WarmUp What is industrialization What are 3 effects

Warm-Up • What is industrialization? • What are 3 effects of the industrial revolution? 1

Major Economic Classifications 2

Economic sector is dividing the country’s population based upon the economic area in which that population is employed. 3

Economic Sectors Primary Sector Secondary Sector Tertiary Sector Quaternary Sector Quinary Sector • Jobs that revolve around getting raw materials from the Earth. • Ex. • Jobs that deal with processing the raw materials into a finished product of greater value. • Ex. • Services that move, sell, or trade the products made in the secondary sector. • Ex. • Jobs that involve information creation and transfer. • Ex. • Jobs that require the highest level of decision making. • Ex.

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Economic sectors can also be broken down into formal vs informal Formal Market: Ecuador Informal Market: Ecuador

Not reported to the government, no taxes paid. Formal Market: Brazil Informal Market: Brazil

Afghanistan GDP - composition, by sector of origin: agriculture: 20% industry: 25. 6% services: 54. 4% Australia Labor force - by occupation: agriculture: 3. 6% industry: 21. 1% services: 75% (2009 est. ) 8

Primary Sector jobs Specific examples Your Resource What is it used for? Where is it found? How is it extracted? Secondary Sector jobs Specific examples Tertiary Sector jobs Specific examples Quaternary Sector jobs Specific examples 9

Primary Sector Your Resource What is it used for? Direct jobs Specific examples Secondary Sector Direct jobs Specific examples Tertiary Sector Direct jobs Specific examples Quaternary Sector Direct jobs Specific examples Related Jobs (include resource) 10

Resources Available • • • Dairy Corn Iron Ore Wheat Corn Petroleum Livestock (cattle) Softwood Coffee Salmon Sugar cane 11

Industrial Revolution

Industrialization is the process by which economic activities evolved from producing primary goods to factories that mass-produce goods.

Cottage Industries are homebased manufacturers where people manufacture tools and agriculture equipment for their own communities.

The Industrial Revolution was the process of technological change that started in the late 1700 s that transformed how goods were produced and obtained by the people. Began in England: *machines replaced human labor *coal was the leading energy source *improved transportation and infrastructure Brought on the commodification of labor

Great Britain Diffusion of the Industrial Revolution Belgium/France (late 1700 s) The United States (1790 s) Most of Europe came late to the party because of revolution and strife (ie. French Revolution, Napoleonic Wars) Italy, Netherlands, Russia, Sweden (late 1800 s) The United States entered the IR later than Belgium and France but expanded more rapidly. The Middle East and Africa entered the IR because of WWI and the need for oil. Asia, Middle East and Africa (Mid 20 th Century)

Infrastructure includes services that support economic activities. It provides for transportation, communication, education, and other external needs of a company.

Four Primary Industrial Zones NIC’s – New Industrial Countries Northeastern US & South Canada Western Russia & Ukraine Central & Western Europe East Asia (4 Tigers) & Japan, China

The Rust Belt Deindustrialization: industrial facilities leave an area, taking the economic base with them

New International Division of Labor – Breaks up the manufacturing process by having various pieces of a product made in various countries and then assembling the pieces in another country Southeast Asia Northern Africa Secondary Industrial Regions Mexico Brazil

Weber’s Least Cost Theory

Alfred Weber’s Least Cost Theory is a theory that explains the location of industries based on where cost are the least.

Assumptions of his theory • UNIFORMITY - An area is completely uniform physically, politically, culturally, & technologically • ONE PRODUCT/MARKET - Manufacturing involves a single product to be shipped to a single market whose location is known • RAW MATERIALS FROM MULTIPLE LOCATIONS Inputs involve raw materials from more than one known source location. • INFINITE /IMMOBILE LABOR - Labor is infinitely available but immobile in location • FIXED TRANSPORTATION ROUTES Transportation routes are not fixed but connect origin & destination by the shortest path; and transport costs directly reflect the weight of items shipped & the distance they are moved.

