Review Images #6: Economic Geography
Transcript of Review Images #6: Economic Geography
Review Images #6: Economic Geography
Commodity Chain (Supply Chain)
How Can We Measure The Value of Economic Production?
• Gross National Product (GNP): value of goods and services produced by a country in a year
• Gross Domestic Product (GDP): value of goods and services produced in a country in a year
• Gross National Income (GNI): value of goods and services produced in a country in a year plus net income from other sources
Additional Key Measure of Economic Development:
Labor Force Structure Percent Employed in Primary, Secondary, Tertiary Sectors
Quaternary: information generation & sharing
Quinary: high level decision making
Percent of Labor Force Engaged in Agriculture
Other Statistics We Can Use
and many more …
2016 U.N. HDI
Regional Trends? Outliers?
Single best statistic for measuring standard of living
Shortcomings of GNP, GDP and GNI?
• Only measure formal economy–Do not include subsistence, informal and
illegal (black market) activities• Do not measure true costs of
production (externalities)–Examples: environmental effects, health
effects, working conditions, etc.
Example: Illegal Activities That Are Not Calculated in GDP
Example: Externalities
Example: Externalities
As China develops economically, a wealthier population purchases more cigarettes, which helps the economy in the short run, but will result in increased health care costs in the
future.
Example: Externalities
2013 Garment Factory Collapse 1000+ Died
Why Does Hans Rosling Say “Stop Calling Them
Developing Countries”?
Developed and Developing
Regional Trends? Outliers? Outdated?
Core, Periphery and Semi-Periphery
Global North - Global South“The Brandt Line”
1st, 2nd and 3rd World Countries
Why Is Scale Important?
GDP per capita
Walt Rostow
Economist
U.S. National Security Advisor 1966-1969
Rostow’s Stages of Growth Modelalso called Modernization Model, Take Off Model &
Ladder of Development
– Stage 1: Traditional Society - Subsistence– Stage 2: Preconditions for Take-off - Leadership
embraces modernization– Stage 3: Take-off - Industrialization, urbanization,
technology adoption– Stage 4: Drive to Maturity - Industrial
specialization, technology diffusion, international trade, slowing population growth
– Stage 5: High Mass Consumption - High incomes, diverse production, emphasis on tertiary sector
Neocolonialism
• Political colonialism has ended, economic colonialism continues …–Structuralist theory: economic disparities
are built in to the global economy; can not easily be changed
–Dependency theory: former colonies are still dependent on their former colonial powers
Wallerstein’s World Systems Theory
1. The world economy has one market & a global division of labor.
2. Although the world has multiple states, almost everything takes place within the context of the (a single) world economy.
3. The world economy has a three-tier structure (core, periphery and semi-periphery)
Barriers to Development: Low Standard of Living
Inadequate nutrition, health care, sanitation, drinking water, and lack of access to education. High rates of disease.
Barriers to Development: Foreign Debt
• World Bank & International Monetary Fund (IMF) loan money to developing countries
• Developing countries spend huge amounts of money repaying loans with interest, leaving little money for other development efforts
• Austerity (cost-cutting) measures can create social problems and unrest
Costs of Development: Export Processing Zones or
Free Trade Zones
Millions of people work in EPZs in 100+ countries producing clothes, shoes, electronics & toys
China’s Special Economic Zones (SEZs)
Shenzhen, China
Maquiladoras in Mexico
“Costs” of Development
Environmental Degradation & Desertification
Negative Impacts of Tourism
Uneven Development Within the State
• Government policies may give some producers an advantage over others– Subsidies (payments to producers)
– Import quotas (limits on what can be imported from certain countries)
– Trade agreements (WTO, NAFTA, etc.)• Governments may make investments
that give certain locations an advantage over others– Islands of development
Islands of Development
MicrocreditThe supply of loans, savings and other
financial services to the poor
Non-governmental Organizations (NGOs) Play a Key Role in
Development Efforts• More than 40,000 internationally
– Some have budgets & staff larger than countries!
