DEVELOPMENT & ECONOMIC GEOGRAPHY UNIT 5 REVIEW

ECONOMIC SECTORS

Secondary Sector - Activity that transforms raw materials into usable products, adding value in the process. Primary Sector - Activity that directly extracts or harvests resources from Earth. Location partly dependent on where natural resources are. SECTORS OF ECONOMIC ACTIVITY

Quaternary Sector - Highly skilled, information-based services; usually includes management Tertiary Sector - Activity that links primary & secondary sectors to consumers and other businesses by selling goods or performing services; includes both retail and business (producer) services SECTORS OF ECONOMIC ACTIVITY

Primarily for direct consumption by a local population, usually small scale and low tech Subsistence Agriculture Primarily for purpose of selling products for money, often monocultures for economies of scale Commercial Agriculture Sector 1: Primary Sector -Agriculture

Large-area farms or ranches Low inputs of labor & low output per acre Extensive Land Use Small-area farms or ranches High inputs of labor & high output per acre Intensive Land Use Rice paddies, southeast China Cattle ranch, northeast Colorado

Large amount of human work is applied per unit of output Labor-Intensive Agriculture Large amount of capital (equipment and buildings used to produce other goods) is applied per unit of output Capital-Intensive Agriculture Top picture – Labor-intensive corn raising in central Mexico. Bottom picture – Corn exported from capital- intensive U.S. farms to the Mexican market

Probable culture-hearths of agriculture shift from hunter-gatherer to agricultural societies Invention of farming & domestication of livestock (8,000– 14,000 years ago) + diffusion from several source regions = shift from hunter-gatherer to agricultural societies First Agricultural Revolution

Second Agricultural Revolution Technological changes (starting 1600s in Western Europe; spread by 1800s to North America) Began with new methods: crop rotation, better horse collars Later innovations: replace human labor with machines, supplement natural fertilizers & pesticides with chemical Beginnings of commercialization of agriculture (production of surplus for trade); enabled widespread urbanization

Third Agricultural Revolution Since 1960s - hybridized grains for better yields ( “ Green Revolution ” ) - greater reliance on synthetic fertilizers - genetically engineered crops - vertical integration of ownership (e.g., Cargill, ConAgra, ADM) - globalization of production A partial list of ConAgra ’ s brands Swiss MissHunt ’ s Van Camp ’ sMarie Callender ’ s WessonHebrew National Slim JimEgg Beaters RosaritaChef Boyardee ReddiWipPam Peter PanOrville Redenbacher ’ s Healthy ChoiceBanquet

“ Green Revolution ” – 1960s -1980s Rice plant Rice - staple food for 2.5 billion Asians - provides 2/3 of calories for Asians with rice-based diets Green Rev – Raised yields * Improved rice strains * Greater use of fertilizer * Increase use of irrigation Asia’s rice production grew at annual rates of 3.0% until 1980s Yield growth rate exceeded high pop. growth rates of the time Sources: FAO, IRRI (research organization devoted to rice) – part of global CGIAR effort at improving yields of staple crops worldwide

Third Agricultural Revolution Benefits Reduced uncertainties in agriculture Greater global exchange of ag products Increased yields Costs Increased dependence on fossil fuels Reliance on chemical inputs Less global diversity of food products Concentration of pollutants

ORGANIC REVOLUTION? Response to chemicals used in food production and the health impacts of processed foods Go Local & Go Organic!

Climate and natural environment Culture Economic factors Simplified von Thünen model of agricultural land use (1826) Factors influencing location of agriculture Medium transportation cost items (corn, soybeans, mixed farming) More extensive land use – medium rent Urban market High transportation cost items (vegetables, eggs, dairy, flowers) Intensive land use – high land rent Lowest transportation cost items (forestry, wheat, livestock ranching) Most extensive land use – lowest land rent

Mode of production/consumption in late 19th thru mid- 20th centuries Features: Large domestic corporations Manufacturing base: food processing, heavy equipment manufacturing, and energy products Industrial Economy Emerging mode of production/consumption of late 20 th - 21st centuries Features: Huge transnational corporations Localized agglomerations producing and/or using IT and telecom Greater employment in tertiary and quaternary services Postindustrial Economy

SITE & SITUATION Site A description of the physical features of a particular location OR Availability of labor, land and capital at a particular spot or location Situation Describes a place in terms of its relative location comparative to other places/locations OR Involves locating a factory because of its proximity to something else (raw materials, energy, customers)

SOME KEY ASSUMPTIONS IN ECONOMIC GEOGRAPHY *Rational Behavior – people (and firms) seek to minimize costs to themselves and maximize benefits *Geography of Supply – Costs of doing business vary from place to place (resources for production) - availability for financing (capital outlays) - natural resources (raw materials) - labor (particular skills needed) - transporting goods (to plant and to market) *Geography of Demand – Markets vary spatially - Location of consumers (size of market / population) - Wealth (purchasing power) - Tastes of consumers (cultural values, preferences)

Ullman ’ s Concepts of Spatial Interaction (Principles of Economic Geography) Complementarity One area has surplus of a commodity needed by another area (mutual needs can be satisfied through trade) Transferability (key: accessibility, infrastructure) Ease with which commodity can be moved from producer to consumer (physical factors, transportation systems) Intervening Opportunity Potential trade between two partners develops only in absence of a closer, intervening source of supply Comparative Advantage Areas tend to specialize in products for which they have greatest relative advantage over other, competing areas Edward Ullman ( )

