INDUSTRY AND SERVICESChapter 12

Where Did the Industrial Revolution Begin, and How Did It

Diffuse?Industrial Revolution: A series of inventions that brought new uses to known energy sources, new machines to improve efficiencies and enable other new inventions

Beginning of Industrial Revolution

• Began in Great Britain in the middle to late 1700s

• Why Great Britain?– Flow of capital– Second Agricultural Revolution– Mercantilism and cottage industries

– Resources: Coal, iron ore, and water power

Flow of Capital into Europe, 1775

• Textiles: Liverpool, Manchester

• Iron: Birmingham

• Coal mining: Newcastle

Origins of the Industrial Revolution

Diffusion of the Industrial Revolution

• Mainland Europe – Early 1800s– Location criteria:

•Proximity to coal fields•Connection via water to a port•Flow of capital

• Later– Late 1800s – Some regions without coal– Location criteria

•Access to railroad•Flow of capital

Diffusion of the Industrial Revolution

How Do Location Theories Explain

Industrial Location?

Location theory: Predicting where business will or should be located, considering

• Variable costs• Friction of distance

Location Models

Weber’s Model

Manufacturing plants will locate where costs of transportation, labor, and agglomeration are the least

Theory: Least Cost Theory

Hotelling’s Model

Location of an industry cannot be understood without reference to other industries of the same kind

Theory: Locational Interdependence

Losch’s Model

Manufacturing plants choose locations where they can maximize profit

Theory: Zone of Profitability

– • Least Cost Theory (1909) – Alfred Weber’s model – owners of

manufacturing plants seek to minimize three costs: 1) Transportation, 2) labor, and 3) agglomeration (too much can lead to high rents & wages, circulation problems)

– Weight-losing case: final product weighs less than raw mat.s; location = source

– – Weight-gaining case: final product weighs more (or takes more space) than raw mat.s (e.g. addition of water); location = market

– Some argue Weber’s model doesn’t adequately account for variations in costs over time (e.g. taxation, consumer demand)

– Substitution principle – decreases in certain costs can offset increases in others

• Christaller’s Central Place Theory – Revisited

• Distance affects the marketing strategies of enterprises

• Businesses identify one location, possess a monopoly

• Hexagons display a nesting pattern; Christaller’s theory is not as accurate today (diminishing specialization)

– • Harold Hotelling Model (Two dimensional) – Locational interdependence – the location

of industries can’t be understood w/o ref. to the location of other industries of like kind

– Two vendors located on pts. A & C, eventually gravitate toward pt. B (moving from this pt. will only hurt profitability)

– A third vendor complicates this (spatially)

Losch’s Model: Zone of Profitability

Major Industrial Regions of the World Before 1950

• Main determinants– Near raw materials– Transportation

• But…additional needs– Goods and capital– Political circumstances– Economic leadership– Labor costs– Levels of education and training

Western and

Central Europe

Major Deposits of Fossil Fuels in North America

Major Manufacturing Regions of North America

Major Manufacturing Regions of Russia

Major Manufacturing Regions of East Asia

How Has Industrial Production Changed?

• Fordist : Dominant mode of mass production during the twentieth century, with production of consumer goods at a single site

• Post-Fordist : Current mode of production with more flexible production practices – Goods not mass produced– Production accelerated and dispersed around the globe

– Multinational companies that shift production, outsourcing it around the world

Time-Space Compression• Improvements in transportation and communications technologies

• Many places in the world more connected than ever before

Effects of Time-Space Compression

• Just-in-time delivery– Keeping just what is needed for short-term production

– New parts shipped quickly when needed

• Global division of labor: Corporations drawing from labor around the globe for different components of production

New Influences on the Geography of Manufacturing

• Transportation

• Regional and global trade agreements

• Energy

Modern Production

Outsourcing

Moving individual steps in the production process (of a good or a service) to a supplier, who focuses their production and offers a cost savings

Offshore

Outsourced work that is located outside of the country

Where Are the Major Industrial Belts in the World Today, and Why?

• Deindustrialization – A process by which companies move industrial jobs to other regions with cheaper labor

– Period of high unemployment in deindustrialized region

– Goal: Switch to a service economy • Newly industrialized regions

– Pro–free trade laws– Lax environmental regulations

China: Newly Industrialized Country

• Major industrial growth after 1950, in 1960s– State-planned– Focus on:

•Northeast district •Shanghai and Chang district

• Today– Companies that bring production (not the whole company)

– Advantages •Chinese labor •Special economic zones (SEZs)

Geographical Dimensions of the Service Economy

Influences on location• Information technologies • Less tied to energy sources than manufacturing

• Market accessibility more relevant for some and less relevant for others because of telecommunications

• Presence of multinational corporations• Quaternary and quinary economic activities

High-Technology Corridors

• Technology corridor: An area designated by local or state government to benefit from lower taxes and high-technology infrastructure with the goal of providing high-technology jobs to the local population

• Technopole: An area planned for high technology with agglomeration built on a synergy among technological companies