1. Industrialization and Economic Development
Chapters 10 and 12

2. Most populated cities
Top 10

3. Tokyo mil
Delhi 24.95
Shanghai 22.99
Mexico City20.84
Sao Paulo 20.83
Mumbai 20.74
Lagos
Beijing 19.52
NY City 18.59
Cairo Source: Mapsofworld.com

4. Tokyo, Japan

5. Tokyo, Japan

6. Mumbai, India

7. Mumbai, India

8. Lagos, Nigeria

9. Lagos, Nigeria

10. Sao Paulo, Brazil

11. Sao Paulo, Brazil

12. Mexico City, Mexico

13. Mexico City, Mexico

14. New York City, U.S.

15. New York City, U.S.

16. Karachi, Pakistan

17. Karachi, Pakistan

18. Dhaka, Bangladesh

19. Dhaka, Bangladesh

20. Shanghai, China 1990

21. Shanghai, China 2010

22. Kolkata (Calcutta), India

23. Kolkata (Calcutta), India

24. Development
Chapter 10

25. Measuring Development
Gross National Income (GNI)
Measure of the monetary worth of what is produced within a country plus income received from investments outside the country.
** Most common measurement used today.
Gross National Product (GNP)
Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year. Includes things produced inside and outside a country’s territory.
Gross Domestic Product (GDP)
Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year.

26. Issues with Measuring Economic Development
All measurements count the:
Formal Economy – the legal economy that governments tax and monitor.
Core countries have a dominating formal economy.
All measurements do not count the:
Informal Economy – the illegal or uncounted economy that governments do not tax or keep track of.
Periphery and semi-periphery countries have a dominating informal economy.

27. Dependency Ratio by Country, 2005
A measure of the number of people under the age of 15 and over the age of 65 that depends on each working-age adult.
Countries that have a high dependency ratio will have a heavy top or bottom to their population pyramid.
Countries want and need a low dependency ratio.

28. Dependency Theory
The political and economic relationships between countries and regions of the world control and limit the economic development possibilities of poorer areas.
* Neo-Colonialism (new-colonialism)
-- Economic structures make poorer countries dependent on wealthier countries.
- Little hope for economic prosperity in poorer countries.

29. Dollarization –
Abandoning the local currency of a country and adopting the dollar as the local currency.
El Salvador went through dollarization in 2001

30. Commodity Chain
Series of links connecting the many places of production and distribution and resulting in a commodity that is then exchanged on the world market.

31. Links in commodity chains
Vertical Integration
A company trying to gain control over their suppliers
Horizontal Integration
A company acquiring or merging with competitors in the same industry value chain.
** What is one positive and one negative for integration of commodity chains?

32. The World Economy What are examples of core countries?
What characteristics classify them as core?
What are examples of semi-periphery countries?
What characteristics classify them as semi-periphery?
What are examples of periphery countries?
What characteristics classify them as periphery?

33. Wallerstein’s Three Tier Structure
Core
Processes that incorporate higher levels of education, higher salaries, and more technology
* Generate more wealth in the world economy
Periphery
Processes that incorporate lower levels of education, lower salaries, and less technology
* Generate less wealth in the world economy
Semi-periphery
Places where core and periphery processes are both occurring. Places that are exploited by the core but then exploit the periphery.
* Serves as a buffer between core and periphery

34. * All of this started with the Europeans exploring the world starting in the 1600s *

35. Human Development Index (HDI)
The HDI was derived trying to create a method of measuring development that attempts to include social and economic elements.
The HDI uses the following for its measurements:
Per capita GDP
Life expectancy
Literacy rate
Average years of education
Sub-Saharan Africa has the lowest overall HDI ranking

36. Development Models Modernization Model
Walt Rostow’s model assumes all countries follow a similar path to development or modernization, advancing through five stages of development, climbing a ladder of development.
1 traditional
2 preconditions of takeoff
3 takeoff
4 drive to maturity
5 high mass consumption
* Goal is to reach the fifth and final stage of high mass consumption *

37. Rostow Modernization Model
Traditional: dominant activity is subsistence farming
Rigid social structure, resistance to change
Preconditions of Takeoff: progressive leadership moves the country toward openness and diversification

38. Rostow Modernization Model
Takeoff: Industrial Revolution, Urbanization, Mass-Production
Drive to Maturity: Tech. Diffusion, industrial specialization, international trade, modernization of core,pop. Decline

39. Rostow Modernization Model
5. High Mass Consumption: high income, widespread production of G&S, Service Sector

40. Rostow’s Ladder of Development
The goal is to achieve high mass consumption

41. Many nations are now past Stage 5
*Many nations are now past Stage 5. Create your own column entitled High Technology, depicting the modern world.

42. What are the Barriers to and the Costs of Economic Development?

43. Barriers to Economic Development
Low Levels of Social Welfare
Foreign Debt
Political Instability
Widespread Disease

44. Widespread Disease
Malaria kills 150,000 children in the global periphery each month.
Tamolo, India
This baby sleeps under a mosquito net distributed to villagers by UNICEF workers.

