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The Cultural Landscape Chapter 12: Services
Services
The regular distribution observed over North America and over other MDCs is not seen in LDCs.
Geographers explain this difference and why the absence of a regular pattern is significant.
The regular pattern of settlement in MDCs reflects where services are provided.
In MDCs the majority of the workers are employed in the tertiary sector of the economy, defined in Chapter 9 as the provision of goods and services to people in exchange for payment.
In contrast, less than 10 percent of the labor force in LDCs provides services.
Everyone needs food for survival.
In LDCs, most people work in the primary sector, growing food.
In MDCs, people purchase food at supermarkets or restaurants.
The people employed at the supermarkets and restaurants are examples of service-sector workers, and the customers pay for the food with money earned in other service-sector jobs, such as retailing, banking, law, education, and government.
In MDCs, most people work in such places as shops, offices, restaurants, universities, and hospitals.
These are examples of the tertiary or service sector of the economy.
A service is any activity that fulfills a human want or need and returns money to those who provide it.
A smaller number of people work in factories or farms, the primary and secondary sectors.
In sorting out where services are distributed in space, geographers see a close link between services and settlements, because services are located in settlements.
A settlement is a permanent collection of buildings where people reside, work, and obtain services.
Settlements range in size from tiny rural villages with barely a hundred inhabitants to teeming cities with 20 million people.
They occupy a very small percentage of Earth's surface, well under 1 percent, but settlements are home to nearly all humans, because few people live in isolation.
Explaining why services are clustered in settlements is at one level straightforward for geographers.
In geographic terms, only one locational factor is critical for a service—proximity to the market.
The optimal location of industry, described in the last chapter, requires balancing a number of site and situation factors, but the optimal location for a service is simply near its customers.
On the other hand, locating a service calls for far more precise geographic skills than locating a factory.
The optimal location for a factory may be an area of several hundred square kilometers—such as Honda's factory—whereas the optimal location for a service may be a very specific place, such as a street corner.
Service providers often say that the three critical factors in selecting a suitable site are "location, location, and location."
Although geographically imprecise, the expression is a way for nongeographers to appreciate that a successful service must carefully select its precise location.
Industries can locate in remote areas, confident that workers, water, and highways will be brought to the location if necessary.
The distribution of services must follow to a large extent the distribution of where people live, within a city, country, or world region.
However, if services were located merely where people lived, then China and India would have the most, rather than the United States and other MDCs.
Services cluster in MDCs because more people able to buy services live there.
Within MDCs, larger cities offer a larger scale of services than do small towns, because more customers reside there.
As in other economic and cultural features, geographers observe trends toward both globalization and local diversity in the distribution of services.
In terms of globalization, the provision of services is increasingly uniform from one urban settlement to another, especially within MDCs.
Every urban settlement in the United States above a certain size has a branch of a large retail chain, such as a McDonald's restaurant, and the larger cities have several.
In England, every city above a certain size has a Tesco supermarket, and the larger cities have several.
In an MDC, the demand for many types of services produces regular connections among settlements.
Despite the strong globalization trend so clearly visible on the landscape, local diversity is alive and well in the provision of services.
Within MDCs, fast-food restaurants may be located in every settlement, but other services cluster in particular locations.
A settlement may offer a service such as a medical clinic, an advertising agency, or a film studio not found in other settlements of comparable size.
And every place—MDCs and LDCs alike—offers distinctive services that attract tourists and visitors.
KEY ISSUE 1 - Where Did Services Originate?
Services are provided in all societies, but in MDCs a majority of workers are engaged in the provision of services.
In North America, three-fourths of workers are in services.
The percentage of service workers varies widely in LDCs but is typically less than one-fourth.
One reason for the wide variation is that in a number of LDCs, workers engaged in agriculture or manufacturing are counted in the service sector because they are employed by the government.
Three Types of Services
Services generate more than two-thirds of GDP in most MDCs, compared to less than one-half in most LDCs.
Logically, the distribution of service workers is opposite that of the percentage of primary workers.
The service sector of the economy is subdivided into three types—consumer services, business services, and public services. Each of these sectors is divided into several major subsectors.
Consumer Services
The principal purpose of consumer services is to provide services to individual consumers who desire them and can afford to pay for them.
Around 44 percent of all jobs in the United States are in consumer services. Four main types of consumer services are retail, education, health, and leisure.
Retail and Wholesale Services. About 15 percent of all U.S. jobs. Department stores, grocers, and motor vehicle sales and service account for nearly one-half of these jobs; another one-fourth are wholesalers who provide merchandise to retailers.
Education Services. About 10 percent of all U.S. jobs. Two-thirds of educators are employed in public schools, the other one-third in private schools. Educators at public schools are counted in public-sector employment.
Health Services. About 12 percent of all U.S. jobs, primarily hospitals, doctors' offices, and nursing homes.
Leisure and Hospitality Services. About 10 percent of all U.S. jobs. Around 70 percent of these jobs are in restaurants and bars; the other 30 percent is divided evenly between lodging and entertainment.
Business Services
The principal purpose of business services is to facilitate other businesses.
Around 24 percent of all jobs in the United States are in business services.
Professional services, financial services, and transportation services are the three main types of business services.
Financial Services. About 6 percent of all U.S. jobs. This sector is often called "FIRE," an acronym for finance, insurance, and real estate. One-half of the financial services jobs are in banks and other financial institutions, one-third in insurance companies, and the remainder in real estate.
Professional Services. About 12 percent of all U.S. jobs. One-half are in technical services, including law, management, accounting, architecture, engineering, design, and consulting. The remaining one-half of this sector is in support services, such as clerical, secretarial, and custodial work.
Transportation and Information Services. About 6 percent of all U.S. jobs. One-half of these services are in transportation, primarily trucking. The other half are in information services such as publishing and broadcasting, as well as utilities such as water and electricity.
Public Services
The purpose of public services is to provide security and protection for citizens and businesses.
About 17 percent of all U.S. jobs are in the public sector.
Nine percent of public school employees are excluded from this total and counted instead under education (consumer) services.
Excluding educators, one-fourth of public-sector employees work for the federal government, one-fourth for one of the 50 state governments, and one-half for the tens of thousands of local governments.
Changes in Number of Employees
All of the growth in employment in the United States has been in services, whereas employment in primary- and secondary-sector activities has declined.
Within business services, jobs expanded most rapidly in professional services (such as engineering, management, and law), data processing, advertising, and temporary employment agencies.
Jobs grew more slowly in finance and transportation services because of improved efficiency—fewer workers are needed to run trains and answer phones, for example.
On the consumer services side, the most rapid increase has been in the provision of health care, including hospital staff, clinics, nursing homes, and home health-care programs.
Other large increases have been recorded in education, entertainment, and recreation.
The share of jobs in retailing has not increased—more stores are opening all the time, but they don't need as many employees as in the past.
Services in Early Rural Settlements
Before the establishment of permanent settlements as service centers, people lived as nomads, migrating in small groups across the landscape in search of food and water.
They gathered wild berries and roots or killed wild animals for food (see Chapter 10).
At some point, groups decided to build permanent settlements.
Several families clustered together in a rural location and obtained food in the surrounding area.
What services would these nomads require?
Why would they establish permanent settlements to provide these services?
No one knows the precise sequence of events through which settlements were established to provide services.
Based on archaeological research, settlements probably originated to provide consumer and public services.
Business services came later.
