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Unit 6 Notes: Industrialization and Development
Industrial Terms & Concepts
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Economy - system of production, consumption, and distribution in a region
Industrialization • Growth of manufacturing activity in an economy
• Leads to decrease in subsistence farmers
Economic Classifications
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Primary Sector - activities revolve around raw materials
• Farming, fishing, mining
Secondary Sector - activities deal with processing raw materials
• Factories
Tertiary Sector - activities involve moving, selling, and trading products
• Bank tellers, fast food workers
Quaternary Sector - activities involve information creation & transfer
• Investment analysts
Quinary Sector - Sub-quaternary
• High-level government research
Diffusion of Industrialization
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Industrial Revolution in 1760’s England
Machine labor replaces human labor
• Coal powered
Assembly-line manufacturing
Emergence of factories & factory cities
Growth of transportation infrastructure
Mechanized farming
1825 - technology spreads to N. America & W. Europe
• Rich coal deposits
1920’s - Automobile factories
Fordist Production Method:
• Build out rather than up
• Division of Labor
Weber’s Least Cost Theory of Industrial Location
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Alfred Weber - German Economist
Predict & Explain where factories choose to locate
Similar to Von Thunen
Consider 2 issues:
• Distance of transportation
• Weight of goods being transported
Weber’s Model
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Based on Assumptions:
• Transportation costs determined by weight of goods being shipped & distance
• Industries are competitive
• Markets are in fixed location
• Labor is not mobile
• Physical & political landscape is uniform
Location based on 4 factors:
• Transportation, Labor, Agglomeration, Deglomeration
Weber’s criticisms
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Does not identify changes in labor forces (age, skills, gender, language)
Transportation costs are not directly proportional to distance
Concepts Related to Weber’s Model
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Weight-Gaining Processes - using raw materials to make a heavier product
• Beverage Bottling
• Locate near place where heavier product will be sold - Market Orientation
Weight-Losing Processes - manufacturing raw materials to make a lighter product
• Paper production
• Locate near raw resource supply - Material Orientation
Footloose Industries - Unrestricted in location
• Spatially fixed costs - cost of transportation & production same regardless of location
Substitution Principle - industry will move for lower labor costs
• Industrial Capital - availability of machines, tools, workers
Agglomeration
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Industries clump together in same geographic space
Alfred Marshall - benefits of agglomeration in England
Shared costs
Agglomeration Economies:
• Positive effects
• Localization Economies - many firms in same industry benefit from clustering
• Urbanization Economies - large populations in urban areas benefit from clustering
High-tech Corridor
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Where technology & computer industries agglomerate
• Silicon Valley
• Technopole
Shared resources: workforce, repair, electrical services
Agglomeration Effects
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Backwash Effects:
• Negative Consequences of agglomeration
• “brain-drain”
Locational Interdependence:
• Industries choose locations based on competition
• Maximizing dominance in a market
Deglomeration:
• “unclumping” of factories
• Too clustered, too crowed = strained resources
MDC v. LDC
• Development - improving material condition of people
Differences
MDCs
LDCs
Challenges
Maintaining Economic Growth
Improving Econonmic Growth
GDP
Greater than $20,000
Less than $1000
Development Rate
Tripled over last decade
Doubled over last decade
Population Increase Rate
Fell by 85%
Fell by 5%
Factors of Development
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GNP - all goods & services owned and produced by a country overseas
• Poor measure of development
Purchasing Power Parity (PPP) - calculating exchange rates
• “apple-to-apple”
Informal Sector - all business transactions not reported to government
• Inexpensive
• Illegal immigrants
Human Development Index (HDI) - measure country’s development level & compare to other regions
• Uses GDP, LE, Education, Literacy Rates
Development Gap
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Widening difference between development levels of MDCs & LDCs
• MDCs > LDCs
North-South Gap:
• Pattern of locating MDCs & LDCs
• Northern Hemisphere - MDCs
• Southern Hemisphere - LDCs
Dependency Theory:
• LDCs locked in cycle of underdevelopment
• Political & economic relations limits LDC
• Colonization - reason for poor countries
Core-Periphery Model
• World’s countries are organized into 3 categories:
1. Core - Industrialized countries
• Highest per-capital income
2. Semi-periphery - newly industrialized countries
• Vast inequalities in standards of living
3. Periphery - LDCs with low industrialization
• Low level of infrastructure, standard of living, per-capita income
Wallerstein’s World System Analysis
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Immanuel Wallerstein - world is capitalist system of interlocking states connected through economic and
political competition
Unequal positions of countries - colonization & exploration
• Lead to exploitation of semi-periphery & periphery
• 3 divisions of nations b/c of competition
Rostow Modernization Model
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1950’s to predict economic development in countries
5 stages of economic development
• MDCs = stages 4 & 5, LDCs = stages 1-3
Investing = development
Stage 1 - Traditional Society (subsistence farming)
Stage 2 - Preconditions for Takeoff (small group initiates innovative takeoff)
Stage 3 - Takeoff (new industries begin rapid growth)
Stage 4 - Drive to Maturity (advanced technology & development)
Stage 5 - High Mass Consumption (service-oriented jobs dominate)
Flaws to Rostow’s Model
• Projections based on Western Europe
• Does not consider structural issues that limit country’s development
• Each country independent - No interlocking
• Does high productive economy lead to high consumption?
Improving Economic Development
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4 different approaches to improve development
Self-Sufficiency:
• reduce gap between rich & poor countries
• under-developed countries provide for their own people
• favors closed economic state
Export-Oriented Approach:
• International trade - under-developed nations identify what they offer
• develop advantage over rest of the world
• Comparative advantage - Let other countries develop
Development Approaches
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Structural Adjustment Approach:
• LDCs receive money/loans from supranational organizations
• requirements attached to loan
• increases privatization
Non-Governmental Organizations Approach:
• NGOs - charities & private organizations
• Doctors w/o Borders
• decrease government spending
Globalization
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Increasing interconnectedness & spatial interaction among governments, cultures, economies
• Originally economic, now cultural & political diffusion
MNC/TNC:
• primary agents of globalization
• conglomerate corporations
Outsourcing:
• take advantage of low labor costs, low tax rates, low cost of land
• Substitution Principle
New Industrial Countries:
• newly industrialized economy & global trade
Asian Tigers
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South Korea, Taiwan, Hong Kong, Singapore
Rapid economic growth in late 20th century
Followed mold of Japan
Pacific Rim economic region
Special Economic Zones
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Foreign Direct Investment - MNC investing in foreign country’s economy
SEZ - regions that offer incentives to attract foreign businesses & investment
Export Processing Zone:
• free-trade zone (no tariffs)
• encourage MDCs to invest in LDCs
Maquiladoras
• SEZ on northern border of Mexico & US
• MNC outsources labor to region for low labor costs
• Mexican govt offers tax breaks to US MNCs
• NAFTA phases out maquiladora program
New International Division of Labor
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Breaks up manufacturing to different countries
Fordist assembly-line production phased out with globalization
More countries involved in production of single produce
Free trade v. Fair Trade:
• Free - MNCs outsource with no regulations
• Fair - oversight of foreign direct investment
Globalization & Environment
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Sustainable Development:
• rate of growth and resource consumption that can be maintained from one generation to another
• Problem - increased production v. scarce resources
• Solution - Conservation?
Ecotourism:
• tourist operations that do as little harm to environment as possible
• Problem - areas being transformed to meet tourist desires v. destruction of local
communities/environments
• Solution - ecotourism = celebrate ecological diversity
Global Warming