Transportation: the most important cost - where cost to transport materials and product is lowest Labor: high labor cost reduce profit – where there is a supply of cheap, non-union labor is best Agglomeration: advantages & savings made when industries clump together for mutual advantage Deglomeration: “unclumping” of factories because of negative effects & higher costs associated with industrial overcrowding

Bulk Gaining – Bulk Losing – add weight or bulk during manufacturing process remove weight or bulk during the production process

Bulk Reducing Heavier input, shorter distance to plant • Input Factory (Material Orientation) Lighter output, longer distance to market, • Input Factory Market Lighter input, longer distance to plant. Bulk Gaining (Market Orientation) Heavier output, shorter distance to market

Location Triangle The location triangle is used to determine the best place to locate a manufacturing plant based on Weber’s Model. Resource 2 Market Resource 1 28

Exceptions to the rule • Footloose industries – Not restricted in where they can locate – Maintain the same cost of transportation and production • Substitution principle – Reducing the cost of labor even though an increase in transportation will follow • Agglomeration – Industries clumping together in same space to share benefits and costs of region 29

Related concepts • Locational Interdependence – Industries choose their locations based on where their competitors are. – Ex. • Deglomeration – the unclumping of factories because of the negative effects and higher costs associated with industrial overcrowding – Ex. 30

Related concepts • High-tech corridor and Technopoles – regions where technology and computer industries agglomerate – Ex. • Backwash effect – Negative effects that happen when other areas suffer out migration of talented people to Technopoles – Ex. 31

Rowstow’s Stages of Development

Development • Development – Process of improving material condition of people through technology & knowledge • Liberal development theory – Development is a process through which all countries can move 33

Less Developed Countries are those on the economically poorer side of the spectrum. More Developed Countries are on the wealthier side of the development spectrum.

Models of Economic Development Wallerstein’s World System Analysis 1. Core: High Income High use of technology High % of tertiary activities High levels of Education by the majority of the population OECD countries G 8 2. Semi-Periphery: used to be peripheral states Increased economic development BRICS 3. Periphery: Low Income Low use of technology High % of primary activities Low levels of education by the majority of the population

How MDCs and LDCs Differ: GDP Types of Jobs • $20, 000 in MDC • $1000 in LDC • MDC – Fewer Industrial Jobs • LDC – More Industrial Jobs Consumer Goods • MDCs can afford Consumer goods and have more access to them. Economic development is often accompanied by social development.

Development Gap is the widening difference between development levels in MDCs and LDCs. Dependency Theory argues that LDCs are locked into a cycle of underdevelopment by the global economic system that supports unequal structure.

Core-periphery model states that the world’s countries are divided into three groups: core, periphery, and semi-periphery.

Looks at the world as a capitalistic system of interlocking states connected through competition.

BRICS: Brazil, Russia, India, China South Africa added in 2010 G 8: Top State economies Canada, France, Germany, Italy, U. K. , U. S. (Core) Mexico recently admitted (semi-periphery)

BRICS: Semi-Peripheral States

Rowstow’s Stages of Development seeks to explain and predict countries pattern’s of economic development by explaining five stages which all countries move through as they improve their economic development.

Models of Development Rostow: International Trade Approach

International Trade Approach

Developmentalism • Predicts that all countries will eventually reach the highest level of development (Rostow follows developmentalism) – Criticism: It is not an equal opportunity system, core countries have advantages that peripheral countries do not.

Based on European model of development. Criticisms Does not account for inequities in resources. Considers each country an independent agent.

Warm-Up • Which model of development do you believe is mor accurate (Wallerstien or Rostow). Explain your response! 54

How is Development Measured? 55

Categorizing Development

Categorizing Development • Geographers break down levels of development into 1 st-5 th world countries

1 st World Countries • • Service-Based Economy Free Market High Productivity High Standard of living 1 st World Countries = Blue

2 nd World Countries • Hard-Line Communist Countries • Centrally planned economies

3 rd World Countries • Countries with economies based on Primary activities • Ex. Niger, Haiti

4 th and 5 th World Countries • 4 th World – Third-world countries who have suffered a financial crisis and no longer have a functioning economy Afghanistan • 5 th World. Third world country which lacks BOTH a functioning government and economy Somalia

Women and Development • Women are paid less for equal work in MDCs and LDCs • Women work more hours than men in almost all countries

Women and Development • Gender-Related Development Index (GDI)- Evaluates gender equality by comparing – – Per capita income School enrollment Literacy Life expectancy

Women and Development • Gender Empowerment Measurement (GEM) evaluated geneder equality by comparing – Per capita income – Types of jobs held by women (technical/administrative vs. labor or basic jobs)

Natural Resources and Development • Natural resources have a major impact on the development of a region Dubai

Natural Resources and Development • Core-countries use natural resources more rapidly that peripheral countries • Core-countries are often dependent upon peripheral countries for their natural resources CO 2 Emission

Sustainable Development • Emphasis on conservation of resources for future generations • Requires development of renewable energy sources

How to Measure Development 68

Standard of Living • Measurement of Life Enjoyment which considers: – – Basic Needs being met Access to Technology Education Expendable income

GDP per Capita (per head) • Total number of goods and services produced by a country divided by the total population

GDP Per Capita? • What is the problem with using the GDP per capita for predicting standard of living within a country?