Least-Cost Location Theory Cost minimization is half of profit maximization equation (along with maximizing revenues) Cost minimization theory: - labor-cost minimization - transportation cost minimization Cost minimization - an industrial location strategy that seeks to minimize what the firm pays to produce and distribute its products or services

Fixed and Variable Costs Influence the Optimum Location for Economic Activity Classical economic geography models focus mainly on the variable cost of transportation

WEBER TRIANGLE Three factors: Transport costs Labor costs Agglomeration Transport costs: One market and two sources: Equal distance and shipping costs dictates a market location Two weight-losing materials results in an intermediate location

Raw Material Oriented Tendency for industry to locate near its source of raw materials in order to save on transport costs Usually occurs when raw materials lose weight in the production process (e.g., paper, steel) Transportation Cost Minimization

Market Oriented Tendency for industry to locate near population centers in order to save on transport costs Occurs when product is more costly to transport than raw materials (e.g., beverages, glass) Transportation Cost Minimization

Break-of-Bulk Oriented Location between sources of raw materials and markets – for products that must be divided and shipped from a central point of entry Intermodal transportation – e.g., moving from rails to trucks or ships to trucks, or ports to pipelines Transportation Cost Minimization

“ Post-Fordist ” Production – High Tech Industry Adapting the traditional models of economic geography Greater flexibility of production Less reliance on storage of inventory – seek prompt delivery of goods needed for production ( “ just-in-time ” ) Suppliers ’ location Need to have access to fast delivery systems (= airports) Agglomeration of management Still occurs! High-tech innovators locate closer to airports; universities; amenities; venture capital (tends to be a “ footloose ” industry) Internationalized spatial division of labor Lower labor costs needed for production – industry locates manufacturing in lower wage areas (secondary) but tech and management stays in core area (quaternary)

“LOCATION, LOCATION, LOCATION!” IT MATTERS WITH SERVICE TOO – AKA THE TERTIARY SECTOR Range The maximum distance that people are willing to travel to use a service Market Area The area surrounding a service from which customers are attracted Good example of a nodal region Threshold The minimum number of people needed to support a service How do you find the perfect place?

Nested hexagonal market areas predicted by Central Place Theory Central Place Theory Spatial model of settlements (central places) for a nested hierarchy of market areas

INDICATORS OF ECONOMIC DEVELOPMENT

GROWTH VERSUS DEVELOPMENT Economic growth may be one aspect of economic development but is not the same Economic growth: A measure of the value of output of goods and services within a time period Economic Development: A measure of the welfare of humans in a society

DEVELOPMENT Development incorporates the notion of a measure/measures of human welfare As such it is a normative concept – open to interpretation and subjectivity What should it include?

HUMAN DEVELOPMENT INDEX (HDI) HDI – A socio-economic measure Focus on three dimensions of human welfare: Longevity – Life expectancy Knowledge – Access to education, literacy rates Standard of living – GDP per capita: Purchasing Power Parity (PPP)

WHAT ARE THE BARRIERS TO AND THE COSTS OF DEVELOPMENT? Millennium Development Goals 1.Eliminate extreme poverty and hunger 2.Achieve universal primary education 3.Promote gender equality and empower women 4.Reduce child mortality 5.Improve maternal health 6.Combat HIV/AIDS, malaria, and other diseases 7.Ensure environmental sustainability 8.Develop a global partnership for development

Modernization Theory Based on Rostow ’ s model of progressive stages of econ growth 1. Traditional subsistence 2. Preconditions for take-off (investment) 3. “ Take-Off ” (sustained industrial growth) 4. Drive to maturity (increased tech; rise of services) 5. Age of mass consumption (consumer goods) Real-World Strategies of 1950s-1960s Investment in infrastructure is critical Technology transfer from MDCs to LDCs Large-scale development projects The change from traditional to modern ways of life – based on greater investment in specialization, technology, and capital.

Dependency Theory Real-World Strategies for LDCs: Small-scale and rural enterprises Import substitution Nationalization of industry Introduced by Wallerstein (1970s) - Explains low development levels as result of LDCs ’ continuing economic dependency on MDCs ( “ neo-colonialism). Measures of development with human welfare indicators as well as economic indicators.

Core-periphery model is central to Dependency Theory Model of economic development over time and space consisting of an uneven power relationship between a rich, productive, innovative core region and a poor, dependent periphery. Wallerstein predicted the development of a “ semi-periphery ” - a middle- income regional subcenter that the core expands to and gradually encompasses the periphery Graphics from Kuby et al., Human Geography in Action

Neoliberalism Real-World Strategies for LDCs: Privatization of industry (reduced state role) Encourage foreign direct investment by MNCs Encourage free trade Currency devaluation (to encourage exports) Introduced 1980s (Reagan, Thatcher) - School of development emphasizing free-market approaches and globalization of trade, especially expansion into transitional (post-communist) economies and newly emerging industrializing states

Real-World Strategies for LDCs: Market mechanisms for envir regulation Resource conservation; renewable resources Loans to women and very poor (microcredit) Use of appropriate-scale technology Sustainable Development Introduced 1990s (UN) - Development providing for the needs of the present generation without diminishing the options of future generations – includes both economic improvement and environmental conservation