Industrial Revolution• 1700’s - 1800’s• Began in UK, diffused to Europe, later to U.S.
and rest of world• Manual (hand) labor replaced by machines
– New energy source: burn coal steam– New machines produced textiles (fabrics) & iron– Trade expanded - new canals, roads, railroads &
ships helped transport• Early industrial locations were based on:
access to capital ($), coal fields and ports
World Coal Deposits
Location Theory•Weber’s Least Cost Theory: industry locates
where costs are lowest• Transportation
–Bulk losing industry: if raw materials are bulkier than end product, locate close to raw materials
–Bulk gaining industry: if end product is bulkier than raw materials, locate close to market (consumers)
• Labor–Unskilled: found everywhere–Skilled: more difficult to find
• Agglomeration: cluster together with similar industries to lower common costs
Location Theory: Hotelling
Locational interdependence: Location of Industry A depends on location of Industry B. Goal is profit maximization.
Location Theory: LoschLosch’s Zone of Profitability: businesses will identify a zone where profits outweigh costs
Early Industrial Regions Pre-1950
Western and Central Europe
North America
Manufacturing Belt - now called “Rust Belt”
Russia
East Asia
Fordist vs. Post-Fordist Style Production
• Fordist: production of goods at a single location
• Post-Fordist: production dispersed around the globe
Time-Space CompressionTime and space are “shrunk” by
increasing connectivity (advances in communication &
transportation)
DeindustrializationIndustries move or close
Deindustrialized region must “reinvent itself” and work through a period of high unemployment
Ex.: Bethlehem, PA
Closed steel manufacturing
facility to become multi-million dollar
casino!
From the Rust Belt to the Sunbelt
Sunbelt Has Gained Jobs Due To Relatively Low Labor Costs and Taxes
Read about the Sunbelt:http://geography.about.com/od/specificplacesofinterest/a/sunbelt.htm
Why The Sunbelt?“Industries such as aerospace, defense and oil boomed in the Sun Belt as companies took advantage of the low involvement of labor unions in the south .. and enjoyed the proximity to many U.S. military installations … The oil industry helped propel many southern states such as Texas and Louisiana forward … tourism exploded in Florida and southern California … high tech and new economy industries have been major drivers of growth in California and Texas as well as many other parts of the Sun Belt … More than a third of all Fortune 500 companies today are based in the belt with Texas and California among the top 3 states in the nation.” (New York #2)
Outsourcing and Offshoring
• Outsourcing: moving individual steps of the production process to an outside supplier (subcontracting)
• Offshoring: moving individual steps in the production process out of the home country
Tholon’s Top Cities for Outsourcing
What regional trends and patterns do you see in this
data?
“The Race to the Bottom”
A phrase used to describe the idea that companies are always looking for the cheapest labor. The location of cheap labor can change over time.
China’s Locational Advantage: Manufacturing
Special Economic Zones (SEZs):Regions with special government policies promoting
manufacturing for export
India’s Locational Advantage: Services
Populous, motivated, educated, English-speaking, wired to the world …
Manufacturing Beyond China
“… growing labor supply, improved productivity, increasing affluence, more attention to education and training, increasingly integrated free trade area and economic community …
Newly Industrialized Countries (NICs)
Mexico, Brazil, Turkey, South Africa, India, China, Thailand, Malaysia, Indonesia, Philippines
The 4 Asian Tigers• Focus on exports &
industrialization led to rapid economic growth from 1960’s to 1990’s
• Today:• Hong Kong & Singapore =
financial centers• South Korea & Taiwan =
global manufacturing hubs• All have educated populations
& high savings rates
South Korea, Taiwan, Hong Kong, Singapore
BRICS: Brazil, Russia, India, China, South Africa
Large, fast-growing economies, significantInfluence on regional affairs
MINTs: Mexico, Indonesia, Nigeria, Turkey
Busiest Ports of Call for Container Ships
What regional trends and patterns do you see in this data?
What does this tell us about development?
High Tech Corridors and Technopoles:Centers of R & D, High Tech
Manufacturing
Example: Silicon Valley, California (San Jose) Many more here: http://en.wikipedia.org/wiki/List_of_technology_centers