Early Consumer Services
The earliest permanent settlements may have been established to offer consumer services, specifically places to bury the dead.
Perhaps nomadic groups had rituals honoring the deceased, including ceremonies commemorating the anniversary of a death.
Having established a permanent resting place for the dead, the group might then install priests at the site to perform the service of saying prayers for the deceased.
This would have encouraged the building of structures—places for ceremonies and dwellings.
By the time recorded history began about 5,000 years ago, many settlements existed, and some featured a temple.
In fact, until the invention of skyscrapers in the late nineteenth century, religious buildings were often the tallest structures in a community.
Settlements also may have been places to house families, permitting unburdened males to travel farther and faster in their search for food.
Women kept "home and hearth," making household objects, such as pots, tools, and clothing, as well as educating the children.
These household-based services evolved over thousands of years into schools, libraries, theaters, museums, and other institutions that create and store a group's values and heritage and transmit them from one generation to the next.
People also needed tools, clothing, shelter, containers, fuel, and other material goods.
Settlements therefore became manufacturing centers.
Men gathered the materials needed to make a variety of objects, including stones for tools and weapons, grass for containers and matting, animal hair for clothing, and wood for shelter and heat.
Women used these materials to manufacture household objects and maintain their dwellings.
The variety of consumer services expanded as people began to specialize.
One person could be skilled at repairing tools, another at training horses.
People could then trade these services with one another.
Settlements took on a retail-service function.
Early Public Services
Public services probably followed religious activities into the early permanent settlements.
The group's political leaders also chose to live permanently in the settlement, which may have been located for strategic reasons, to protect the group's land claims.
Everyone in a settlement was vulnerable to attack from other groups, so for protection, some members became soldiers, stationed in the settlement.
The settlement likely was a good base from which the group could defend nearby food sources against competitors.
For defense, the group might surround the settlement with a wall.
Defenders were stationed at small openings or atop the wall, giving them a great advantage over attackers.
Thus settlements became citadels—centers of military power.
Walls proved an extremely effective defense for thousands of years, until warfare was revolutionized by the introduction of gunpowder in Europe in the fourteenth century.
Early Business Services
Everyone in settlements needed food, which was supplied by the group through hunting or gathering.
At some point, someone probably wondered, why not bring in extra food for hard times, such as drought or conflict?
This perhaps was the origin of transportation services.
Not every group had access to the same resources, because of the varied distribution of vegetation, animals, fuelwood, and mineral resources across the landscape.
People brought objects and materials they collected or produced into the settlement and exchanged them for items brought by others.
Settlements became warehousing centers to store the extra food.
The settlement served as neutral ground where several groups could safely come together to trade goods and services.
To facilitate this trade, officials in the settlement provided producer services, such as regulating the terms of transactions, setting fair prices, keeping records, and creating a currency system.
Through centuries of experiments and accidents, residents of early settlements realized that some of the wild vegetation they had gathered could generate food if deliberately placed in the ground and nursed to maturity-in other words, agriculture, as described in Chapter 10.
Over time, settlements became surrounded by fields, where people produced most of their food by planting seeds and raising animals rather than by hunting and gathering.
Services in Early Urban Settlements
Urban settlements date from the beginning of documented history in the Middle East and Asia.
In ancient times, a handful of urban settlements provided business and public services, as well as some consumer services with large market areas.
Virtually all settlements were rural, though, because the economy was based on the agriculture of the surrounding fields.
Services in Ancient Cities
Urban settlements may have originated in Mesopotamia, part of the Fertile Crescent of the Middle East, and diffused at an early date to Egypt, China, and South Asia's Indus Valley.
Or they may have originated independently in each of the four hearths.
In any case, from these four hearths, the concept of urban settlements diffused to the rest of the world.
EARLIEST URBAN SETTLEMENTS.
Among the oldest well-documented urban settlements is Ur in Mesopotamia (present-day Iraq).
Ur, which means "fire," was where Abraham lived prior to his journey to Canaan in approximately 1900 B.C., according to the Bible.
Archaeologists have unearthed ruins in Ur that date from approximately 3000 B.C.
Titris Hoyuk, in present-day Turkey, occupied a 50-hectare (125-acre) site and apparently had a population of about 10,000.
The site is especially well preserved today because after 300 years the settlement was abandoned and never covered by newer buildings.
Recent evidence unearthed at Titris Hoyuk from about 2500 B.C. suggests that early urban settlements were well-planned communities.
Houses were arranged in a regular pattern—walls and streets were apparently laid out first.
Palaces, temples, and other public buildings were placed at the center, and cemeteries were beyond the walls.
Houses varied in size but were of similar design, built around a central courtyard that contained a crypt where some of the family members were buried.
The several cooking areas within the houses indicate that they were apparently occupied by an extended family, and evidence of wine production and weaving has been found in the houses.
ANCIENT ATHENS.
Settlements were first established in the eastern Mediterranean about 2500 B.C.
The oldest include Knossos on the island of Crete, Troy in Asia Miner (Turkey), and Mycenae in Greece.
These settlements were trading centers for the thousands of islands dotting the Aegean Sea and the eastern Mediterranean and provided the government, military protection, and other public services for their surrounding hinterlands.
They were organized into city-states-independent self-governing communities that included the settlement and nearby countryside.
Athens, the largest city-state in ancient Greece, was probably the first city to attain a population of 100,000.
Athens made substantial contributions to the development of culture, philosophy, and other elements of Western civilization, an example of the traditional distinction between urban settlements and rural.
The urban settlements provided not only public services but also a concentration of consumer services, notably cultural activities, not found in smaller settlements.
ANCIENT ROME.
The rise of the Roman Empire encouraged urban settlement.
With much of Europe, North Africa, and Southwest Asia under Roman rule, settlements were established as centers of administrative, military, and other public services, as well as retail and other consumer services.
Trade was encouraged through transportation and utility services, notably construction of many roads and aqueducts, and the security the Roman legions provided.
The city of Rome—the empire's center for administration, commerce, culture, and all other services—grew to at least 250,000 inhabitants, although some claim that the population may have reached a million.
The city's centrality in the empire's communications network was reflected in the old saying "All roads lead to Rome.”
With the fall of the Roman Empire in the fifth century, urban settlements declined.
Their prosperity had rested on trading in the secure environment of imperial Rome.
But with the empire fragmented under hundreds of rulers, trade diminished.
Large urban settlements shrank or were abandoned.
For several hundred years Europe's cultural heritage was preserved largely in monasteries and isolated rural areas.
Services in Medieval Cities
Urban life began to revive in Europe in the eleventh century as feudal lords established new urban settlements.
The lords gave residents charters of rights with which to establish independent cities in exchange for their military service.
Both the lord and the urban residents benefited from this arrangement.
The lord obtained people to defend his territory at less cost than maintaining a standing army.
For their part, urban residents preferred periodic military service to the burden faced by rural serfs, who farmed the lord's land and could keep only a small portion of their own agricultural output.
With their newly won freedom from the relentless burden of rural serfdom, the urban dwellers set about expanding trade.
Surplus from the countryside was brought into the city for sale or exchange, and markets were expanded through trade with other free cities.
The trade among different urban settlements was enhanced by new roads and more use of rivers.
By the fourteenth century, Europe was covered by a dense network of small market towns serving the needs of particular lords.
The largest medieval European urban settlements served as power centers for the lords and church leaders, as well as major market centers.
The most important public services occupied palaces, churches, and other prominent buildings arranged around a central market square.
