Chapter 1 Economic Geography: An Introduction

1. Chapter 1 Economic Geography:An Introduction • Geographic Perspectives • Economic Geography of the World Economy • Globalization • World Development Problems • Four Major Questions of the World Economy • Political Economies • Geographical Information Systems

2. Geographic Perspectives • Barney Warf’s Style: anything goes • The geographic perspective • Key Point: Why are activities located where they are? Space and time are interdependent • Geographic Perspectives: Fig 1.1, Fig 1.2 Economic space is highly unequal Economic Geography as a field

3. Figure 1.1 Cartogram of GNPAreas are NOT proportional to population Area looks too large

4. Figure 1.2 GDP per capitaHighly variable among countries

5. Geographic Perspectives – Economic Geography • Different paradigms abound in economic geography • Logical positivism, use of scientific method (development of hypotheses, data collection, and development of predictive models • Predominant approach to location theory and models of spatial interaction, representation of spatial structures, based on “homo economicus” – • Other approaches: behavioral, humanist, structuralist, post-structuralist & the “cultural turn”

6. Economic Geography of the World Economy • The global perspective – an interdependent network of people and industries linked in a dynamic system of resource distribution, wealth creation, and power structures • Shifting technologies, geopolitical forces, transportation and IT, culture, environment • Transport & communication cost reductions • Fall of centrally planned economies • Rise of global capital markets • Rise of institutions such as World Bank, IMF, WTO, OPEC, OECD….

7. Figure 1.3 The Global North and the Global South

8. Crude Oil – OPEC & Recent Trends Price Spike $140 Peak $76 9/15/10 2008 2010 now

9. Recent Oil Prices from WTRG.com

10. The 2008 Price Spike In Crude Oil

11. Variations in Economic Structure Gross National Income Source: World Bank (2010) World Development Indicators

12. Global Shares of Population and Gross National Income (2008)

13. Structure of Production (% of GDP) Hollowing of Industry Growing Inequality Decrease in Agriculture, Services Growth

14. The Clark-Fisher Model of Structural Change Services Share of Output Manufacturing Agriculture Time Is This Model Inevitable?

15. Distribution of Gross Domestic Product (%) GDP = Final Sales to Government, Consumers & Investment Why so high & why the decline? Global Increase in Trade Note: 2006 Exports includes services

16. Imports/Exports 2006 ($ billions) The U.S. Share of Services Trade is very high High Income have much stronger trade in services than Low and Middle Income

17. Structure of Merchandise Exports (%)

18. Structure of Merchandise Imports (%)

19. Origin and Destination of Merchandise Exports (%)

20. Globalization • P.9 “processes that make the world, its economic system, and its society more uniform, more integrated, and more interdependent.” Some dispute uniform • Elements: culture, consumption, telecommunications, economy, transnational corporations, investment, labor, services, tourism. Role of IT. • Globalization & Local Diversity

21. Globalization and MNC’s

22. SampleU.S. MNC’s Foreign Revenue

23. FDI in the U.S. – similar diagram could be drawn for any country

24. Another view of FDI

25. World Development Problems • Environmental constraints • The cycle of poverty (Fig 1.9) Low Real Income Unemployment Underemployment Rapid Population Growth Low Level Of Saving Low Level Of Demand Low Output / Productivity Low levels of Investment in Capital deficiency

26. Four Major Questions of the World Economy • What should be produced, at what scale of output, and with what mix of inputs? • How should factors be combined? Labor, capital, resource factors, etc. • Where should production occur? • Who should get output? How should it be divided?

27. The Four Questions for the World Economy

28. Economics – Key Topics • Allocation of Scarce Resources • Markets for Production, Distribution, and Consumption • The Division of Labor • Solving What, How, What Price, What Quantity, and Where Production Takes Place • Types of Economic Systems • Neoclassical versus Behavioral and Structural Approaches

29. Political Economies • Alternative Systems: capitalism, command, and traditional – with systems of power & class that shape output • Capitalist System (Fig 1.11) • Command Economies • Traditional economies • The general demise of command and traditional economies in the face of globalization

30. The Circular Flow in the Capitalist System (set in space and time) (sales) Resource Market (prices) Income from work Goods & Services Labor (production - labor) Households (consumption) (consumption - resources) Businesses & Government (production) Savings & Investment: Capital Markets (sales) Product Market (prices) Goods & Services Goods & Services $ from product market $ to pay for consumption Public Goods: Taxation & Provision

31. Geographical Information Systems • Manifold applications • displaying attributes • Examples in this • figure • Many other layers • possible • Display current patterns • and changes • Integrated with data • from remote sensed • sources with • human system • data bases including • geocoded economic • information

32. Summary and Plan • The chapter plan • Learning objectives at beginning of each chapter • Study questions at end of each chapter • Key terms • Suggested readings • Web sites