Oh IndustryIndustrialization and Economic

Development-the past 300 years

IndustrializationThat is the process of economic activities on the earth’s surface evolved from producing basic goods to using factories to mass produce goods for consumption

Industry is Secondary Economic Activities: those that transform raw materials into usable products-useful

Involves advanced sources of energy

Machinery

Specialized labor

Involve both assembly, processing, and distribution

Economic Development

Were talking about improving material conditions of people through diffusion of knowledge but MOSTLY technology

Primary Sector

Secondary Sector

Tertiary Sector

Newly industrializing countries-between MDC and LDC

Compressed Modernity-rapid economic and political change that stabilizes a country (South Korea)

Economic Indicators

Gross Domestic Product and GDP Per Capita20 K for MDCs and 1 K for LDCs

Differences between MDC’s and LDCs

Types of Jobs

Worker Productivity (value added)

Access to Raw Materials

Availability of consumer goods

There are strong correlations between economic development and social development (literacy, education, healthcare)

Manufacturing Value Added

Theories of Economic

DevelopmentModernization (Westernization) Model: to be successful follow model of industrialized nations

Tradition greatest barrier to economic development

Dependency Theory: global poverty is the fault of rich nations and their historical and contemporary exploitation of LDC’s.

Marxism-class theory

Rostow’s Theory:Extension of Modernization

Theory4 Stage Theory

Traditional Stage

Take-off Stage

Drive to Technological Maturity

High Mass Consumption

Modernization Theory encourages LDC’s to control population growth, increase food production, and take advantage of industrial technology.

Wallerstein’s Capitalist World Economy-

Outgrowth of Dependency Theory

Divided by role in global economy (role determined by colonial period dominated by Europeans)

Core Countries-rich nations that fuel world economy-take raw materials from around the world (starbucks coffee commercials)

Countries of the Periphery-poor nations, continue to support rich nations with raw materials, inexpensive labor, market to buy products

Countries of the Semi-Periphery-between poor and rich, still dominated by Core

A Brief History of Industrializtion

Britain-coal-steam engine-textiles-the rest of Europe-mass production-North America-more inventions-New York port

After WWI-industry needs fuel/energy starts exploring periphery for it-America most successful

Location Theory of Industry

Primary Industry-develops around location of natural resources but when transport improves

Secondary Industry-develops without dependence on resource location

Variable costs-energy labor transport less expensive

Friction of distance-costs go up as distance from source increases

Distance decay-industries are more likely to serve markets nearby

Weber’s Least Cost Theory

of location of industryLocation of Industry influenced by 3 factors

Transportation-site chosen partly based on cost of moving raw materials to factory to market

Labor-cheap labor may allow an industry to make up for higher transport costs

Agglomeration-if several industries cluster in a city, they can provide supporting services (truck factory, furniture company, restaurant)

Can backfire and cause deglomeration-exodus from an areas

Locational Interdependence

TheoryDependent on locations of competition

Variable Revenue Analysis-a company’s ability to capture a market that will earn more customers and money than competitors

Ice Cream on the Beach

Worldwide Steel Production 2005

Situation and SiteRemember them?

Situation factors of development: mainly deal with transportation (locate factory as close as possible to buyers and sellers)

Bulk Reducing-copper heavy expensive to transport closer to factory

Bulk Gaining-canned food and beverages, weigh more after processed closer to market

Single Market-clothing cluster near market (buyers)

Situation and SiteRemember them?

Site factors are particular to a specific geographic location and focus on varying costs of land, labor and capital

Climate, land costs, access to cultural or sporting events, labor costs, willingness of banks to invest

Globalizationpatterns and impact of

industrializationFactories are still placed in places that have hard infrastructure (if not some industries may invest because labor is so inexpensive)

Industrial Regions of the World:Primary Industrial Regions (areas w/largest agglomeration-called the Industrial Belt)

Western and Central Europe

Eastern North America

Russia and Ukraine

Eastern Asia (Japan, China, Singapore, South Korea, Hong Kong, Taiwan)

Manufacturing Eastern Europe

and Russia

Manufacturing in North America

Manufacturing in East Asia

Globalization cont.

Secondary Industrial Regions: Venezuela

Argentina

Brazil

South Africa

Nigeria

Coastal Areas of India, Malaysia

Southern Austrialia

Let’s talk about Mexico

The US, Canada, and Mexico have a special relationship that allows for free trade among the three countries called NAFTA North American Free Trade AgreementOn the border between US and Mexico regions called Maquiladora-workers produce goods primarily for US consumers in US based plants

Mexico faces a dilemma-Maquiladora jobs taken elsewhere where labor is even cheaper (Mexico to China)

What about outsourced India?

India has some advantagesGovernment policies encouraging industrialization

Growing urban centers

Hydroelectric potential, coal, iron ore

Large labor force

Midway between Europe and Pacific Rim

Global access to Information TechnologyOutsourcing jobs (call centers)

Tertiary sector growth

Globalization equals global inequality?Industrial Revolution set in motion

global inequality

Increasingly global economy provides challenges for all countries both MDC’s and LDC’s

Challenges for MDC’sTrading Blocs-trade among countries

North America, EU, East Asia

Transnational Corporations and Conglomerate Corporations

Deindustrialization (decreasing manufacturing)

Labor Cost Per Hour MDC’s and LDC’s

Globalization equals global inequality?Challenges for LDC’s

Distance from MarketsInadequate infrastructureCompetition with existing manufacturers in other countries

Transnational corporations set up low cost jobs in LDC’s-keeps global inequalities in place

Industry and the Environment

Coal replaces wood as leading source of energy-

New energy: coal, petroleum and natural gas will run out (fossil fuels)

Fossil Fuel reservesProven-discovered not extracted

Potential-undiscovered

Petroleum is being consumed faster than it is being found

MDC’s with ¼ world’s population consume ¾ world’s fossil fuels

Industry and the Environment

Industrial PollutionAir, H20, Land

Global Warming-reduce ozone layer, world gets hotter

Called the Greenhouse effect

Acid Rain-sulfur dioxide nitrogen released into air by burning fossil fuels

Get into lakes and streams

Sustainable developmentEnvironment cannot sustain industrial demands on it

Current populations should not impair future ones

Possible Solutions to Environmental

ProblemsPrevention-changing governmental policies

Technological change-pollution capturing filters for industrial runoff and recycling of industrial wastes

Alternate energy sources-wind, solar

Mitigation-reduce damage by replacing or cleaning

Compensation-political bodies could compensate companies and industries who are more responsible in practices and business