The tallest and most elaborate structures were usually churches, many of which still dominate the landscape of smaller European towns.
In medieval times, European urban settlements were usually surrounded by walls even though by then cannonballs could destroy them.
Dense and compact within the walls, medieval urban settlements lacked space for construction, so ordinary shops and houses nestled into the side of the walls and the large buildings.
Most of these modest medieval shops and homes, as well as the walls, have been demolished in modern times, with only the massive churches and palaces surviving.
Modern tourists can appreciate the architectural beauty of these medieval churches and palaces, but they do not receive an accurate image of a densely built medieval town.
Most of the world's largest cities were in Asia, not Europe, however, from the collapse of the Roman Empire until the diffusion of the Industrial Revolution across Europe during the nineteenth century.
The five most populous cities in 900 are thought to have included Baghdad (in present-day Iraq), Constantinople (now called Istanbul, in Turkey), Kyoto (in Japan), and Changan and Hangchow (in China).
Beijing (China) competed with Constantinople as the world’s most populous city for several hundred years, until London claimed the distinction during the early 1800s.
Agra (India), Cairo (Egypt), Canton (China), Isfahan (Iran), and Osaka Japan) also ranked among the world’s most populous cities prior to the Industrial Revolution.
KEY ISSUE 2 - Where Are Contemporary Services Located?
Services are clustered in settlements.
Rural settlements are centers for agriculture and provide a small number of services; urban settlements are centers for consumer and business services.
One-half of the people in the world currently live in a rural settlement and the other half in an urban settlement.
Services in Rural Settlements
A clustered rural settlement is a place where a number of families live in close proximity to each other, with fields surrounding the collection of houses and farm buildings.
A dispersed rural settlement, typical of the North American rural landscape, is characterized by farmers living on individual farms isolated from neighbors rather than alongside other farmers in settlements.
Clustered Rural Settlements
A clustered rural settlement typically includes homes, barns, tool sheds, and other farm structures, plus consumer services, such as religious structures, schools, and shops.
A handful of public and business services may also be present in the clustered rural settlement. In common language, such a settlement is called a hamlet or village.
Each person living in a clustered rural settlement is allocated strips of land in the surrounding fields.
The fields must be accessible to the farmers and are thus generally limited to a radius of 1 or 2 kilometers (½ to 1 mile) from the buildings.
The strips of land are allocated in different ways.
In some places, individual farmers own or rent the land.
In other places, the land is owned collectively by the settlement or by a lord, and farmers do not control the choice of crops or use of the output.
Farmers typically own, or have responsibility for, a collection of scattered parcels in several fields.
This pattern of controlling several fragmented parcels of land has encouraged living in a clustered rural settlement to minimize travel time to the various fields.
Traditionally, when the population of a settlement grew too large for the capacity of the surrounding fields, new settlements were established nearby.
This was possible because not all land was under cultivation.
Homes, public buildings, and fields in a clustered rural settlement are arranged according to local cultural and physical characteristics.
Clustered rural settlements are often arranged in one of two types of patterns—circular or linear.
CIRCULAR RURAL SETTLEMENTS.
These comprise a central open space surrounded by structures.
Examples include:
Kraal villages in southern Africa, which have enclosures for livestock in the center, surrounded by a ring of houses.
Gewandorf settlements, once found in rural Germany, which consisted of a core of houses, barns, and churches, encircled by different types of agricultural activities. Small garden plots were located in the first ring surrounding the village, with cultivated land, pastures, and woodlands in successive rings. Von Thiinen observed this circular rural pattern in his landmark agricultural studies of the early nineteenth century.
LINEAR RURAL SETTLEMENTS.
These comprise buildings clustered along a road, river, or dike to facilitate communications.
The fields extend behind the buildings in long, narrow strips.
Long-lot farms can be seen today along the St. Lawrence River in Quebec.
In the French long-lot system, houses were erected along a river, which was the principal water source and means of communication.
Narrow lots from 5 to 100 kilometers deep (3 to 60 miles) were established perpendicular to the river so that each original settler had river access.
This created a linear settlement along the river.
These long, narrow lots eventually were subdivided.
French law required that each son inherit an equal portion of an estate, so the heirs established separate farms in each division.
Roads were constructed inland parallel to the river for access to inland farms.
In this way, a new linear settlement emerged along each road, parallel to the original riverfront settlement.
Clustered Settlements in Colonial America
New England colonists built clustered settlements centered on an open area called a common.
Settlers grouped their homes and public buildings, such as the church and school, around the common.
In addition to their houses, each settler had a home lot of 1 to 5 acres (½ to 2 hectares), which contained a barn, garden, and enclosures for feeding livestock.
Clustered settlements were favored by New England colonists for several reasons:
They typically traveled to the New World in a group. The English government granted an area of land, in New England perhaps 4 to 10 square miles (10 to 25 square kilometers). Members of the group then traveled to America to settle the land, and usually built the settlement near the center or the land grant.
The colonists wanted to live close together to reinforce common cultural and religious values. Most came from the same English village and belonged to the same church. Many of them left England in the 1600s to gain religious freedom. The settlement's leader was often an official of the Puritan Church, and the church played a central role in daily activities.
They clustered their settlements for defense against Indian attacks.
Each villager owned several discontinuous parcels on the periphery of the settlement, to provide the variety of land types needed for different crops.
Beyond the fields, the town held pastures and woodland for the common use of all residents.
Outsiders could obtain land in the settlement only by permission of the town's residents.
Land was not sold, but rather was awarded to an individual after the town's residents felt confident that the recipient would work hard.
Settlements accommodated a growing population by establishing new settlements nearby.
As in the older settlements, the newer ones contained central commons surrounded by houses and public buildings, home lots, and outer fields.
The contemporary New England landscape contains remnants of the old clustered rural settlement pattern.
Many New England towns still have a central common surrounded by the church, school, and various houses.
However, quaint New England towns are little more than picturesque shells of clustered rural settlements, because today's residents work in shops and offices rather than on farms.
Dispersed Rural Settlements
Outside of New England, dispersed rural settlements were more common in the American colonies.
Meanwhile, in New England and in Great Britain clustered rural settlements were converted to a dispersed pattern.
Owning several discontinuous fields around a clustered rural settlement had several disadvantages: Farmers lost time moving between fields, villagers had to build more roads to connect the small lots, and farmers were restricted in what they could plant.
With the introduction of farm machinery, farms operated more efficiently at a larger scale.
DISPERSED RURAL SETTLEMENTS IN THE UNITED STATES.
The Middle Atlantic colonies were settled by more heterogeneous groups than those in New England.
Colonises came from Germany, Holland, Ireland, Scotland, and Sweden, as well as from England.
Most arrived in Middle Atlantic colonies individually rather than as a member of a cohesive religious or cultural group.
Some bought tracts of land from speculators.
Others acquired land directly from individuals who had been given large land grants by the English government, including William Penn (Pennsylvania), Lord Baltimore (Maryland), and Sir George Carteret (the Carolinas).
Dispersed settlement patterns dominated the American Midwest in part because the early settlers came primarily from the Middle Atlantic colonies.
The pioneers crossed the Appalachian Mountains and established dispersed farms on the frontier.
Land was plentiful and cheap, and people bought as much as they could manage.
In New England, a dispersed distribution began to replace clustered settlements in the eighteenth century.
Eventually, people bought, sold, and exchanged land to create large, continuous holdings instead of several isolated pieces.
