general

Problems w/ Intnl Trade Model
  • 3.) Increased dependence on MDCs takeoff
    industries force LDCs to decrease production of
    food, clothing, or other necessities for own
  • Conclusion.intntl trade model is widely accepted
    alternative to self-sufficiency model

  • World Bank since 1990 per capita GDP has
    increased more than 4 annually in countries w/
    intnl trade model and less than 1 in countries
    w/ self-sufficiency model

  • 1960-1990..
  • Indias GDP increased by 4/year on self
    sufficiency model
  • Thailands by 8/year (intnl trade)
  • Taiwans by 8/year (intnl trade)
  • S. Koreas by 9 /year (intnl trade)
  • Since 1990s India switched to intnl trade and GDP
    has increased by 6/year

WTO World Trade Organization
  • Est in 1995 promotes intnl trade model. Works
    to decrease barriers to intnl trade by.
  • Eliminating restriction on trade (no tariffs, no
    quotas on imports, no subsidies on exports)
  • Enforcing trade agreements (rules on arguments
    and accusations)

  • Liberal critics say WTO is anti-democratic and
    promotes interests of large, wealthy,
    transnational corp
  • Conservative critics says WTO compromises gov
    of countries b/c it can order changes in
    subsidies, taxes, etc.
  • ALWAYS protestors outside WTO mtgs

for Development??
  • 1.) Loans usually from World Bank or
    International Monetary Fund (both controlled by
  • Together loan _at_ 50 billion/year
  • Idea borrow to improve infrastructure to
    attract businesses/investment
  • Many infrastructure projects fail dont work,
    dont pay off, or businesses still do not come

for Development?
  • (Loans)
  • Debt is greater than annual income in 30
  • Many LDCs cannot even pay interest on loans, much
    less the principal
  • Result.many MDCs becoming more hesitant to
    grant loans

for Development??
  • 2.) Foreign Direct Investment Transnational
    Corporations flow of money and investment from
    one country to another through private
    corporations (increasing trend in late 20th C)
  • BUT only ¼ of foreign investment went from MDC to
    LDC (most goes from MDC to MDC)
  • Of all money from MDC to LDC, ½ of that goes to
    Brazil, China, MX
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