Economic Geography

New York Stock Exchange

Fiat Factory, Italy

Chemist in Laboratory

OverviewEconomic SectorsChanges in the U.S. and Global

EconomyTrading BlocksEconomic Location Theory

What makes a place developed?

LDCs – Less developed; periphery Lacking infrastructure (roads, clean

water sources, advanced energy technology), industry, healthcare and educational opportunities

MDCs – More developed; core Infrastructure, industry, healthcare

and educational opportunities

Human Development Index (HDI)

Where are high HDIs – in MDCsWhere are low HDIs- in LDCs

The HDI takes:• One Economic Factor (GDP – Gross

Domestic Product)• Two Social Factors (literacy rate and

educational level)• One Demographic Factor (life expectancy)• Used to calculate the level of development

Highest and Fails

Highest: Norway (2009) .971Lowest: Niger (2009) .340LDCs:

30 in Sub-Saharan AfricaMDCs:

Canada and the US

Gender DifferencesGender Empowerment Measure (GEM)

Compares the ability of women and men to participate in economic and political decision making• Lower scores (Africa and Asia)• Higher scores (W. Europe and the US)

Gender Related Development Index (GDI) means that women have more share of resources than in other countries Compares the development of women with that

of both sexes

How did the MDCs/Core World Develop??The History of the Industrial Revolution:- 19th century: 1800s - Begins in EnglandI. 19th Century England- called “The Victorian Age” A) Why England? 1. Natural Resources: -Coal - Iron Ore 2. New inventions:

The History of the Industrial Revolution (19th Century)

cont: a) James Watt-Steam Engine

b) Henry Bessemer – Steel refining Furnace

II. Spread of the Industrial Revolution

- United States: used to refine cotton

The Industrial Revolution in the US.

A) New Inventions in the U.S- Eli Whitney: Cotton gin- Alexander Bell: Telephone- Thomas Edison: light bulb

extra credit: African-American assistant created the filament that makes the light bulb operate

(LewisLattimer)

Levels of Economic Activity

The Industrial Revolution creates levels of economic activity: - Primary -Secondary- Tertiary

Primary Activities

Direct removal of natural resources such as mining, forestry, and agriculture -most important in the LDCs.

Subsistence AgricultureFishing and ForestryMining and Quarrying

Primary ProductsThe percentage of people working in agriculture exceeds 75% in many LDCs of Africa and Asia. In Anglo-America and Western Europe the figure is <5%

Trade in Primary ProductsImportance to

Developing Economies

Danger of Commodity Trade Dependence

Puerto Rico Coffee Plantation

Secondary Activities: Manufacturing

Secondary - Processing and transforming natural resources: steel, textiles, auto assembly. These used to be most important in MDCs, but increasingly important in the semi-periphery (Korea, Mexico, Brazil, Singapore)

Tertiary and Beyond: Services

Provision of services in exchange for payment. Includes retailing, banking, law, education, and government.

Education, R & D, and information technology becoming most important in the postindustrial core regions.

Less-developed countries often focus on tourism.

Services historically were clustered into settlements. Increasingly the most important service centers are massive world cities.

Tertiary and Beyond: Services

Less-developed countries often focus on tourism.

Club Med, The Bahamas

Vendors, Bali

Tertiary and Beyond: Services

Can What Kind of Economic Activities You Have Determine Wealth?

YES!!MDCs have more 2nd and 3rd tier

economic activities (Japan, the US and Europe)

LDCs have more 1st and some 2nd tier economic activities (Latin America, Africa and S.E. Asia) Frontline Video (Coffee) Guatemala

Resources and Technology

Resources affect patterns of development: cultivable land, energy sources, minerals. But changes in technology affect the value of these resources. Also, trade or lack of it can offset lack of resources (Japan) or make them less relevant (Brazil).

Technology Systems: roughly every 50 years since 1790 a new complex of technologies has revolutionized the world economic system and its structure. The most recent of these is the system which includes biotechnology, advanced materials (superconductors, solar power) and information technology.

Which parts of the world benefited from the shift from coal to oil? Which suffered? Which parts of the world will benefit from the inevitable end of our reliance on petroleum and the necessary shift to wind, hydro, tide, or solar power ?

International Trade ModelsRosteau’s Model – Only works with

WESTERN POWERS Doesn’t allow for Imperialism and

exploitation of raw materials FOUR STAGES:

• Rudimentary• Education of the Elite• Beginning of Industry (Textiles)• Beginning of Tertiary Activities• Mass Consumption

Rosteau’s Continued:

Mass Consumption: When markets fall, the countries that

provide goods for mass consumption fall apart (their markets)

If your market relies on ONE thing, what happens when that thing is no longer needed?• The Rust Belt in the US

Flaws in Rosteau’s ModelSome countries only have ONE major (needed)

export The Arab States (Dubai)

Some Countries SKIP Stages – From Rudimentary to Tertiary Activity The FOUR Asian Dragons: Japan (influenced South Korea China (Hong Kong) Singapore Taiwan

Flaws Continued:

Self Efficiancy Doesn’t Work (post-colonial Africa)

• Rwanda

New International Division of Labor

Transnational Companies have been very aggressive in using low-cost labor in LDCs. Seek elimination of trade barriers (Tariffs) No minimum standards in place A “rush” to the bottom? Loss of U.S. jobs - “a great sucking

sound” after NAFTA?

New International Division of Labor

Trading Blocks

International agreements that eliminate barriers to trade within regions: North American Free Trade Agreement

(NAFTA) European Union (EU) Oil Producing and Exporting Countries

(OPEC)Trading OrganizationsInternational agreements that eliminate

barriers to trade among members: World Trade Organization (WTO) for the UN

member nations

Principals of LocationIndustrial Location: Site and Situation

Factors Raw Materials Energy Labor Market Transport

In order to succeed industries must have some comparative advantage in one or more of these factors. Moreover, demand must exist for the product.

Industrial Location: Transport Characteristics (Bulk-Reducing)

Secondary Activities: Manufacturing

Industrial Location: Site and Situation Factors Transport Characteristics (Bulk-

Gaining)

Service Location Theory

•Market Areas - circular or hexagonal area from which customers are drawn.

•Range - maximum distance people will go for a service

•Threshold - minimum # of consumers needed to support the service.

Convenience Store Locations

Service Location Theory

•Market Areas - circular or hexagonal area from which customers are drawn.

•Range - maximum distance people will go for a service

•Threshold - minimum # of consumers needed to support the service.

Grocery Store Locations

Industrial Location: Site and Situation Factors

Labor Supply versus Access to Markets

Woven Cotton Production

East Asian Manufacturing Centers

Why are so many wovens produced in the less developed world?

The industrial centers of Japan, for example, depend on imported raw materials and access to markets via the Pacific.

Great Economists of the 19th CenturyAdam Smith Capitalism: “The Wealth of Nations” - father of modern capitalism - agreed with laissez faire economics and free-market trade - also: Thomas Malthus and David Ricardo

More TheoriesJeremy BenthamUtlitarianism: Do what is best for the greatest group of peopleKarl Marx- “The Communist Manifesto & Das Kapital” - history has been a struggle of the “haves” and the “have nots” - only radical social transformation ation can change the owner-

Marx

can change the owner- ship of the means of production

economic interpretation of history