The clustered rural settlement pattern worked when the population was low, but settlements had no spare land to meet the needs of a population that was growing through natural increase and net in-migration.
A shortage of land eventually forced immigrants and children to strike out alone and claim farmland on the frontier.
In addition, the cultural bonds that had created clustered rural settlements were weakened.
Descendants of the original settlers were less interested in the religious and cultural values that had unified the original immigrants.
DISPERSED RURAL SETTLEMENTS IN GREAT BRITAIN.
To improve agricultural production, a number of European countries converted their rural landscapes from clustered settlements to dispersed patterns.
Dispersed settlements were considered more efficient for agriculture than clustered settlements.
A prominent example was the enclosure movement in Great Britain, between 1750 and 1850.
The British government transformed the rural landscape by consolidating individually owned strips of land surrounding a village into a single large farm, owned by an individual.
When necessary, the government forced people to give up their former holdings.
The enclosure movement brought greater agricultural efficiency, but it destroyed the self-contained world of village life.
Village populations declined drastically as displaced farmers moved to urban settlements.
Because the enclosure movement coincided with the Industrial Revolution, villagers who were displaced from farming moved to urban settlements and became workers in factories and services.
Some villages became the centers of the new, larger farms, but villages that were not centrally located to a new farm's extensive land holdings were abandoned and replaced with entirely new farmsteads at more strategic locations.
As a result, the isolated, dispersed farmstead, unknown in medieval England, is now a common feature of that country's rural landscape.
As recently as 1800, only 3 percent of Earth's population lived in cities, and only one city in the world—Beijing—had more than 1 million inhabitants.
Two centuries later, one-half of the world's people live in cities, and more than 400 of them have at least 1 million inhabitants.
This rapid growth has made it difficult to define the boundaries of cities (see Chapter 13).
Services in Urban Settlements
The population of urban settlements exceeded that of rural settlements for the first time in human history in 2008.
the percentage of people living in urban settlements had increased from 3 percent in 1800 to 6 percent in 1850, 14 percent in 1900, 30 percent in 1950, and 47 percent in 2000.
Differences Between Urban and Rural Settlements
A century ago, social scientists observed striking differences between urban and rural residents.
Louis Wirth argued during the 1930s that an urban dweller follows a different way of life than does a rural dweller.
Thus Wirth defined a city as a permanent settlement that has three characteristics—large size, high population density, and socially heterogeneous people. These characteristics produced differences in the social behavior of urban and rural residents.
LARGE SIZE.
If you live in a rural settlement, you know most of the other inhabitants and may even be related to many of them.
The people with whom you relax are probably the same ones you see in local shops and at church.
In contrast, if you live in an urban settlement, you can know only a small percentage of the other residents.
You meet most of them in specific roles—your supervisor, your lawyer, your supermarket cashier, your electrician.
Most of these relationships are contractual: You are paid wages according to a contract, and you pay others for goods and services.
Consequently, the large size of an urban settlement produces different social relationships than those formed in rural settlements.
HIGH DENSITY.
High density also produces social consequences for urban residents, according to Wirth.
The only way that a large number of people can be supported in a small area is through specialization.
Each person in an urban settlement plays a special role or performs a specific task to allow the complex urban system to function smoothly.
At the same time, high density also encourages people to compete for survival in limited space.
Social groups compete to occupy the same territory, and the stronger group dominates.
This behavior distinguishes an urban settlement from a rural one.
SOCIAL HETEROGENEITY.
The larger the settlement, the greater the variety of people.
A person has greater freedom in an urban settlement than in a rural settlement to pursue an unusual profession, sexual orientation, or cultural interest.
In a rural settlement, unusual actions might be noticed and scorned, but urban residents are more tolerant of diverse social behavior.
Regardless of values and preferences, in a large urban settlement individuals can find people with similar interests.
But, despite the freedom and independence of an urban settlement, people may also feel lonely and isolated.
Residents of a crowded urban settlement often feel that they are surrounded by people who are indifferent and reserved.
Wirth's three-part distinction between urban and rural settlements may still apply in LDCs.
But in MDCs social distinctions between urban and rural residents have blurred.
According to Wirth's definition, nearly everyone in an MDC now is urban.
All but 1 percent of workers in developed societies hold "urban" types of jobs.
Nearly universal ownership of automobiles, telephones, televisions, and other modern communications and transportation has also reduced the differences between urban and rural lifestyles in MDCs.
Almost regardless of where you live in an MDC, you have access to urban jobs, services, culture, and recreation.
Increasing Percentage of People in Cities
The process by which the population of urban settlements grows, known as urbanization, has two dimensions—an increase in the number of people living in cities and an increase in the percentage of people living in cities.
The distinction between the two factors is important because they occur for different reasons and have different global distributions.
A large percentage of people living in urban settlements reflects a country's level of development in MDCs.
About three-fourths of the people live in urban areas, compared to about two-fifths in LDCs.
The major exception to the global pattern is Latin America, where the urban percentage is comparable to the level of MDCs.
The higher percentage of urban residents in MDCs is a consequence of changes in economic structure during the past two centuries—first the Industrial Revolution in the nineteenth century and then the growth of services in the twentieth.
The world map of urban percentages looks very much like the world map of percentage of GDP derived from services.
The percentage of urban dwellers is high in MDCs because over the past 200 years rural residents have migrated from the countryside to work in the factories and services that are concentrated in cities.
The need for fewer farmworkers has pushed people out of rural areas, and rising employment opportunities in manufacturing and services have lured them into urban areas.
Because everyone resides either in an urban settlement or a rural settlement, an increase in the percentage living in urban areas has produced a corresponding decrease in the percentage living in rural areas.
Because the percentage living in urban areas simply cannot increase much more in MDCs, the process of urbanization that began around 1800 has largely ended.
Nearly everyone interested in migrating from rural to urban areas has already done so, leaving those who choose to live in rural areas.
We can now speak of MDCs as being fully urbanized, because the percentage of urban residents is so high.
In recent years in LDCs, the percentage living in cities has risen rapidly because of the migration of rural residents to the cities in search of jobs in manufacturing or services.
As in MDCs, people in LDCs are pushed off the farms by declining opportunities.
However, urban jobs are by no means assured in LDCs experiencing rapid overall population growth.
Increasing Number of People in Cities
MDCs have a higher percentage of urban residents, but LDCs have more of the very large urban settlements.
Eight of the ten most populous cities are currently in LDCs—Buenos Aires, Delhi, Dhaka, Kolkata (Calcutta), Mexico City, Mumbai (Bombay), São Paulo, and Shanghai.
New York and Tokyo are the two large cities in MDCs.
That LDCs dominate the list of largest urban settlements is remarkable because urbanization was once associated with economic development.
In 1800, seven of the world's ten largest cities were in Asia.
In 1900, after diffusion of the Industrial Revolution from Great Britain to today's MDCs, all ten of the world's largest cities were in Europe and North America.
In LDCs, migration from the countryside is fueling half of the increase in population in urban settlements, even though job opportunities may not be available.
The other half results from high natural increase rates; in Africa, the natural increase rate accounts for three-fourths of urban growth.
KEY ISSUE 3 - Why Are Consumer Services Distributed in a Regular Pattern?
Consumer services and business services do not have the same distributions.
Consumer services generally follow a regular pattern based on size of settlements, with larger settlements offering more consumer services than smaller ones.
The next Key Issue will describe how business services cluster in specific settlements, creating a specialized pattern.
