Chapter Three The Geography of Manufacturing

Introduction New Industrial Spaces-recent concentrations of manufacturing in regions that are situated well beyond the long-established industrial regions of western Europe and North America However, there is a tendency for industry to develop around already established centers of industry “In this way, industrialization incorporates a ‘tension’ within and between the relative advantages of old and new industrial areas”

Chapter Overview Discussion of, since the Industrial Revolution, how the global geography of manufacturing has evolved New patterns of manufacturing production and trade that are linked with Information and Communications technology (ICT) techno-economic paradigm Examples and discussion of regional patterns, specifically in the US during the 20 th century The importance of the manufacturing sector in economic development

Geography of Manufacturing is very uneven Even in the UK where the Industrial Revolution began, industrialization was localized and isolated – This applies not only to UK, but to North America and Europe as a whole as well Even though industrialization has been localized, its usually had far reaching impacts in terms of trade. – Global trade has often been an essential part for local and regional development of manufacturing industrialization. Exporting has been a source of income which in turn led to development. An exception to this would be the US because of their larger domestic market compared to that of European countries

Distribution of industry according to Bairoch Study by Bairoch – Estimated the evolution of global manufacturing production since 1750 (Charts on pg. 47) – Attempt to explain and understand global trends in manufacturing Prior to Industrial Revolution, manufacturing distribution was concentrated in “Third World” countries and closely reflected population. After the first and second waves of Industrial Revolution, percentage of manufacturing in third world countries declined drastically from 75% to 7.5% – This occurred because of an increase in factories in the UK, USA, and Europe. – Third World country share of manufacturing continued to decline until However, since then, there has been a steady increase in manufacturing in those parts of the world.

Share of World Manufacturing between Developed and “Third World” Countries between 1750 and 1913

Bairoch study continued… Leading Countries in manufacturing industry – China and India: Largest producers in manufacturing prior to the Industrial Revolution – UK: Largest producers during Industrial Revolution – USA: Dominantly took the lead by beginning of 20 th century.

Contemporary Global Patterns Define: – Value-Added: difference between value of inputs on arrival at the factory and the value of outputs at the factory gates. – Organization of Economic and Co-operative Development (OECD): countries in western and north-western Europe, North America, Japan, Australia, and New Zealand – Newly Industrializing Country (NIC): countries that have just started to make an influence on the manufacturing industry

Contemporary Global Patterns continued By 1990, 85% of the global value-added in manufacturing was produced by 20 countries – This means that the rest of the world had very little contribution in manufacturing output. However, employment in manufacturing jobs suggest a different distribution of the manufacturing industry – China and the CIS employ the most people in the manufacturing sector, followed by US, Japan, Germany, and India – This is an indication of efficiency within manufacturing Just because China and the CIS employ more workers, it does not mean that they are more efficient. In fact, countries in the OECD, like the US and Germany have continued to increase production over the 1990’s with the same, and in some cases, a smaller workforce

Important Shifts in Manufacturing Production Since WWII, Japan has grown tremendously – By 1990, its industrial economy was relatively equal to that of the US Both are twice as big as Germany’s industry, the third largest OECD country US officially lost its dominant role in industrial manufacturing UK had most drastic industrial decline. From 1963 to 1990, it went from 2 nd largest to 5 th largest industrial producer.

Corresponding Employment Changes From , UK had a net loss of 5 million manufacturing jobs Japan had gained more than 6 million jobs US had gained 3 million manufacturing jobs over the same time period

Newly Industrializing Countries Newly Industrializing Countries include Spain, Portugal, Greece, former Yugoslavia, Mexico, Brazil, Hong Kong, Singapore, Taiwan, and South Korea. – Even though Hong Kong, Singapore and South Korea show the greatest growth in employment and production in manufacturing since the 1970’s, they still only account for 1.5% of the world’s manufacturing production.

Global Patterns of Trade In 1989 and 1990, 9 out of 10 of the leading exporters were OECD members accounting for 57.1% of world exports. – 1990: Germany became the largest exporter of visible goods followed by the US, Japan, France, and the UK These five countries comprised 43% of global visible exports. The next 15 countries on the list, including several NICs accounted for 9.5% NICs have concentrated mainly in production of clothing, leather, and footwear. – In 1993, 20% of visible exports for the US were from NICs

Surplus vs. Deficit Imports may not necessarily balance what you export – US and the UK have deficits of 125 and 40 billion dollars respectively – Germany and Japan have surpluses of 60 and 50 billion dollars respectively Since the 1970’s, the US and UK have imported more than they have exported causing trade deficits. This has sparked debate and criticism, especially in the US. – Ex: US auto industry