GINI Coefficient • Measures the income disparity between the wealthiest and the poorest in a country (100 is the highest and worst score)

Human Development Index • Developed to gain a predictor of standard of living by evaluating both the productivity of a country and social factors – Economic Factors: GDP per Capita – Social Factors: Literacy Rate, Level of Education, Life Expectancy – Score of 1 is the Highest and Best Score

Human Development Index

Human Development Index • Can you think of any other factors the Human Development Index should consider when ranking standard of living?

Physical Quality of Life Index • Also developed to be a predictor of standard of living by looking at – Literacy Rate – Life Expectancy – Infant Mortality Rate

Physical Quality of Life Index • Can you think of any other factors the Physical Quality of Life Index should consider when ranking standard of living? Do you see any problems with it’s measurement?

HOW TO INCREASE DEVELOPMENT

International Trade • Idea: countries can increase their development by trading with other countries • Major Organizations: (WTO) World Trade Organization

World Trade Organization • Goals: – Reduce barriers to international trade by getting rid of trade restrictions such as tariffs – Allow for easier movement of money between countries – Enforce trade agreements (countries can file a complaint with the WTO if another country violated a trade agreement

Foreign Direct Investment • Idea: Give countries loans, to complete development projects • Major Organizations: World Bank and (IMF) International Monetary Fund

World Bank • Provides loans to countries to complete specific development projects such as strengthening infrastructure, financial institutions, transportation modes, and service projects World Bank Development Timeline

International Monetary Fund • Gives loans to countries who are financially insecure to help stabilize their economy. These loans do not have a specific project specified, the country can choose how to use the loan.

Foreign Development Aid • Aid is not a loan, but a payment of money to help them complete development goals

Globalization 85

Globalization: The increasing economic, cultural, demographic, political, and environmental interdependence of different places around the world.

International Trade : Pushing for a country to identify its unique set of strengths in the world and to channel investments toward building on those strengths

Comparative Advantage When one region is relatively more efficient at producing a particular product compared with other regions.

Agents of Globalization 89

Multinational Corporations (MNC): Business with headquarters in one country (MDC) and production facilities in another countries (LDC)

New International Division of Labor: Breaks up the manufacturing process by having various pieces of a product made in various countries and then assembling the pieces in another country

Special Economic zones: regions that offer tax breaks, eased environmental restrictions, and other incentives to attract foreign business Maquiladora zones – Mexico’s special economic zones on northern borders with US to create jobs for farmers our of work

Maquiladoras • Foreign-owned assembly companies located in the US – Mexico border region • Cheaper labor • Favorable tax breaks • Lax environmental regulations • Close to markets at minimal cost

Maquilladoras Examples of Maquiladoras in Mexico Mercedes Benz BMW Kodak/Verbatim Eberhard-Faber Fisher Price Ford JVC GM Hasbro Hewlett Packard Honda Honeywell, Inc. Hyundai Precision America IBM Mitsubishi Electronics Corp. Type of employment: Worker from Auto Motorola Trim de Mexico S. A. de C. V Nissan Work Schedule: 40 hours per week Philips Samsonite Corporation Daily wage: $8. 29 Samsung Minimum wage (Geographic Area A): Sony Electronics $3. 44 per day Toshiba Wage per hour: $1. 04 Xerox Weekly salary: $58. 09 Discount for union dues (4%): $2. 32 Net pay: $55. 77 Amount leftover per week for clothes, shoes, entertainment and medical attention: $2. 03

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outsourcing • Turning over much of the responsibility for production to independent suppliers • Vertical integration: company owns all phases of production • What does outsourcing mean for the profit of a company? • What does it mean about choosing a location? • http: //www. youtube. com/watch? v=i 5 zg 1 f. G 7 m 88