Central Place Theory
Selecting the right location for a new shop is probably the single most important factor in the profitability of a consumer service.
Central place theory helps to explain how the most profitable location can be identified.
Central place theory was first proposed in the 1930s by German geographer Walter Christaller, based on his studies of southern Germany.
August Losch in Germany and Brian Berry and others in the United States further developed the concept during the 1950s.
A central place is a market center for the exchange of goods and services by people attracted from the surrounding area.
The central place is so-called because it is centrally located to maximize accessibility.
Central places compete against each other to serve as markets for goods and services for the surrounding region.
According to central place theory, this competition creates a regular pattern of settlements.
Market Area of a Service
The area surrounding a service from which customers are attracted is the market area or hinterland.
A market area is a good example of a nodal region—a region with a core where the characteristic is most intense.
To establish the market area, a circle is drawn around the node of service on a map.
The territory inside the circle is its market area.
Because most people prefer to get services from the nearest location, consumers near the center of the circle obtain services from local establishments.
The closer to the periphery of the circle, the greater is the percentage of consumers who will choose to obtain services from other nodes.
People on the circumference of the market-area circle are equally likely to use the service, or go elsewhere.
The entire United States can be divided into market areas based on the hinterland surrounding the largest urban settlements.
Studies conducted by C. A. Doxiadis, Brian Berry, and the U.S. Department of Commerce allocated the 48 contiguous states to 171 functional regions centered around commuting hubs, which they called "daily urban systems."
To represent market areas in central place theory, geographers draw hexagons around settlements.
(Hexagons represent a compromise between circles and squares.)
Like squares, hexagons nest without gaps.
Although all points along the hexagon are not the same distance from the center, the variation is less than with a square.
Size of Market Area
The market area of every service varies.
To determine the extent of a market area, geographers need two pieces of information about a service—its range and its threshold.
RANGE OF A SERVICE.
How far are you willing to drive for a pizza? To see a doctor for a serious problem? To watch a ball game?
The range is the maximum distance people are willing to travel to use a service.
The range is the radius of the circle (or hexagon) drawn to delineate a service's market area.
People are willing to go only a short distance for everyday consumer services, like groceries.
But they will travel a long distance for other services, such as a concert or ball game.
Thus a convenience store has a small range, whereas an arena has a large range.
In a large urban settlement, for example, the range of a fast-food franchise like McDonald's is roughly 5 kilometers (3 miles); the range of a casual dining chain like Steak'n'Shake is roughly 8 kilometers (5 miles), and an arena has a range of 100 kilometers (60 miles) or more.
As a rule, people tend to go to the nearest available service: someone in the mood for a McDonald's hamburger is likely to go to the nearest McDonald's.
Therefore, the range of a service is irregularly shaped to take in only the area for which the site is closer than competitors' sites.
For example, irregularly shaped circles can be drawn around the location of all Kroger supermarkets in Dayton, Ohio.
The radius of each irregular circle is the range for each store.
The median radius for Kroger supermarkets in Dayton is approximately 2 kilometers (1.2 miles).
Most people go to the nearest provider of a service, but some travel to a more distant location.
Consequently, retailers typically define their range as the maximum distance that three-fourths of their customers are willing to travel.
The range must be modified further because most people think of distance in terms of time, rather than in terms of a linear measure like kilometers or miles.
If you ask people how far they are willing to travel to a restaurant or a baseball game, they are more likely to answer in minutes or hours than in distance.
If the range of a good or service is expressed in travel time, then the irregularly shaped circle must be drawn to acknowledge that travel time varies with road conditions.
"One hour" may translate into traveling 90 kilometers (60 miles) while driving on an expressway but only 50 kilometers (30 miles) driving congested city streets.
THRESHOLD OF A SERVICE.
The second piece of geographic information needed to compute a market area is the threshold, which is the minimum number of people needed to support the service.
Every enterprise has a minimum number of customers required to generate enough sales to make a profit.
So once the range has been determined, a service provider must determine whether a location is suitable by counting the potential customers inside the irregularly shaped circle.
For example, the median threshold needed to support a Kroger supermarket in Dayton is about 30,000 people.
Census data help to determine the population within the circle.
How potential consumers inside the range are counted depends on the product.
Convenience stores and fast-food restaurants appeal to nearly everyone, whereas other goods and services appeal primarily to certain consumer groups.
Movie theaters attract younger people; chiropractors attract older folks.
Poorer people are drawn to thrift stores; wealthier ones might frequent upscale department stores.
Amusement parks attract families with children; nightclubs appeal to singles.
If a good or service appeals to certain customers, then only the type of good or service that appeals to them should be counted inside the range.
Developers of shopping malls, department stores, and large supermarkets may count only higher-income people, perhaps, those whose annual incomes exceed $50,000.
Even though the stores may attract individuals of all incomes, higher-income people are likely to spend more and purchase items that carry higher profit margins for the retailer.
Hence, in the Dayton area, Kroger operates more supermarkets in the south, where higher-income people are clustered, and fewer in the west, a lower-income area.
Market-Area Analysis
Would a convenience store be profitable in your community?
Retailers and other providers of consumer services use market-area analysis to determine if locating in the area would be profitable and where the best location would be within the market area.
Profitability of a Location
The range and threshold together determine whether a good or service can be profitable in a particular location.
Compute the range. You might survey local residents and determine that people are generally willing to travel up to 15 minutes to reach a convenience store.
Compute the threshold. Suppose a convenience store must sell at least $10,000 worth of goods per week to make a profit, and the average customer spends $2 a week. The store needs at least 5,000 customers each week, spending $2 each, to achieve the break-even sales level of $10,000. If the average customer goes to a convenience store once a week, the threshold in this example would be 5,000.
Draw the market area. For a proposed location, draw an irregular circle with a 15-minute travel radius, adjusting the boundaries to account for any competitors. Count the number of people within the irregularly shaped circle. If more than 5,000 people are within the radius, then the threshold may be high enough to justify locating the new convenience store in your community. However, your store may need a larger threshold and range to attract some of the available customers if competitors are located nearby.
Optimal Location Within a Market
If the threshold and range justify the service, the next geographic question is: Where should the service be located within the market area to maximize profit?
According to geographers, the best location is the one that minimizes the distance to the service for the largest number of people.
BEST LOCATION IN A LINEAR SETTLEMENT.
Suppose that you want to establish your hot business idea, Geographers' Pizza, in your community.
Where is the best place to build it?
Assume that you are seeking the optimal location for your business in an elongated community such as Miami Beach, Florida; Atlantic City, New Jersey; or Ocean City, Maryland.
The community has only one major north-south street and a number of short east-west streets that are numbered consecutively.
The best location will be the one that minimizes the distance your van must travel to deliver to all potential customers.
It corresponds to the median, which mathematically is the middle point in any series of observations.
In a linear community such as an Atlantic Ocean resort, the service should be located where half of the customers are to the north and half are to the south.
What if a different number of customers live in each block of the city? What if the buildings are apartments, each housing a different number of families?
To compute the optimal location in these cases, geographers have adapted the gravity model from physics.
The gravity model predicts that the optimal location of a service is directly related to the number of people in the area and inversely related to the distance people must travel to access it.
According to the gravity model, consumer behavior reflects two patterns:
The greater the number of people living in a particular place, the greater is the number of potential customers for a service. A city block or apartment building that contains 100 families will generate more customers than a house containing only one family.