Regional Dimension of Industrialization In both Europe and the United States, industry had a tendency to develop in areas with easy access to raw materials, water, and transportation – Ex: Manufacturing developed regionally in the US in what is known as the “American Manufacturing Belt”. This area became the heart of industry for the entire continent Easy access to water made the creation of canals possible. Canals and the creation of railroad transportation made it possible to ship goods to all global markets. Three specialized regions with in the Belt developed – Consumer goods in New York, Boston, and Baltimore – Producer goods in Philadelphia and Cleveland – Less specialized consumer goods further west

Deindustrialization in the US and spatial shifts in manufacturing industry : Employment in US Manufacturing Belt did not grow as fast as national average. Fastest rates of growth were in California and Texas – This was due to the fact that California and Texas had new industries of aerospace, electronics, and chemicals : Manufacturing Belt had a loss of jobs including a reduction of 15% in East and North Central States : Manufacturing Belt continues to loss jobs – NY lost 1/3 of its manufacturing jobs – But other states loss manufacturing jobs as well California lost 10% and Texas lost almost 6% of its manufacturing jobs

Deindustrialization in the US and spatial shifts in manufacturing industry Why was there a shift in manufacturing jobs? – 1960’s and 1970’s: Industry shifted away from “rust and frost” belt in favor of “sun and gun” belts – However, by 1980, many of the “frost-belt” states regained some of their prosperity. Shift of industry from urban cities to suburban areas – Ex: Manhattan

Unpredictability of Location Evolution Shifts in manufacturing and employment were not foreseen by anyone – Harris stipulated that the Manufacturing Belt was the “locus of the nation’s greatest market potential and most advantageous location for industry” Three observations of manufacturing shifts in US – Explanations will vary depending on period and geological scale – Explanations need to take into account global as well as local variables – Employment in the private sector is determined by employers whose judgments can vary considerably amongst one another

Trends Elsewhere UK – Experience deindustrialization. Coal fields of England were experiencing unemployment – Followed similar trend of the US. Manufacturing jobs moved from urban areas to non-metropolitan areas. Japan – Has not experienced deindustrialization. However, industry is centralized in two main regions: Kanto region (by Tokyo) and Kinki region (by Osaka)

Manufacturing in Economic Development Most powerful and rich countries are those that are most industrialized – During Industrial Revolution, UK had highest per capita income – In 1989, Germany, Japan, and the US were the three most powerful countries in the world and richest in terms of wealth and per capita income. They accounted for 50% of manufacturing output

Fisher and Clark’s Three Sector Model of Economic Development Explains the sequential shift in employment composition Three main sectors that take turns dominating society – Agricultural – Manufacturing – Service

Critique of Fisher and Clark Many believe that according to Fisher and Clark, manufacturing is not important – Bell’s phrase, “post industrial society” suggests that there is a shift from “a goods producing society to an information and knowledge society” Why Manufacturing is still important? – Manufacturing creates demand in other parts of the economy (construction, utilities, transportation) – Countries with decreased manufacturing face problems with unemployment, while NICs decrease unemployment annually – There are always been a historical relationship between industrial strength, political strength, and the standard of living

Policies Towards Industrialization Since UK was the first to truly industrialize, they had no model to follow, whereas other countries could examine alternative ways and learn from the mistakes and successes of the UK There are two main models of industrialization – Economic Liberalism and Economic Nationalism

Economic Liberalism vs. Economic Nationalism Anglo-Saxon Economic - Followed Adam Smith’s teachings of economic liberalism -Wealth of nations rooted in labor division and pursuit of self interest regulated by fair competition (“The Invisible Hand”) -This will lead to serve the needs of consumers. -Minimal government role Economic Nationalism -Founded on writings of Frederick List. -Wealth depends on productive forces with a strong relationship between agriculture, industry, commerce and transport with a cultural basis for production involving improvement in education, health, etc. -Government involved in economy to promote and develop values listed above

Economic Liberalism vs Economic Nationalism Almost all industrializing countries showed some signs of economic nationalism – Even the US and the UK, who later adopted liberal theories, attempted to protect their industry in its early stages. – Germany and Japan are known for their roots and continued use of economic nationalism Countries favoring economic liberalism are more likely to allow foreign plants/firms in their country

Questions about NIC’s NICs are proof that industrialization is closely linked to economic development however, several questions arise about their success – Can less developed countries use the same strategy as NICs? – Can NIC’s sustain their own growth?

Conclusion This has only been a broad outline of geographical industrialization On a global and local level, shifts in manufacturing is a selective process that is usually centralized in specific regions Alexandersson emphasizes the growing “location freedom” of manufacturing because of availability of energy sources “The advantages of relocation are inevitably complicated by the advantages of staying-put”