Chapter 22 Notes

1
Chapter 22 Notes

• Industrial Activity and Geographic Location

2
Economic Geography

• Economic geographers investigate the reasons
  behind the location of an economic activity

3
Location Theory

• An economic activity is categorized according to
• Purpose
• Relationship to natural resources
• Complexity
• Primary, secondary, tertiary, quaternary, quinary
• Location theory attempts to explain the location
  pattern of an economic activity in terms of the
  factors that influence that pattern

4
The Location Decision

• Primary Industries
• Because these deal with the extraction of
  resources, primary industries must be located
  where the resources are

5
The Location Decision

• Secondary Industries
• less dependent on resource location because raw
  materials can be transported to distant locations
  to be converted into manufactured products if
  profits outweigh the costs of transportation

6
The Location Decision

• Establishing a model for the location of a
  secondary industry is difficult because the
  location depends on
• Human behavior and decision making
• Cultural, political and economic factors
• Intuition or whim

7
The Location Decision

• Models must be based on assumptions and economic
  geographers must assume that
• Decision makers are trying to maximize their
  advantages over competitors
• Profit maximization
• Variable costs must be taken into account (energy
  supply, transport expenses, labor costs)

8
The Location Decision

• Alfred Weber 1868-1958
• German
• The Von Thunen of economic geography
• Least Cost Theory
• Accounted for the location of a manufacturing
  plant in terms of the owners desire to maximize
  three costs

9
The Location Decision

• Transportation (most important)
• moving raw materials to factory and finished
  goods to market
• Labor
• High labor costs reduce margin of profit
• current economic boom on Pacific rim
• Agglomeration
• number of similar enterprises clustered in the
  same area
• Shared talents, services and facilities
• when excessive, can lead to high rents, rising
  wages, circulation problems

10
Weber

• Sparked spirited debate among economic
  geographers
• Some argued that Webers model did not adequately
  account for variations in costs over time
• Substitution principle when one cost decreases
  can endure higher costs in another area
• Model suggests that one particular site would be
  optimal but the business could flourish in more
  than one area
• Taxation policies are not accounted for by the
  model

11
Factors of Industrial Location

• Raw Materials
• resources involved in manufacturing
• steel plants along Atlantic seaboard re. iron
  shipped in from Venezuela
• Europes coal and iron ore regions
• Iron smelters built near coal fields
• Japans colonial expansion into E Asia
  dependencies (China/Korea)due to raw materials
  available
• Japans cheap labor allowed them to purchase and
  transport goods from other locales (substitution
  principle)
• European colonization for resources, periphery to
  core

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Factors of Industrial Location

• Labor
• a large, low-wage trainable labor force will
  attract manufacturers
• Japans postwar success based on skills and low
  wages of workforce, low quality high quantity
  initially
• China emerged with large labor force in 80s
• Taiwan and South Korea emerged to challenge Japan
  in mid 90s due to cheap labor
• pre-NAFTA US and Mexico

13
Factors of Industrial Location

• Transportation
• highly developed industrial areas are places that
  are served most effectively by transportation
  facilities
• efficiency
• alternative systems
• container systems
• for most goods, truck is cheaper over shorter
  distances, railroads cheaper over medium
  distances, and ships cheapest over longest
  distances
• must consider loading/unloading, actual
  transportation (cost of transportation increases
  with distance at a decreasing rate), and weight
  and volume

14
Factors of Industrial Location

• Infrastructure
• transportation, telephone, utilities, banks,
  postal, hotel
• China-inadequate local and regional
  infrastructure
• Vietnam-inadequate power, water, transportation

15
Factors of Industrial Location

• Energy
• used to be much more important than it is today
• early British textile mills had to locate near
  water power
• rarely a problem today, except industries needing
  a huge amount of energy--- metal processing and
  chemical industries may locate near hydropower
  (TVA or Pacific Northwest)

16
Other Factors

• agglomeration
• political stability
• receptiveness to investment
• taxation policies
• environmental conditions (Hollywood)