The Challenges of Globalization

Important Ideas A.Geographic factors such as landforms, climate, natural resources, areas of human settlement, and infrastructure (technology, communications, transportation routes, and other man-made resources), influence the location of economic activities. B.Changes in climate, resources, and infrastructure can affect the location and pattern of economic activities.

Important Ideas Cont’d C. The management of scarce natural resources poses special problems. D.The distribution of natural resources affects trading patterns. E.Global trading patterns have changed over time. F.Globalization is changing economies around the world today. G.Globalization holds great promise but also provides challenges for the future.

How Geography Influences the Location of Economic Activities There are four types of Productive Resources: – Natural Resources – the resources provided by nature that people use to create goods and services Air Water Plants Animals Minerals

Productive Resources – Human Resources – All of the human labor that is required to produce something. Planning Studying Training Actual Work required to produce a good or service.

Productive Resources – Capital Resources – are goods made, not to consume, but to produce other goods and services. Money Machines Tools Infrastructure (technology, transportation routes, communications, and networks) are all Capital Resources.

Productive Resources – Entrepreneurship – the people who bring together and organize all of the other Productive Resources. Business Owners Managers

Location of Productive Resources Natural Resources – Companies that use natural resources to make finished goods are often located near these resources. The production of steel requires large amounts of coal, so steel mills are located in Pennsylvania where there is a large supply of this resource. Oil companies have invested large amounts of money in Saudi Arabia where there is huge supply of oil.

Location of Productive Resources Climate – Climate affects which crops can grow in certain regions. In harsh, cold climates agriculture is not possible so people in these areas are forced to locate other resources to harvest. In low and mid latitudes, farmers can harvest anything from rubber in Asia to wheat in Kansas. In high latitudes, fishermen harvest fish and land animals.

Location of Productive Resources Human Resources – Human resources and entrepreneurship are just as important as natural resources in economic activities. – Where human resources are located affects the location of these economic activities. Japan has few natural resources, but it has a large supply of educated and skilled human resources. So, Japan has become a center of manufacturing for high technology products like cars and electronics.

Location of Productive Resources Infrastructure – Infrastructure is the Capital Resource or investment that makes economic activities possible. Roads Cities Buildings Electricity Communications If the geography of a place or region limits the infrastructure that can be built, then certain types of economic activities will be limited in that place or region.

Access to Consumers The location of consumers also influences the location of economic activities. – Activities that provide services to consumers, like schools, hospitals, professional services, and retail stores, are usually located directly near consumers. This is especially true in densely populated regions or locations like cities. – Factories also need access to consumers and will usually be located on the same side of a geographic barrier as their customers.

Access to Consumers Changes in technology and the creation of infrastructure can sometimes overcome geographic barriers. Recent improvements in communications and transportation have lowered shipping costs and allowed some businesses to move to locations where production costs are lower, sometimes overseas.

The Effect of Changes in Geography Changes in climate such as global warming or cooling can effect changes in the location of some economic activities such as farming, herding, fishing, or hunting. Changes in resources such as the discovery, or depletion, of minerals can lead to drastic changes in economic activity like creating boom towns or ghost towns.

The Effect of Changes in Geography Improvements in infrastructure such as new canals, railways, and paved roads can drastically lower shipping costs and increase access to new resources and new consumers.

Trade The same factors affect the location of economic activities in every region of the world. How these factors affect each region can lead to specialization of economic activities. These specializations lead regions to Trade with other regions for the things they need.

The Uneven Distribution of Resources Various parts of the world have different climates, landforms, soils, and minerals. This gives rise to diverse ecosystems which are only capable of producing certain resources., so different productive resources appear in different regions; they are spread unevenly.

The Uneven Distribution of Resources – Petroleum – is created by the decay of organisms that once lived in an area where oil and gas are now found. Oil is not found everywhere, only where these particular organisms lived in the past. – Human Resources – some countries, like China, have large numbers of workers who have lower living costs and are willing to work for lower wages. In other, highly developed, countries, workers are highly educated and demand higher standards of living and higher wages.

Specialization The uneven distribution of resources leads to specialization. Meaning, each region will produce the type of goods it can produce at the lowest cost, based on the resources available. This is called comparative advantage.

Specialization Specialization encourages trade because each region will trade the goods and services it specializes in making to other regions in return for the goods and services it needs. – A region exports what it makes to other regions. – A region imports what it needs but cannot make.