Chapter 1 Economic Geography: An Introduction Geographic Perspectives Economic Geography of the World Economy Globalization World Development Problems Four Major Questions of the World Economy Political Economies Geographical Information Systems

Geographic Perspectives Barney Warf’s Style: anything goes The geographic perspective Key Point: Why are activities located where they are? Space and time are interdependent Geographic Perspectives: Fig 1.1, Fig 1.2 Economic space is highly unequal Economic Geography as a field

Figure 1.1 Cartogram of GNP Areas are NOT proportional to population Area looks too large

Figure 1.2 GDP per capita Highly variable among countries

Geographic Perspectives – Economic Geography Different paradigms abound in economic geography –Logical positivism, use of scientific method (development of hypotheses, data collection, and development of predictive models –Predominant approach to location theory and models of spatial interaction, representation of spatial structures, based on “homo economicus” – –Other approaches: behavioral, humanist, structuralist, post-structuralist & the “cultural turn”

Economic Geography of the World Economy The global perspective – an interdependent network of people and industries linked in a dynamic system of resource distribution, wealth creation, and power structures Shifting technologies, geopolitical forces, transportation and IT, culture, environment Transport & communication cost reductions Fall of centrally planned economies Rise of global capital markets Rise of institutions such as World Bank, IMF, WTO, OPEC, OECD….

Figure 1.3 The Global North and the Global South

Crude Oil – OPEC & Recent Trends Price Spike now $140 Peak $76 9/15/10

Recent Oil Prices from WTRG.com

The 2008 Price Spike In Crude Oil

Variations in Economic Structure Gross National Income Source: World Bank (2010) World Development Indicators

Global Shares of Population and Gross National Income (2008)

Structure of Production (% of GDP) Growing Inequality Hollowing of Industry Decrease in Agriculture, Services Growth

The Clark-Fisher Model of Structural Change Time Share of Output Agriculture Manufacturing Services Is This Model Inevitable?

Distribution of Gross Domestic Product (%) Why so high & why the decline? GDP = Final Sales to Government, Consumers & Investment Global Increase in Trade Note: 2006 Exports includes services

Imports/Exports 2006 ($ billions) High Income have much stronger trade in services than Low and Middle Income The U.S. Share of Services Trade is very high

Structure of Merchandise Exports (%)

Structure of Merchandise Imports (%)

Origin and Destination of Merchandise Exports (%)

Globalization P.9 “processes that make the world, its economic system, and its society more uniform, more integrated, and more interdependent.” Some dispute uniform Elements: culture, consumption, telecommunications, economy, transnational corporations, investment, labor, services, tourism. Role of IT. Globalization & Local Diversity

Globalization and MNC’s

Sample U.S. MNC’s Foreign Revenue

FDI in the U.S. – similar diagram could be drawn for any country

Another view of FDI

World Development Problems Environmental constraints The cycle of poverty (Fig 1.9) Low Real Income Unemployment Underemployment Low Output / Productivity Rapid Population Growth Low Level Of Saving Low Level Of Demand Low levels of Investment in Capital deficiency

Four Major Questions of the World Economy What should be produced, at what scale of output, and with what mix of inputs? How should factors be combined? Labor, capital, resource factors, etc. Where should production occur? Who should get output? How should it be divided?

The Four Questions for the World Economy

Economics – Key Topics Allocation of Scarce Resources Markets for Production, Distribution, and Consumption The Division of Labor Solving What, How, What Price, What Quantity, and Where Production Takes Place Types of Economic Systems Neoclassical versus Behavioral and Structural Approaches

Political Economies Alternative Systems: capitalism, command, and traditional – with systems of power & class that shape output Capitalist System (Fig 1.11) Command Economies Traditional economies The general demise of command and traditional economies in the face of globalization

The Circular Flow in the Capitalist System (set in space and time) (sales) Resource Market (prices) (consumption - resources) Businesses & Government (production) (sales) Product Market (prices) (production - labor) Households (consumption) Goods & Services $ to pay for consumption $ from product market Goods & Services Goods & Services Labor Income from work Savings & Investment: Capital Markets Public Goods: Taxation & Provision

Geographical Information Systems Manifold applications displaying attributes -Examples in this figure -Many other layers possible -Display current patterns and changes -Integrated with data from remote sensed sources with human system data bases including geocoded economic information

Summary and Plan The chapter plan Learning objectives at beginning of each chapter Study questions at end of each chapter Key terms Suggested readings Web sites