Unit 6 Economic Geography Spring 2012 Vicky Schrimsher

1. Unit 6 Economic Geography Spring 2012 Vicky Schrimsher

2. Industrialization • Primary Economic Activity • farming • Mining (coal, iron ore) • Secondary Economic Activity-turns raw materials into usable products • Potatoes become potato chips or frozen French fries • Coal and iron ore create steel

3. Tertiary Economic Activity- focus on moving, selling, and trading the products made in the primary and secondary sector; also includes financial services, such as banks, carpet cleaning businesses, and fast-food restaurants • Quaternary Economic Activity- involves information creation and transfer; assemble, distribute, and process information; manage other business operations (University research and investment analysis are examples) • Quinary Economic Activity- involves the highest level of decision making like a legislature or president

4. 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?

5. 3 Types of Economic Development • Primary Sector-agriculture, raising animals, fishing, forestry, and mining • Secondary Sector (industry)-refining petroleum, turning metals into tools or automobiles • Tertiary Sector (service)-construction, trade, finance, real estate, private services, government, and transportation

6. MDC-More developed country (core) • LDC- Less developed country (periphery) • NIC- Newly Industrialized Country • Examples: South Korea transformed to an industrialized country in 50 years. This is called compressed modernity. • Example: Mexico beginning in the 1980s do to the oil industry • The Four Tigers

7. Economic Indicators of Development(Measures of Development) • GDP-Gross Domestic Product-total output of goods and services produced in a country during a year • GDP per capita-measure of the average person’s contribution to generating a country’s wealth in a year • Examples- MDCs-exceed $20,000 per capita(person) LDCs- $1,000 per capita

8. Measuring Development Continued… 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 country’s territory. 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.

9. Measures of Development Continued… • Big Mac Index- compares the prices of McDonald’s Big Mac throughout the world; the more expensive the Big Mac the more developed the country • Types of Jobs • MDCs (Core)-few people in the primary sector; more in the tertiary • LDCs (Periphery)-Most in the primary sector • Newly Industrialized (semi-periphery)-all three sectors are represented

10. Measures of Development Continued… • United Nation’s Human Development Index (HDI)-measure of development that can be used to compare the various development levels of regions and countries. There are three factors considered: • Life expectancy • Average educational level • Standard of living (uses GDP as measure) • Worker Productivity • MDCs have access to machines, tools, and equipment • LDCs rely on human and animal power

11. Measures of Development Continued… • Access to raw materials • Availability of Consumer Goods • MDCs have money for essential and nonessential goods Essential Nonessential Food cars Shelter telephones Clothing televisions

12. Social development usually follows economic development. This includes: • Rates of literacy • Formal education • Better health care *Economic development also has an affect on life expectancy, CBR, and CDR

13. 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.

14. Dependency Ratio by Country, 2005 A measure of the number of people under the age of 15 and over the age of 65 that depends on each working-age adult.

15. Liberal vs. Structuralist (Theories) • Liberal development theories claim that development is a process through which all countries can move • Rostow’s Modernization Model • Structuralist development theories are less-developed countries are locked into a vicious cycle of entrenched underdevelopment by a global economic system that supports an unequal structure • Dependency Theory (Wallerstein’s World Systems Theory)

16. Theories of Development • Rostow’s Modernization Theory (Westernization Model) • Countries should follow Great Britain’s path to industrialization • Argues that traditionis the greatest barrier to economic development

17. Pre-conditions to take off

18. Dependency Theory- Wallerstein’s Capitalist World Economy Developed by Wallerstein in 1974; argues that the world is divided into three tiers: Core---Periphery---Semiperiphery

19. Industrial Revolution • The hearth of Industrial Revolution was England, Great Britain in the late 18th century • Economic development is a bi-product of the Industrial Revolution

20. Early British factories were run by water running down slope. This ended when James Watt invented the steam engine • Other inventions- water pumps, railroads, locomotives, smelting of iron, cast iron, steam powered ships, textile industry…

21. Industrialization Through the Early 20th Century • England’s landscape transformed • Cities grew dramatically • Midlands of north central Great Britain had a belt of coalfields that extended from west to east.

22. Mainland Europe’s New Industrial Belt • Extended from France-Belgium-Netherlands-German-Poland

23. Western European countries accessed raw materials from their colonial holdings • Europe had skilled laborers and established trade routes

24. Industrial Revolution in the U.S.A • 1st textile mill was built in Rhode Island in 1791 by Samuel Slater • U.S. protected new industries through embargos (blocked goods from Europe) to help industry grow • Industry flourished in the Northeastern portion of the U.S. from Boston to Washington D.C. • New York became a world port due to skilled labor and a natural harbor to help with break-of bulk.

