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Industrialization and Economic Development
Transcript of Industrialization and Economic Development
If You Only Learn Eight Things
Industry is based on transportation and labor cost. Weber's least cost theory suggest that a production point must be located within a triangle, with raw materials coming from at least two sources. Weight gaining industries vs. Weight reducing industries
Five main themes of industrial transportation are truck, train, airplane, pipeline, and ship
Basic industries are city-forming industries, whereas nonbasic industries are city-serving industries. Basic industries are the main business in the city
The main factor in determining an area's development is the Human Development Index, which measures life expectancy, literacy, education, and the overall standard of living
The core-periphery describes four ares: the industrial core, upward transition, downward transition, and resource frontier
Sustainable development attempts to improve lives of people w/o depleting resources
Natural resources are either renewable or nonrenewable
The US is the leading consumer of fossil fuels consumer
Location of Industry
The centralization of features of an industry for the mutual benefit of the industry as a whole. EX: The mall.
Manufacturing or warehouse location: Based on agglomeration. Where companies locate themselves near industrial centers.
Cumulative causation: the continued growth due to the positive aspects of the principle itself. EX: the Detroit automotive industry.
Cumulative causation can lead to disadvantages, this is called deglomeration.
Deglomeration of an economy creates too much competition, forcing some bushiness within that industry to relocate or close
Foreign Production of Goods
Maquiladoras: Industry plants located in Mexico that produce goods using inexpensive labor then sell the goods in the US for a high price
Outsourcing of jobs: Unions hate losing jobs to cheaper labor while the consumer benefits from cheap products
This is called new intentional division of labor
Footlose Industry: a company with no allegiance or loyalty to country and can move freely
Transnational Corporations: Large companies that have offices around the world
Ubiquitous: The goal for all companies; when their product is consumed around the world
International division of labor: When individuals specialize in their production, reducing costs
EX: Ford Motor Company
Sweatshops tend to occur in labor intensive communities
Global Industry Zones
There are four primary industrial zones in the world: 1) United States and southeastern Canada; 2) Western Russia and the Ukraine; 3) Central and Western Europe; 4) East Asia
Treaty ports: International ports that must be kept open for international trade. China has 80 treaty ports
Export Process Zones: Zones that export goods made in China efficiently
The Chinese have set up Special Economic Zones (SEZs) that allow foreign companies to locate their headquarters
Entreports: areas where trade goods are brought to be reloaded on other forms of transportation
Four Asian Tigers: Hong Kong, South Korea, Taiwan, and Singapore all experiences economic growth due to industry and exporting to the US
A complementary process where both sides benefit
Baby Tigers: Malaysia, Vietnam, the Philippines, Thailand
United Nations (UN) developed a metric to measure the level of development of every country called the Human Development Index (HDI) which is based on three factors:
Decent standard of living
Long and healthy life
Access to knowledge
Countries group into 4 classes
Level of development ranging from developed (Very High) to developing (Low).
Occurred in the mid-1700s, extension of Enlightenment Era
Steam engine enabled faster and further travel
Used in trains and ships
Began in England
Allowed for mass production
Weber's Least Cost Theory
Alfred Weber: a German economist and socialist who developed a theory to describe industrial location
The fundamental principle is a triangle
The base contains two raw materials necessary for production.
If the product is weight-gaining, the industry need to be located near the market
If the product is weight-reducing, the industry can be closer to the raw materials
Economic Success Factors
Environmental Friendly Activities
You must show that your company treats the environment with respect
Support of politicians in important of company success
You need to sell something that society approves of
Economic Support Base
This includes well trained workers
Site is the internal characteristics of a place based on its physical features
The relationship that a location has with the locations
Industrial and Transportation Factors
Industrial cost: either fixed or variable. Variable costs fluctuate based on volume of the order. Fixed costs do not fluctuate based on the quantity ordered. Most Business prefer variable.
Industry needs low-cost transportation.
Time-space compression is the attempt to increase efficiency of the time in the delivery by diminishing distance.
Distance is a factor in transportation cost, yet it is continuously decreasing
Five primary means of industrial transportation are:
Trucks: Pros:Mobile, efficient. Cons:delays, pollution, fossil fuels, maintenance
Trains: Pros:Haul large cargo further, fuel efficient.Cons:Non-flexible routes
Airplanes: Pros:Fast, accessible. Cons:Expensive delays.
Pipelines: Pros:Safe, efficient. Cons:Limited in transportation, expensive, environment
Ships: Pros:Haul large cargo, cost efficient. Cons:Slow, lack of water ways, weather dependent
Keys To Economic and Industrial Development
Some countries develop faster than others
Industrialization is one of the main components of economic success
Government systems have an impact on economic system. The three main economic systems are:
Capitalism: the process of letting the competitive market determine the price of goods. Based on competition-contains winners and losers
Socialism: government controls basic items in an economy. Some say it provides no incentives for people to work because the government provides social security
Communism: total government control of all prices in a society. According to defectors, communism offers no incentive to a person to succeed.
Break-of-bulk points: Transfer points where cargo is transported by another form of transportation. EX: Train cargo being transported by car to the final destination.
Development Variations in Countries
A Decent Standard of Living
UN measures standard of living based on two functions:
Gross national income (GNI)
Value of the output of goods and services produced in a country annually, including money that leaves and enters the country.
Gross domestic product (GDP) is similar except it doesn’t account for money entering and leaving the country.
Per capita GNI measures average (mean) wealth, not its distribution among citizens.
Purchasing power parity (PPP)
Cost of living adjustment made to the GNI.
A Long and Healthy Life
UN considers good health to be an important measure of development:
Main health indicator contribution to the HDI is life expectancy at birth.
Average life expectancies of a baby
Global average: 70 years
Developed country: 80 years
Developing country: 68 years