The farther people are from a particular service, the less likely they are to use it. People who live 1 kilometer from a store are more likely to patronize it than people who live 10 kilometers away.
BEST LOCATION IN A NONLINEAR SETTLEMENT.
Most settlements are more complex than a single main street.
Geographers still apply the gravity model to find the best location, following these steps:
Identify a possible site for a new service.
Within the range of the service, identify where every potential user lives.
Measure the distance from the possible site of the new service to every potential user.
Divide each potential user by the distance to the potential site for the service.
Sum all of the results of potential users divided by distances.
Select a second possible location for the new service, and repeat steps 2, 3, 4, and 5.
Compare the results of step 5 for all possible sites. The site with the highest score has the highest potential number of users and is therefore the optimal location for the service.
Hierarchy of Services and Settlements
Small settlements are limited to consumer services that have small thresholds, short ranges, and small market areas, because too few people live in small settlements to support many services.
A large department store or specialty store cannot survive in a small settlement because the minimum number of people needed exceeds the population within range of the settlement.
Larger settlements provide consumer services having larger thresholds, ranges, and market areas.
Neighborhoods within large settlements also provide services having small thresholds and ranges.
Services patronized by a small number of locals can coexist in a neighborhood ("mom-and-pop stores") along with services that attract many from throughout the settlement.
This difference is vividly demonstrated by comparing the yellow pages for a small settlement with those for a major city.
The major city's yellow pages are thick with more services, and diverse headings show widely varied services unavailable in small settlements.
We spend as little time and effort as possible in obtaining consumer services and thus go to the nearest place that fulfills our needs.
There is no point in traveling to a distant department store if the same merchandise is available at a nearby one.
We travel greater distances only if the price is much lower or if the item is unavailable locally.
Nesting of Services and Settlements
According to central place theory, market areas across an MDC would be a series of hexagons of various sizes, unless interrupted by physical features such as mountains and bodies of water.
MDCs have numerous small settlements with small thresholds and ranges, and far fewer large settlements with large thresholds and ranges.
The nesting pattern can be illustrated with overlapping hexagons of different sizes.
Hamlets with very small market areas are represented by the smallest contiguous hexagons.
Larger hexagons represent the market areas of larger settlements and are overlaid on the smaller hexagons, because consumers from smaller settlements shop for some goods and services in larger settlements.
In his original study, Walter Christaller showed that the distances between settlements in southern Germany followed a regular pattern.
He identified seven sizes of settlements (market hamlet, township center, county seat, district city, small state capital, provincial head capital, and regional capital city).
In southern Germany, the smallest (market hamlet) had an average population of 800 and a market area of 45 square kilometers (17 square miles).
The average distance between market hamlets was 7 kilometers (4.4 miles).
The figures were higher for the average settlement at each increasing level in the hierarchy.
Brian Berry has documented a similar hierarchy of settlements in parts of the U.S. Midwest.
The principle of nesting market areas also works at the scale of services within cities.
For example, compare the market areas within Dayton of United Dairy Farmers (UDF) with those of Kroger.
The UDF convenience stores are more numerous than Kroger stores and have smaller thresholds, ranges, and market areas.
Rank-Size Distribution of Settlements
In many MDCs, geographers observe that ranking settlements from largest to smallest (population) produces a regular pattern or hierarchy.
This is the rank-size rule, in which the country's nth-largest settlement is 1/n the population of the largest settlement.
In other words, the second-largest city is one-half the size of the largest, the fourth-largest city is one-fourth the size of the largest, and so on.
When plotted on logarithmic paper, the rank-size distribution forms a fairly straight line.
In the United States and a handful of other countries, the distribution of settlements closely follows the rank-size rule.
If the settlement hierarchy does not graph as a straight line, then the country does not have a rank-size distribution of settlements.
Instead, it may follow the primate city rule, in which the largest settlement has more than twice as many people as the second-ranking settlement.
In this distribution, the country's largest city is called the primate city.
Several primate city distributions exist in Europe:
In Denmark, København (Copenhagen) is a primate city with 1 million inhabitants, whereas the second-largest urban area, Aarhus, has only 200,000, instead of the 500,000 that the rank-size rule predicts.
In the United Kingdom, London has 8 million inhabitants, whereas Birmingham—the second-largest—has only 2 million.
In Romania, the largest city, Bucharest, has 1.9 million inhabitants, and the second-largest, Iasi, has 315,000. Romania also has fewer settlements with population between 1,000 and 10,000 than expected.
The existence of a rank-size distribution of settlements is not merely a mathematical curiosity.
It has a real impact on the quality of life for a country's inhabitants.
A regular hierarchy—as in the United States—indicates that the society is sufficiently wealthy to justify the provision of goods and services to consumers throughout the country.
Conversely, the absence of the rank-size distribution in an LDC indicates that there is not enough wealth in the society to pay for a full variety of services.
The absence of a rank-size distribution constitutes a hardship for people who must travel long distances to reach an urban settlement with shops and such services as hospitals.
Because most people in LDCs do not have cars, buses must be provided to reach larger towns.
A trip to a shop or a doctor that takes a few minutes in the United States could take several hours in an LDC.
Periodic Markets
Services at the lower end of the central place hierarchy may be provided at a periodic market, which is a collection of individual vendors who come together to offer goods and services in a location on specified days.
The periodic market typically is set up in a street or other public space early in the morning, taken down at the end of the day, and set up in another location the next day.
A periodic market provides goods to residents of LDCs as well as rural areas in MDCs, where sparse populations and low incomes produce purchasing power too low to support full-time retailing.
A periodic market makes services available in more villages than would otherwise be possible, at least on a part-time basis.
In urban areas, periodic markets offer residents fresh food brought in that morning from the countryside.
Many of the vendors in periodic markets are mobile, driving their trucks from farm to market, back to the farm to restock then to another market.
Other vendors, especially local residents who cannot or prefer not to travel to other villages, operate on a part-time basis, perhaps only a few times a year.
Other part-time vendors are individuals who are capable of producing only a small quantity of food or handicrafts.
The frequency of periodic markets varies by culture.
Muslim countries: Typically conform to the weekly calendar—once a week in each of six cities and no market on Friday, the Muslim day of rest.
Rural China: A three-city, 10-day cycle of periodic markets according to G. William Skinner. The market operates in central market on days 1, 4, and 7; in a second location on days 2, 5, and 8; in a third location on days 3, 6, and 9; and no market on the tenth day. Three 10-day cycles fit in a lunar month.
Korea: Two 15-day cycles in a lunar month.
Africa: Varies from 3 to 7 days. Variations in the cycle stem from ethnic differences.
KEY ISSUE 4 - Why Do Business Services Cluster in Large Settlements?
Every urban settlement provides consumer services to people in a surrounding area, but not every settlement of a given size has the same number and types of business services.
Business services disproportionately cluster in a handful of urban settlements, and individual settlements specialize in particular business services.
Hierarchy of Business Services
Geographers distinguish four levels of urban settlements according to their importance in the provision of business services.
At the top are a handful of urban settlements known as world cities that play an especially important role in global business services.
World cities, as well as the other three levels, can be further subdivided.
Services in World Cities
World cities are most closely integrated into the global economic system because they are at the center of the flow of information and capital.
Business services, including law, banking, insurance, accounting, and advertising, concentrate in disproportionately large numbers in world cities.
New forms of transportation and communications were expected to reduce the need for clustering of services in large cities.
