Models and Theories Comparison - Industry Economic Geography Unit Project

Industry/Economic Geography Unit Project Rostow and Wallerstein Models Comparison: Wallerstein and Rostow both created models that can be differentiated and protruded. Wallerstein’s theory basically separated states (countries) into three different categories. Core, Semi-Periphery, and Periphery. The Periphery States are those with low technology, and low education systems. Peripheral countries are dependent on core and semi-periphery countries for capital and have underdeveloped industry. Examples of Periphery states include most of Africa, Chile, and the Arabian Peninsula. Semi-periphery are those that exploit periphery states. These Countries share characteristics of both core and periphery countries. Examples of Semiperiphery states include South Africa, Russia, Israel, Mexico, and China. The last type of state is Core. Core states are states with high technology, lot of military, and exploit semi-periphery and periphery states. A core country is described by a dominant country that exploits the peripheral and semi-peripheral countries for labor and raw materials. Examples of Core countries includes Japan, U.S.A, Canada, and Australia. Rostow on the other hand, created the modernization model which consists of the different economic stages that a country endures. His model is comprised of 5 stages. The first stage is Traditional Society with an economic system primarily based on agriculture. In the second stage Pre-Conditions to Take-off larger markets are reached with manufacturing. The third stage Take-off is where new industries such as textiles is created. The fourth stage is Drive to Maturity where complex industries are created and natural resources are typically used. The final and fifth stage is Age of High Consumption occurs when consumers and governments have excess money to spend. The first two stages: Traditional Society & Pre-conditions for Take-off are often correlated with Periphery States from Wallerstein’s model. The next two stages: Take-off and Drive to Maturity are often correlated to Semi-periphery states. The final stage: Age of High Consumption is correlated to Core states. These theorists are similar and different in many ways. For example, they are similar in a sense that they both describe countries in terms of their economy and economic development. However, they do differentiate because Wallerstein only categorizes economic development but Rostow describes the path to economic meritocracy. Rostow and Nolan Models Comparisons: Richard Nolan’s Stages of Growth Model is primarily based around Information Technology in Business. Nolan’s model consists of six steps. The first stage is Initiation occurs when technology is introduced to the company. The second stage is Contagion and a business enters this stage when the technology that was introduced begins to spread. The third stage is Control, in this stage users attempt to control the technology through data processing. The fourth stage is Integration which happens when technology systems can be linked together allowing for more efÏcient data processing. The fifth stage is Data Administration occurs when people learn to create meaning out of the data they have collected. The last and sixth stage Maturity, happens when people have figured out how to not only gather but also use data efÏciently and effectively and are able to use the data to make future predictions. Nolan’s model is mainly intended and targeted for business, while Rostow’s model is intended meant for economic development of states. Nolan’s model can also be applied to Rostow’s model because information technology is a large part of the economic shift depicted in the Modernization model. The stages Initiation and Contagion occur in the Traditional Society. The Pre-conditions for take-off stage is to the stage of third stage control as Take-off is to the fourth stage of Integration. The age of mass consumption is highly correlated to the final stage called Maturity. Webber and Hotelling Models Comparison: Alfred Webber developed the Least Cost Model. His model is very simple and straightforward. His model states that location of the manufacturer is determined by the distance to transportation/materials, labor, and agglomerations. Businesses (manufacturers) will locate where it cost the least amount of money to produce profit. Ideally the manufacturer will locate somewhere in the middle of all three factors to generate the most profit because the expenses (costs) will be at their lowest. This is especially important to manufacturers that deal with bulkgaining and bulk-reducing industries because they will prioritize the factor of distance to transportation and materials. Harold Hotelling developed the Locational Adjacent Interdependence Theory. This theory basically states that competitors will place their businesses close by to increase competition and therefore increase profit and revenue. His theory suggests competitors, in trying to maximize sales, will seek to constrain each other's territory as much as possible which will therefore lead them to locate adjacent to one another in the middle of their collective customer base. For example, this applies to CVS and Walgreens and most Ice Cream Stores. Hotelling’s and Webber’s models both had similarities and differences. For example, they are similar as they both encourage locating near other companies in the same industry. Webber and Hotelling are different because Hotelling’s model is based for Manufacturers, where Webber’s model is for retailers. Situation Factors: A situation factor is a location factor referring to the transportation of materials to and from a particular factory. There are 3 situation factors: Proximity to Inputs, Proximity to Markets, and Transportation Choices. Proximity to Inputs is its distance to raw materials. Proximity to Inputs is important because if a product that must be produced is made of iron or steel, the manufacturer will locate near to the site where iron or steel is available to lower the transportation costs to get to and back from the material site. The other factor is Proximity to Markets. This factor states that businesses will locate close to the biggest market to make the most profit. This factor is important to companies with bulk-gaining products because they will have a higher out-going transportation cost. The last factor is Transportation Choices. Transportation choices states that a company will locate near the cheapest transportation costs to achieve the most amount of profit and least amount of expenses. For companies that consume large amounts of raw materials or participate in bulk-gaining having access to transportation is vital and crucial. Site Factors: A site factor is a factor that influences the cost of the factors of production primarily inside the manufacturing plant. There are three site factors: Labor, Land, and Capital. Land is important to companies because manufacturing plots need large amounts of land for their factories. Companies want to buy the land for cheapest price. Land can be costly. For example, one Company would pick one area over another area for financial purposes. Labor is a site factor because local labor can be cheap and it will save money for the company. Otherwise a business would have to pay more in order to increase their supply of workers. For example, Nike hires children in other developing countries and they pay them a very small salary to make the most profit. Even though it is not ethical or moral for one to do, the companies do so to make large amount of profit. Capital is the last factor. Capital is a site factor because the machinery and technology used can become very costly. The closer the company can locate to cheap infrastructure the more it helps to lower costs and expenses.