Key Issue #3: Where Is Industry Expanding? Since 1970: manufacturing declining in MDCs and rising in LDCs; also relocating within MDCs from traditional to nontraditional areas Changing Distribution within MDCs ①Intraregional (from center city to suburbs/periphery) Historically located inside cities – close to market & transportation to national market (situation) – close to labor & capital (site) Increasingly difficult to find suitable land in city (space needed for large machinery, bulky inputs, storage) – once built multi-story Modern factories more likely suburban or rural – Large land tracts due to size, lower costs in periphery – Built single-story for efficiency – Transportation by truck rather than rail – locate near highway junctions (long E-W or N-S routes or loops around cities) – Use of conveyors & forklifts to move materials on single story – Often cluster in industrial parks – Factories built larger today to take advantage of economies of scale – the more goods produced, the lower the cost per good.

Key Issue #3: Where Is Industry Expanding? Changing Distribution within MDCs ②Interregional Moving from traditional clusters to regions not traditionally associated with manufacturing In U.S., from N & E to S & W In Western Europe, encourage to move to economically depressed periphery areas Southern & Western U.S. – NE lost 1 million manufacturing jobs in last 30 years (1/3 of total) – particularly in NY & PA (clothing, textile, steel, fabricated metals) – South & West have grown by 1/6 – CA & TX have added 250,000 manufacturing jobs each – South did not have industrial growth until 1930s – agricultural focus, depression following Civil War, lack of infrastructure (road, rail, electricity) – TVA brought electricity & jobs to rural South; building of roads; air- conditioning important to make summers more tolerable for living/working – Biggest draw for industries to the South: right-to-work laws

Key Issue #3: Where Is Industry Expanding? Changing Distribution within MDCs ②Interregional Southern & Western U.S. – Right to work laws » Must maintain an open shop (union is optional for employment » Northern states often have closed shops (union membership required for employment) » South made it difficult for unions to organize, collect dues, bargain with employers (strikes, picketing, etc.) » Lower costs for industries if they can avoid potential work stoppages & union compensation demands – South – industries include steel, textiles, tobacco, furniture » Lower wages, less unionized » Access to oil & gas on Gulf Coast (refining, petrochemicals, food processing, aerospace) – West Coast – clothing, textiles, furniture, food processing, aircraft » Favorable climate (mild winters, clear skies, light wind) & large pool of low-wage immigrant labor (Mexico & Asia) » Los Angeles harbor (1910) & Panama Canal (1914) – time & distance greatly reduced for shipping

Key Issue #3: Where Is Industry Expanding? Changing Distribution within MDCs ②Interregional Western Europe (N & W to S & E) – Government policies explicitly encourage relocation (incentives to lure to poor regions & discourage in wealthier; EU’s Structural Fund assists lagging regions/countries) – Spain – largest growth in late 20 th century » Joined EU in 1986 » Had been physically (Iberian Peninsula & Pyrenees Mts.) & politically (fascist, Franco) isolated » Now 2 nd largest motor vehicle industry in Europe behind Germany » Catalonia industrial area (NE Spain near Barcelona) – textiles & autos

Key Issue #3: Where Is Industry Expanding? Relationship to Core-Periphery Model – Core = more developed areas (MDCs, traditional regions of economic activity, cities, etc.) – Periphery = less developed areas (LDCs, nontraditional regions of economic activity, suburbs/rural areas, etc.) – The Core is the traditional center of power – The Core exploits the Periphery for its resources – Recently, the Periphery has gained power and increased economic activity; however, it has benefited the Core on a global level (widening wealth gap, low wages in LDCs aid transnational corporations based in MDCs)

Key Issue #3: Where Is Industry Expanding? New Industrial Regions – China leader among new industrial regions – Steel: 1980 – 80% in MDCs; 2005 – 45% MDCs Now, China 30% of world steel production U.S./Canada dropped 20% to 10% 1980 to 2005 Japan constant at 10% W. Europe 20% to 15% E. Europe 30% to 10% ①Asia China – world leader in textiles, apparel, steel, & many household products – Most populous country – largest supply of low-cost labor & largest consumer market – 1990s – policy changes opened up to transnational corporation – Foreign investment led to rapid economic growth

Key Issue #3: Where Is Industry Expanding? New Industrial Regions ①Asia China’s manufacturing regions on east coast (1/4 of pop., ½ of wealth, ¾ of FDI, 5/6 of foreign trade) – Guangdong & Hong Kong (Guangzhou, Shenzhen, Pearl/Xi River delta) – Yangtze/Chiang Jiang River Valley (Shanghai to Wuhan) – Gulf of Bo Hai – Tianjin to Beijing/Shenyang Clustering of investment has led to large wealth gaps in China Thailand – reduced tariffs in 1990s (120% to 20%) India – 1991 shift from self-sufficiency to international trade model ②Latin America Mexico – northern Mexico & central (Mexico City) Brazil – Sao Paulo Protectionism in 1960s – required foreign companies who wished to operate factories to use domestic raw materials; often inefficient factories & outdated products 1970s – oil shortages led to triple-digit hyper-inflation in 1980s in Latin America (unable to repay massive loans)

Key Issue #3: Where Is Industry Expanding? New Industrial Regions ①Latin America Protectionism ended in 1980s & 1990s – High tariffs ended – Foreign ownership restrictions ended – Privatized formerly gov’t-owned production 1980s in Mexico – industrial expansion near U.S. border with maquiladoras NAFTA (North American Free Trade Agreement) in 1994 – Increased trade between member countries, reduced or eliminated tariffs (example of a trade bloc) – Industrial jobs left U.S. for Mexico – Growth mainly in N. Mexico due to proximity to U.S. & Mexican policies – Led to trade deficit with Canada & Mexico for U.S. – May expand to other Latin American countries Proximity to U.S. is Mexico’s primary advantage – Just-in-Time not feasible because too far from most U.S. markets – Lower wages than U.S. but higher than many other LDCs – Maquiladoras have closed or relocated due to Asian competition (China, Thailand, Vietnam); 325 of 1,122 textile maquiladoras closed

Key Issue #3: Where Is Industry Expanding? New Industrial Regions ③Central Europe Fall of communism in 1990s Poland, Czech Rep., & Hungary Site advantage (Labor) – Less skilled but lower wages than Western Europe – More expensive & skilled than Asia/Latin America Situation advantage (Market proximity) – Closer to Western Europe market than Asia or Latin America