The telegraph and telephone in the nineteenth century and the computer in the twentieth century made it possible to communicate immediately with coworkers. clients, and customers around the world.
The railroad in the nineteenth century and the motor vehicle and airplane in the twentieth century made it possible to deliver people, inputs, and products quickly.
To some extent, economic activities have decentralized, especially manufacturing, but modern transportation and communications reinforce rather than diminish the primacy of world cities in the global economy.
Transportation services converge on world cities.
They tend to have busy harbors and airports and lie at the junction of rail and highway networks.
BUSINESS SERVICES IN WORLD CITIES.
The clustering of business services in the modern world city is a product of the Industrial Revolution.
Modern industry is managed by large corporations formed to minimize the liability to any individual owner.
A board of directors located far from the factory building makes key decisions concerning what to make, how much to produce, and what prices to charge.
Support staff also far from the factory accounts for the flow of money and materials to and from the factories.
This work is done in offices in world cities.
World cities offer many financial services to these businesses.
As centers for finance, world cities attract the headquarters of the major banks, insurance companies, and specialized financial institutions where corporations obtain and store funds for expansion of production.
Shares of major corporations are bought and sold on the stock exchanges, which are located in world cities.
Obtaining information in a timely manner is essential in order to buy and sell shares at attractive prices.
Lawyers, accountants, and other professionals cluster in world cities to provide advice to major corporations and financial institutions.
Advertising agencies, marketing firms, and other services concerned with style and fashion locate in world cities to help corporations anticipate changes in taste and to help shape those changes.
CONSUMER SERVICES IN WORLD CITIES.
Because of their large size, world cities have retail services with extensive market areas, but they may have even more retailers than large size alone would predict.
A disproportionately large number of wealthy people live in world cities, so luxury and highly specialized products are especially likely to be sold there.
Leisure services of national significance are especially likely to cluster in world cities, in part because they require large thresholds and large ranges in part because of the presence of wealthy patrons.
World cities typically offer the most plays, concerts, operas, nightclubs, restaurants, bars, and professional sporting events.
They contain the largest libraries, museums, and theaters.
London presents more plays than the rest of the United Kingdom combined, and New York has nearly more theaters than the rest of the United States combined.
PUBLIC SERVICES IN WORLD CITIES.
World cities may be centers of national or international political power.
Most are national capitals, so they contain mansions or palaces for the head of state, imposing structures for the national legislature and courts, and offices for the government agencies.
Also clustered in the world cities are offices for groups having business with the government, such as representatives of foreign countries, trade associations, labor unions, and professional organizations.
Unlike other world cities, New York is not a national capital.
But as the home of the world's major international organization, the United Nations, it attracts thousands of diplomats and bureaucrats, as well as employees of organizations with business at the United Nations.
Brussels is a world city because it is the most important center for European Union activities.
Four Levels of Business Services
According to the hierarchy of business services in urban settlements, cities can be divided into four levels of importance:
World Cities. Subdivided into three tiers:
Dominant World Cities. London, New York, and Tokyo. Each is the largest city in one of the three main regions of the more developed world (Europe, North America, and East Asia), as discussed in Chapter 9. The world's most important stock exchanges operate in these three cities, and they come in large concentrations of financial and related business services.
Major World Cities. Chicago, Los Angeles, and Washington in North America, and Brussels, Frankfurt, Paris, and Zurich in Europe. Only two of the nine second-tier world cities—Sao Paulo and Singapore—are in LDCs. Some major corporations and banks have their headquarters in major world cities rather than in one of the three dominant ones.
Secondary World Cities. Four in North America (Houston, Miami, San Francisco, and Toronto), seven in Asia (Bangkok, Bombay, Hong Kong, Manila, Osaka, Seoul, and Taipei), five in Europe (Berlin, Madrid, Milan, Rotterdam, and Vienna), four in Latin America (Buenos Aires, Caracas. Mexico City, and Rio de Janeiro), and one each in Africa (Johannesburg) and Oceania (Sydney).
Command and Control Centers. These contain the headquarters of many large corporations, well-developed banking facilities, and concentrations of other business services, including insurance, accounting, advertising, law, and public relations. Important educational, medical, and public institutions can be found in these command and control centers. Two levels of command and control centers are regional centers and subregional centers.
Specialized Producer-Service Centers. These centers offer a more narrow and highly specialized variety of services. One group of these cities specializes in the management and R&D (research and development) activities related to specific industries, such as motor vehicles in Detroit; steel in Pittsburgh; office equipment in Rochester, New York; and semiconductors in San Jose, California.
Dependent Centers. These provide relatively unskilled jobs and depend for their economic health on decisions made in the world cities, regional command and control centers, and specialized producer-service centers. Four subtypes of dependent centers in the United States include:
Resort, Retirement, and Residential Centers. Clustered in the South and West.
Manufacturing Centers. Clustered in the old northeastern manufacturing belt.
Military Centers. Clustered mostly in the South and West.
Mining Centers. Clustered in mining areas.
Business Services in LDCs
In the global economy, LDCs specialize in two distinctive types of business services:
Offshore financial services
Back-office functions
Offshore Financial Services
Small countries, usually islands and microstates, exploit niches in the circulation of global capital by offering offshore financial services.
Offshore centers provide two important functions in the global circulation of capital:
Taxes. Taxes on income, profits, and capital gains are typically low or nonexistent. Companies incorporated in an offshore center also have tax-free status regardless of the nationality of the owners. The United States loses an estimated $70 billion in tax revenue each year because companies operating in the country conceal their assets in offshore tax-havens.
Privacy. Bank secrecy laws can help individuals and businesses evade disclosure in their home countries. People and corporations in litigious professions, such as a doctor or lawyer accused of malpractice or the developer of a collapsed building, can protect some of their assets from lawsuits in offshore centers, as can a wealthy individual who wants to protect assets in a divorce. Creditors cannot reach such assets in bankruptcy hearings. Short statutes of limitation protect offshore accounts from long-term investigation.
The privacy laws and low tax rates in offshore centers can also provide havens to tax dodges and other illegal schemes.
By definition, the extent of illegal activities is unknown and unknowable.
A prominent example is the Cayman Islands, a British crown colony in the Caribbean near Cuba.
The Caymans comprise three main islands and several smaller ones totaling around 260 square kilometers (100 square miles), with 40,000 inhabitants.
Several hundred banks with assets of more than $1 trillion are legally based in the Caymans.
Most of these banks have only a handful of people, if any, actually working in the Caymans.
In the Caymans, it is a crime to discuss confidential business—defined as matters learned on the job—in public.
Assets placed in an offshore center by an individual or corporation in a trust arc not covered by lawsuits originating in the United States, Britain, or other service centers.
To get at those assets, additional lawsuits would have to be filed in the offshore centers, where privacy laws would shield the individual or corporation from undesired disclosures.
Other offshore centers include:
British Dependencies Other Than the Caymans. Including Anguilla, Montserrat, and the British Virgin Islands in the Caribbean; Guernsey/Sark/Alderney, Isle of Man, and Jersey in the English Channel; and Gibraltar, off Spain.
Dependencies of Other Countries. Including Cook Island and Niue, controlled by New Zealand; Aruba and the Netherlands Antilles, controlled by the Netherlands; and the U.S. Virgin Islands.
Independent Island Countries. Including Antigua & Barbuda, Bahamas, Barbados, Dominica, Grenada, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines, and Turks & Caicos in the Caribbean; the Marshall Islands Nauru, Samoa, Tonga, and Vanuatu in the Pacific Ocean; and the Maldives and Seychelles in the Indian Ocean.