25. 20th Century Industrialization after World War I • Mid-20th century dependence on coal lessened-areas became dependent on oil and natural gas • Oil Rich Nations Today: Saudi Arabia, Kuwait, Iran, Russia, China, Mexico, Venezuela, and Nigeria • OPEC-Organization of Petroleum Exporting Countries-

26. OPEC Member Countries • Algeria 1969 • Angola 2007 • Ecuador(**) rejoined 2007 • Iran* 1960 • Iraq* 1960 • Kuwait* 1960 • Libya 1962 • Nigeria 1971 • Qatar 1961 • Saudi Arabia* 1960 • United Arab Emirates 1967 • Venezuela* 1960 *founder Members ** Ecuador joined OPEC in 1973, suspended its membership from Dec. 1992-Oct. 2007

27. Economic Terms to Know

28. International trade approach- method of improving a country’s development that pushes the country to identify its unique set of strengths in the world and to channel investment toward building on these strengths. To compete internationally, this approach argues, a country must find out what it can offer the world and capitalize on that good or service.

29. Comparative advantage- ability of a country or place to produce a good or offer a service better than another country can • Japan developed a comparative advantage in high technology products Tokyo is a world city High Tech High School in Japan

30. Evolution of Economic Cores and Peripheries • Location Theory- • Primary Industry-develops around the location of natural resources • Industrial belt of the British Midlands • Secondary Industry-transportation improves and industry is less dependent on resource location • Ex: the growth of London and Paris

31. Location depends on… • Variable Costs • Friction of Distance • Distance Decay

32. Core has primary and secondary industries • Semi-periphery has some industry • Periphery does not have any primary and secondary industries

33. Location Theories For Secondary Industries • Weber’s Least Cost Theory • Transportation (most important consideration) • Labor • Agglomeration (this sometimes leads to deglomeration)

34. Agglomeration-clustering of industries for mutual advantage • Agglomeration economy- factories in the same area can share cost associated with resources such as electrical lines, roads, pollution control, etc, which leads to lower costs for the consumer • High -Tech Corridor- a place where technology and computer industries agglomerate (Silicon Valley, CA) • Technopole- region of high tech agglomeration • Backwash effect- occurs when other regions suffer a drain of resources and talent due to agglomeration in another region

35. Hotelling’s Locational Interdependence Theory • A firm/business’ location decisions is influenced by their competitor’s location Examples: • Ice Cream Vendor • Car dealerships • Fast Food • Hotels

36. Losch’s Model (1967) • Firms will usually try and identify a zone in which a profit can be expected • To the right and left of the zone distance decay will make sales unprofitable • Firms will try and locate in the middle of the zone of profitability

37. Two types of production costs • Situation Factors • Transportation • Manufacturer tries to locate as close to the buyer and seller to cut costs • Bulk-reducing industries-raw materials are heavy and bulky, but finished product weighs less and takes up less room EX: North American Copper • Bulk-gaining industries-cans, bottles, containers, and ingredients are brought to the factory then combined– weight is gained EX: Cars and Soda

38. Site Factors-particular to a geographic area and focus on varying costs of land, labor, and capital EX: Modern factories are located in the suburbs or rural areas, Why? • Land costs in the center city promotes businesses that can locate in skyscrapers • Climate • Cost of labor • Business loans

39. Major Industrial Regions • Western and Central Europe • Eastern North America • Russia and the Ukraine • Eastern Asia

40. Western and Central Europe Blue Banana

41. Western and Central Europe • Experienced industrialization between 18th and 20th centuries A. ECSC-European Coal and Steel Community- EU would eventually evolve from this B. Coal deposits from France to southern Poland -refer to the map on page 371

42. Three manufacturing districts in Germany A. The Ruhr B. Saxony C. Silesia • Germany still ranks among the leading producers of coal and steel.

43. Major Deposits of Fossil Fuels in North America

45. Major Manufacturing Regions of North America Rust Belt

46. North America • Only serious industrial rival to Europe • Coal was the chief fuel for industries A. U.S. coal reserves are among the world’s largest B. Found from the Appalachian Mountains to the Great Plains C. U.S. competes with China as the world’s largest coal producer

47. Steel industry A. Plants built on northeastern seaboard because the U.S. has to ship iron ore in B. Unload iron ore straight into the plant C. Distant ore deposits affected the location of industry in the U.S.

48. U.S. Benefited from the destruction that WWI brought Europe A. Gained political power B. Developed an infrastructure C. Highly trained workforce • The U.S. also gained industrial power after WWII

49. Major Manufacturing Regions of Russia

50. Former Soviet Union • Industrialization focused mainly on Western Russia (near Moscow) • Moscow offered A. Local markets B. Converging transportation routes C. Large labor force D. Strong centrality 3. Nizhni Novgorod became the “Soviet Detroit”