World Geography (Economic Development + Service Sector)

Industrial Location Theory - Assumptions about human economic behavior. -”people are economically rational” -Producers and sellers are intent on maximizing profit - Although increasingly challenged, these assumptions still underlie current analyses of the spatial patterns of industry. Least cost industrial location model - Costs as determinant in industrial location decisions - Minimize relative transport, labor, land, etc. Importance of transportation costs - The “balance point” - Material-oriented (bulk-reducing) or market-oriented (bulk-gaining)\ Underlying assumptions of the classical theories altered by… - Post-fordist flexible manufacturing processes - Application of information technology - Increasing flexibility of labor and location - Declining transport costs Agglomeration economies - Geographic concentration of industrial activities is the norm at the local or regional scale - Savings to an individual firm that result from spatial association with other, similar economic activities - Shared infrastructure - Pools of labor, capital, business services Political considerations - Other noneconomic forces also affect the locational decision process - Land use controls - Environmental standards - Incentives Other considerations: - Schools - Culture - More… East Asia - economic development - Transformed the global economy 1970s-90s - China is now the largest exporter in the world - Made possible by largely by state-aided market economics - Focus on export-led growth - Japan promoted just-in-time (JIT) manufacturing. This is as opposed to just-in-case system that had been the system for decades - Reinforces spatial agglomeration tendencies Reduces inventory (space) Innovation in Manufacturing: High-tech - Classical location theories do not explain location of high technology processing and production - Impact of high-tech industries on patterns of economic geography Location Tendencies: Proximity to major universities or research centers and to a large pool of scientific and technical labor skills. Locally available venture capital Areas with favorable quality of life First-quality infrastructure Innovation in Manufacturing: High-tech factors: - Some phases of production may be “footloose” - Globalization through transfer and dispersion of high-tech activities - Seize opportunities for outsourcing and offshoring - Have become global entities because global communications and information technologies make it possible Service Activities: - Services are a major and growing segment of domestic and international economic activity. - Postindustrial economies - Dominance of service sectors, decline of manufacturing employment. Growth of the service sector - Provides services to primary and secondary activities - Provides services to businesses and consumers - Provides services to those who provide services - The service (tertiary) sector is the economic base of North America’s economy, with an expanding quaternary sector. The service sector includes high paying jobs But low-paying jobs are more common Service Activities: Consumer Services - Part of the growth in the tertiary component is statistical rather than functional - Outsourcing of services formerly provided in-house Consumer Services - Location based on demand Business Services - Cleaning and maintenance, accounting and brokerage firms, etc. - Tourism is the most important tertiary sector activity - World’s largest industry in jobs and value generated