Other Independent Countries. Including Andorra, Liechtenstein, and Monaco in Europe; Belize and Panama in Central America; Bahrain in the Middle East; and Liberia in Africa.
Back Offices
The second distinctive type of business service found in peripheral regions is back-office functions, also known as business process outsourcing (BPO).
Typical back-office functions include processing insurance claims, payroll management transcription work, and other routine clerical activities.
Back-office work also includes centers for responding to billing inquiries related to credit cards, shipments, and claims, or technical inquiries related to installation, operation, and repair.
Traditionally, companies housed their back-office staff in the same office building downtown as their management staff, or at least in nearby buildings.
A large percentage of the employees in a downtown bank building, for example, would be responsible for sorting paper checks and deposit slips.
Proximity was considered important to assure close supervision of routine office workers and rapid turnaround of information.
Rising rents downtown have induced many business services to move routine work to lower-rent buildings outside the central business district (CBD).
In most cases. sufficiently low rents can be obtained in buildings in the suburbs or nearby small towns.
However, for many business services, improved telecommunications have eliminated the need for spatial proximity.
Selective LDCs have attracted back offices for two reasons related to labor:
Low Wages. Most back-office workers earn a few thousand dollars per year—higher than wages paid in most other sectors of the economy, but only one-tenth the wages paid for workers performing similar jobs in MDCs. As a result, what is regarded as menial and dead-end work in MDCs may be considered relatively high-status work in LDCs and therefore able to attract better-educated, more motivated employees in the LDCs than would be possible in MDCs.
Ability to Speak English. Many LDCs offer lower wages than MDCs, but only a handful of LDCs possess a large labor force fluent in English. In Asia, countries such as India, Malaysia, and the Philippines have substantial numbers of workers with English-language skills, a legacy of British and American colonial rule. Major multinational companies such as American Express and General Electric have extensive back-office facilities in these countries.
The ability to communicate in English over the telephone is a strategic advantage in competing for back offices with neighboring countries, such as Indonesia and Thailand, where English is less commonly used.
Familiarity with English is an advantage not only for literally answering the telephone but also for gaining a better understanding of the preferences of American consumers through exposure to English-language music, movies, and television.
Workers in back offices are often forced to work late at night, when it's daytime in the United States, peak demand for inquiries.
Many employees must arrive at work early and stay late because they lack their own transportation, so they depend on public transportation, which typically does not operate late at night.
Sleeping and entertainment rooms are provided at work to fill the extra hours.
Economic Base of Settlements
A settlement’s distinctive economic structure derives from its basic industries which export primarily to consumers outside the settlement.
Nonbasic industries are enterprises whose customers live in the same community—essentially, consumer services.
A community's unique collection of basic industries defines its economic base.
A settlement's economic base is important, because exporting by the basic industries brings money into the local economy, thus stimulating the provision of more nonbasic consumer services for the settlement.
New basic industries attract new workers to a settlement, and they bring their families with them.
The settlement then attracts additional consumer services to meet the needs of the new workers and their families.
Thus a new basic industry stimulates establishment of new supermarkets, laundromats, restaurants, and other consumer services.
But a new nonbasic service, such as a supermarket, will not induce construction of new basic industries.
A community’s basic industries can be identified by computing the percentage of the community’s workers employed in different types of businesses.
The percentage of workers employed in a particular industry in a settlement is then compared to the percentage of all workers in the country employed in that industry.
If the percentage is much higher in the local community, then that type of business is a basic economic activity.
Specialization of Cities in Different Services
Settlements in the United States can be classified by their type or basic activity.
Each type of activity has a different spatial distribution.
The concept of basic industries originally referred to manufacturing.
Some communities specialize in durable manufactured goods, such as steel and automobiles, others in nondurable manufactured goods, such as textiles, apparel, food, chemicals, and paper.
Most communities that have an economic base of manufacturing durable goods are clustered between northern Ohio and southeastern Wisconsin, near the southern Great Lakes.
Nondurable manufacturing industries, such as textiles, are clustered in the Southeast, especially in the Carolinas.
Compared to the national average, some settlements have a very high percentage of workers employed in the primary sector, notably mining.
Mining settlements are located near reserves of coal, petroleum, and other resources.
In a post-industrial society, such as the United States, increasingly the basic economic activities are in business, consumer, or public services.
Geographers O hUallachain and Reid have documented examples of settlements that specialize in particular types of services:
Examples of settlements specializing in business services:
General business: Large metropolitan areas, especially Chicago, Los Angeles, New York, and San Francisco
Computing and data processing services: Boston and San Jose
High-tech industries support services: Austin, Orlando, and Raleigh-Durham
Military activity support services: Albuquerque, Colorado Springs, Huntsville, Knoxville, and Norfolk
Management-consulting services: Washington, D.C.
Examples of settlements specializing in consumer services:
Entertainment and recreation: Atlantic City, Las Vegas, and Reno
Medical services: Rochester, Minnesota
Examples of settlements specializing in public services:
State capitals
Large universities
Military bases
Although the population of cities in the South and West has grown more rapidly in recent years, O hUallachain and Reid found that cities in the North and East have expanded their provision of business services more rapidly.
Northern and eastern cities that were once major manufacturing centers have been transformed into business service centers.
These cities have moved more aggressively to restructure their economic bases to offset sharp declines in manufacturing jobs.
Steel was once the most important basic industry of Cleveland and Pittsburgh, but now health services such as hospitals and clinics and medical high-technology research are more important.
Baltimore once depended for its economic base on manufactures of fabricated steel products, such as Bethlehem Steel, General Motors, and Westinghouse.
The city’s principal economic asset was its port, through which raw materials and fabricated products passed.
As these manufacturers declined, the city's economic base turned increasingly to services, taking advantage of its clustering of research-oriented universities, especially in medicine.
The city is trying to become a center for the provision of services in biotechnology.
Distribution of Talent
Individuals possessing special talents are not distributed uniformly among cities.
Some cities have a higher percentage of talented individuals than others.
To some extent, talented individuals are attracted to the cities with the most job opportunities and financial incentives.
But the principal enticement for talented individuals to cluster in some cities more than others is cultural rather than economic, according to research conducted by Richard Florida.
Individuals with special talents gravitate toward cities that offer more cultural diversity.
Talent was measured by Florida as a combination of the percentage of people in the city with college degrees, the percentage employed as scientists or engineers, and the percentage employed as professionals or technicians.
Three measures of cultural diversity were used—the number of cultural facilities per capita, the percentage of gay men, and a “coolness” index.
The "coolness" index, developed by POV Magazine, combined the percentage of population in their 20s, the number of bars and other nightlife places per capita, and the number of art galleries per capita.
A city's gay population was based on census figures for the percentage of households consisting of two adult men.
Two adult men who share a house may not be gay, but Florida assumed that the percentage of men living together who were gay did not vary from one city to another
Florida found a significant positive relationship between the distribution of talent and the distribution of diversity in the largest U.S. cities.
In other words, cities with high cultural diversity tended to have relatively high percentages of talented individuals.
Washington, San Francisco, Boston, and Seattle ranked among the top in both talent and diversity, whereas Las Vegas was near the bottom in both.
Attracting talented individuals is important for a city, because these individuals are responsible for promoting economic innovation.
They are likely to start new businesses and infuse the economy with fresh ideas.