1. Industry and Manufacturing

2. Basic vs. Non-basic Basic industry – an industry critical to the health of an area’s economy. Generates revenue from outside the local area Nonbasic industry – Industries that sell their products primarily to consumers in the community. Generates revenue from within the community Money is circulated between members of the community Grocery stores, barbershops, etc.

3. Theories of Industrialization Location Theory a logical attempt to explain the locational pattern of an economic activity and the manner in which its producing areas are interrelated. Von Thünen Least-Cost Theory model developed by Alfred Weber according to which the location of manufacturing establishments is determined by the minimization of three critical expenses: labor, transportation, and agglomeration. Alfred Weber was a German economist, geographer, sociologist and theoretician of culture who invented the Least-Cost Theory. Varignon frame a system of weights and pulleys used by geographers to help determine optimum location. For example, the weights might represent the relative cost of transporting particular goods to or from a particular location, to help a firm decide the most cost effective site to locate a prospective production facility. https://www.youtube.com/watch?v=zUQHl4eQGgw

4. Least Cost Theory Must weigh the cost of transportation, labor & advantages of agglomeration Transportation Must account for transportation of raw materials & finished product Based on weight Bulk-gaining industry Finished product heavier than input parts Locate close to market Automobiles Bulk-reducing industry Finished product lighter than input parts Locate close to raw materials Lumber  sawdust

5. Transportation Proximity to Input: Bulk-reducing industry Ex: Metallic Minerals, lumber Proximity to Markets: Bulk-gaining industry Ex) Fabricated materials, single-market manufacturers, and perishable goods

6. Input Factory Market Heavier input, shorter distance to plant Lighter output, longer distance to market, lo Lighter input, longer distance to plant. Heavier output, shorter distance to market Bulk Reducing Bulk Gaining

7. Corn Ethanol: Bulk-reducing industry

9. Labor

10. Aggolmeration -Attract more customers -Share infrastructure -Attract labor force

11. Varignon frame https://www.youtube.com/watch?v=zUQHl4eQGgw Pierre Varignon French mathematician Locational triangle Balance the cost between the market & two raw materials

12. International Division of Labor International Division of Labor (a.k.a. global division of labor): the reorganization/relocation of economic activities from a national to a global scale Features MDCs dependent on low-cost goods from LDCs Space-time compression leads to separation of production & consumption Areas get competitive advantage by providing lower operating costs (taxes, wages, regulations, etc.) Outsourcing of jobs Transnational/multinational corporations push to reduce costs to increase profits Trade agreements (NAFTA) Management teams coming from MDCs rather than local

13. EPZs Export processing zones (EPZs) – zones established by many countries in the periphery and semi-periphery where they offer favorable tax, regulatory, and trade arrangements to attract foreign trade and investment. Attempt to attract foreign business with favorable business climates Maquiladoras are EPZs in Mexico Situated at/near the border Free of import tariffs Special Economic Zones are EPZs in China Situated near major port cities

14. Maquiladoras Factories built by U.S. companies in Mexico Close to the border (near major cities/points of entry, ease/cost of transportation) Originally required to be within 35 miles of US/Mexico border Low-wage workers Foreign-owned factories Import raw materials/components (do not use local resources, beyond labor) Export finished goods Mutually beneficial Workers earn higher wages than they otherwise would Factories pay lower wages than they otherwise would Issue: outsourcing a decision by a corporation to turn over much of the responsibility for production to a third party. U.S. workers lose manufacturing jobs with U.S. companies decide to move factories to Mexico for lower-wage labor

15. Effect of IDoL U.S. Developing Countries Unemployment Deindustrialization Increase in part-time retail positions (due to increasing demand of consumer products) Internal migration (Rust Belt to Sun Belt) Decline in influence of unions More job opportunities Improved gender equality as more women enter labor force Demand leads to child labor (job opportunities discourage further education) Increase in “wage gap” Migration to manufacturing areas Environmental/health problems Regional development (increased regional inequality) Westernization leads to culture change

16. Newly Industrialized Country: Mexico Inexpensive labor (International Division of Labor) NAFTA Weak environmental regulations Tax incentives/No tariffs on imported goods Proximity to U.S. markets Expanding Mexican middle class U.S. shift to tertiary sector Tourism Transportation connections between U.S. & Mexico U.S. transportation networks Other NICs: BRIC

17. Deindustrialization Deindustrialization – process by which companies move industrial jobs to other regions with cheaper labor, leaving the newly deindustrialized region to switch to a service economy and to work through a period of high unemployment. Examples: Rust Belt Effects: Shift to tertiary sector Improved environment High unemployment (temporarily)