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Chapter 9 Economic Geography: Manufacturing and Services

9.1 Components of the Space Economy

  • In the economic sphere recognize:

    • Regions of industrial concentration

    • Areas of employment and functional specialization

    • Specific factory sites

    • Store locations

    • Tourist destinations

  • Basic Economic Concepts

    • Intensity of spatial interaction decreases with increasing the separation of places

    • Observed importance of complementarity and transferability in the assessment of resource value and trade potential

9.2 Secondary Activities: Manufacturing

  • Secondary Activities are transforming raw materials into products that can be used to pour iron and steel to produce plastic toys, assembling computer components, or sewing jeans

  • Principles of location

    • Spatially fixed costs

      • They are relatively unaffected no matter where the industry is located within a regional or national setting

    • Spatially variable costs

      • They show significant differences from place to place

  • Locational Decisions in Manufacturing

    • Require multiple spatial scales of analysis

      • International

      • Regional

      • Local/Specific to individual enterprises

    • Power Supply

      • Power supplies with low transferability may serve to attract energy-intensive activities

    • Raw materials

      • All manufactured goods have their origins in the processing of raw materials

    • Labor

      • Labor costs are highly variable across space, increasingly affecting location decisions and industrial development

      • There are 3 important considerations for labor:

        • Price

        • Skill

        • Amount

    • Transportation modes

      • Essential factor of industrial location that it is difficult to isolate its separate role

    • Market

      • Everything is produced to supply a market demand

  • Transportation and location

    • Freight rates

      • Charges made for loading, transporting, and unloading of goods

    • Terminal Costs

      • The charges for paperwork, loading, packing, and unloading of a shipment

    • Break-of-bulk points

      • Sites where goods have to be transferred or transshipped from one carrier to another

  • Industrialization Location Theory

    • Industrial locational decisions are based not on a single factor, but on the interplay of a number of considerations

    • Each type or branch of industry has its own specific set of significant plant siting conditions

  • Contemporary Industrial Location Considerations

    • The behavior of individual firms seeking production sites under competitive market conditions

    • It does not account for the locational behaviors that are uncontrolled by “factors,” directed by national or regional economic development planning goals or influenced by new production technologies and corporate structures

    • Political Considerations

      • Political factors affect the location decision process

    • Agglomeration Economies

      • Are benefits that firms enjoy due to factors outside the firm

    • Just-in-Time and Flexible Production

    • Comparative Advantage, Offshoring, and the New International Division of Labor

      • The capitalist division of labor from individual workers to the economies of entire regions and countries

  • Transnational Corporations (TNCs)

  • Businesses are increasingly stateless and economies borderless as giant transnational corporations (TNCs)

  • There are 3 ways high-tech industries impact the patterns of economic geography

    • High-tech activities are major factors in employment growth, manufacturing output, and the total gross value added (GVA)1 for many individual countries

    • High-tech industries have tended to become regionally concentrated in centers of innovation, frequently forming self-sustaining, highly specialized agglomerations

    • The offshoring of less-skilled production and assembly tasks has spurred the economic development of newly industrializing countries

9.3 High-Technology Manufacturing

  • The old fashion location theories are less effective for explaining the location of high-technology research, development, and manufacturing activities

9.4 World Manufacturing Patterns and Trends

  • Mexico, Brazil, China, and others of the developing world have created industrial regions of international significance

  • Deindustrialization

    • Declining relative share of manufacturing in a nation’s economy

    • Got worse during the past two decades

9.5 Tertiary Activities

  • Tertiary activities consist of business and labor specialties that provide services to the primary and secondary sectors, to the general community, and to individuals

  • Types of Service Activities

    • Tertiary and service are broad and imprecise terms that are not limited to the number of activities

    • Whoever purchases the services, we distinguish between consumer services and producer services

  • Locational Interdependence Theory for Services

    • The locational controls for tertiary enterprises are simpler than those for the manufacturing sector

  • Consumer Services

    • Supply of consumer services must match the spatial distribution of effective demand

    • Tourism

      • The growth of tourism is part of a broader shift

      • The tourism industry has experienced a post-Fordist transition

    • Gambling

      • Fast-growing industry that draws large numbers of tourists and in the process remakes places and local economies

  • Producer Services

    • Specialized activities performed for other businesses

9.6 Services in World Trade

  • Service activities have been major engines of national economic growth

  • They become an increasing factor in international trade flows and economic interdependence

9.1 Components of the Space Economy

  • In the economic sphere recognize:

    • Regions of industrial concentration

    • Areas of employment and functional specialization

    • Specific factory sites

    • Store locations

    • Tourist destinations

  • Basic Economic Concepts

    • Intensity of spatial interaction decreases with increasing the separation of places

    • Observed importance of complementarity and transferability in the assessment of resource value and trade potential

9.2 Secondary Activities: Manufacturing

  • Secondary Activities are transforming raw materials into products that can be used to pour iron and steel to produce plastic toys, assembling computer components, or sewing jeans

  • Principles of location

    • Spatially fixed costs

      • They are relatively unaffected no matter where the industry is located within a regional or national setting

    • Spatially variable costs

      • They show significant differences from place to place

  • Locational Decisions in Manufacturing

    • Require multiple spatial scales of analysis

      • International

      • Regional

      • Local/Specific to individual enterprises

    • Power Supply

      • Power supplies with low transferability may serve to attract energy-intensive activities

    • Raw materials

      • All manufactured goods have their origins in the processing of raw materials

    • Labor

      • Labor costs are highly variable across space, increasingly affecting location decisions and industrial development

      • There are 3 important considerations for labor:

        • Price

        • Skill

        • Amount

    • Transportation modes

      • Essential factor of industrial location that it is difficult to isolate its separate role

    • Market

      • Everything is produced to supply a market demand

  • Transportation and location

    • Freight rates

      • Charges made for loading, transporting, and unloading of goods

    • Terminal Costs

      • The charges for paperwork, loading, packing, and unloading of a shipment

    • Break-of-bulk points

      • Sites where goods have to be transferred or transshipped from one carrier to another

  • Industrialization Location Theory

    • Industrial locational decisions are based not on a single factor, but on the interplay of a number of considerations

    • Each type or branch of industry has its own specific set of significant plant siting conditions

  • Contemporary Industrial Location Considerations

    • The behavior of individual firms seeking production sites under competitive market conditions

    • It does not account for the locational behaviors that are uncontrolled by “factors,” directed by national or regional economic development planning goals or influenced by new production technologies and corporate structures

    • Political Considerations

      • Political factors affect the location decision process

    • Agglomeration Economies

      • Are benefits that firms enjoy due to factors outside the firm

    • Just-in-Time and Flexible Production

    • Comparative Advantage, Offshoring, and the New International Division of Labor

      • The capitalist division of labor from individual workers to the economies of entire regions and countries

  • Transnational Corporations (TNCs)

  • Businesses are increasingly stateless and economies borderless as giant transnational corporations (TNCs)

  • There are 3 ways high-tech industries impact the patterns of economic geography

    • High-tech activities are major factors in employment growth, manufacturing output, and the total gross value added (GVA)1 for many individual countries

    • High-tech industries have tended to become regionally concentrated in centers of innovation, frequently forming self-sustaining, highly specialized agglomerations

    • The offshoring of less-skilled production and assembly tasks has spurred the economic development of newly industrializing countries

9.3 High-Technology Manufacturing

  • The old fashion location theories are less effective for explaining the location of high-technology research, development, and manufacturing activities

9.4 World Manufacturing Patterns and Trends

  • Mexico, Brazil, China, and others of the developing world have created industrial regions of international significance

  • Deindustrialization

    • Declining relative share of manufacturing in a nation’s economy

    • Got worse during the past two decades

9.5 Tertiary Activities

  • Tertiary activities consist of business and labor specialties that provide services to the primary and secondary sectors, to the general community, and to individuals

  • Types of Service Activities

    • Tertiary and service are broad and imprecise terms that are not limited to the number of activities

    • Whoever purchases the services, we distinguish between consumer services and producer services

  • Locational Interdependence Theory for Services

    • The locational controls for tertiary enterprises are simpler than those for the manufacturing sector

  • Consumer Services

    • Supply of consumer services must match the spatial distribution of effective demand

    • Tourism

      • The growth of tourism is part of a broader shift

      • The tourism industry has experienced a post-Fordist transition

    • Gambling

      • Fast-growing industry that draws large numbers of tourists and in the process remakes places and local economies

  • Producer Services

    • Specialized activities performed for other businesses

9.6 Services in World Trade

  • Service activities have been major engines of national economic growth

  • They become an increasing factor in international trade flows and economic interdependence