45. Costs of Economic Development
Industrialization
Export Processing Zones (EPZs)
Usually in the underdeveloped regions of developing nations
maquiladoras
Mexico/US border
Manufacturing centers
Cheap land and labor, low environmental standards
special economic zones (SEZs)
Free trade zones
Lower taxes
China
Agriculture
Deforestation
Tourism
Bringing people to your country
Maintaining infrastructure

46. Areas Threatened by Desertification

47. Why do Countries experience Uneven Development within the State?

48. How Government Policies Affect Development
Governments
get involved in world markets
price commodities
affect whether core processes produce wealth
shape laws to affect production
enter international organizations that affect trade
focus foreign investment in certain places
support large-scale projects

49. Governments and Corporations can create Islands of Development
Places within a region or country where foreign investment, jobs, and infrastructure are concentrated.

50. Government-created Island of Development
Malaysian government built a new, ultramodern capital at Putrjaya to symbolize the country’s rapid economic growth.

51. Corporate-created Island of Development
The global oil industry has created the entire city of Port Gentile, Gabon to extract Gabon’s oil resources.

52. Nongovernmental Organizations (NGOs) entities that operate independent of state and local governments, typically, NGOs are non-profit organizations. Each NGO has its own focus/set of goals.
Microcredit program:
loans given to poor people, particularly women, to encourage development of small businesses.

53. Some examples of important NGOs include The Red Cross and Red Crescent, Greenpeace, Amnesty International, and Doctors Without Borders. All of these are international organizations.
The number of NGOs in the United States is estimated at 1.5 million. Russia has 277,000 NGOs. India is estimated to have had around 2 million NGOs in 2009.

54. NGO’s
Some countries have so many NGO’s operating within them that they serve as what the Economist calls “a parallel state, financed by foreigners and accountable to nobody”

55. Industry and Services
Chapter 12

56. Where did the Industrial Revolution begin, and How did it Diffuse?

57. Industrial Revolution
A series of inventions that brought new uses to known energy sources, new machines to improve efficiencies and enable other new inventions. Examples: steam engine iron smelting water pump The most important fuel source for manufacturing was coal.

58. Beginning of Industrial Revolution
When and where did the industrial revolution begin?
In the U.K- Great Britain- in the mid to late 1700s
First diffused into British colonies in North America
Why Great Britain?
Flow of capital
Second agricultural revolution
Mercantilism and cottage industries
People working in their own homes, using their own machinery, to produce goods and services
Resources: coal, iron ore, and water power

59. Flow of Capital into Europe, 1775
Needed flow of capital in order to fuel the industrial revolution.

60. Diffusion of the IR
* In early 1800s, innovations diffused into mainland Europe. Location criteria: proximity to coal fields connection via water to a port flow of capital * In late 1800s, innovations diffused to some regions without coal. Location criteria: access to railroad

61. Diffusion of the IR

62. What has resulted?
Manufacturing regions around the world and inside countries
Example: Steel- China, Japan, the U.S., and South Korea are all major producers of steel due to their manufacturing centers
Example: New York, Chicago, Atlanta, and Seattle are all American cities located in major manufacturing regions.
Companies continue to locate factories in these manufacturing regions because there is a large pool of skilled labor and quick delivery to large markets.

63. Distribution of the fossil fuels today
Southwest Asia has the largest percent of the world’s petroleum reserves.
Many of the world’s most industrialized countries have the least amount of deposits of fossil fuels.

64. How do Location Theories explain Industrial Location?
Why do industries choose to locate in certain areas over others?

65. Location Theory Considerations: Variable costs
Location Theory – predicting where business will or should be located.
Considerations:
Variable costs
Labor, rent, transportation
Friction of distance
How far away is the market?
How far away are the raw materials?

66. Location Models Weber’s Model Hotelling’s Model Losch’s Model
Manufacturing plants will locate where costs are the least (least cost theory)
Theory:
Least Cost Theory
Costs: Transportation, Labor, Agglomeration
Hotelling’s Model
Location of an industry cannot be understood without reference to other industries of the same kind.
Theory:
Locational interdependence
Losch’s Model
Manufacturing plants choose locations where they can maximize profit.
Theory:
Zone of Profitability

67. Weber’s Model
Weber accounted for the location of a manufacturing plant in terms of the owner’s desire to minimize three categories of cost:
Transportation
Labor
Agglomeration

68. Determining where to locate an industry
Agglomeration effects
The cost advantages for an individual company gained by locating near similar functional industries or companies

69. High-Technology Corridors
A Technopole:
An area designated by local or state government to benefit from lower taxes and high-technology infrastructure with the goal of providing high-technology jobs to the local population.
These are not usually located in the inner-city, downtown locations that are close to CBDs.
Examples: Northern California (Silicon Valley),
Bangalore, India, Dallas and Austin, Texas, and
Beijing, China

70. Backwash effects and Spread effects
There can be benefits in the peripheral region from the economic growth- spread effects
The need to provide more goods and services often outstrips the core’s ability to provide them
There can be negative effects of businesses locating all in the same area- backwash effects
They may be pulling talented, educated people away from other regions, which results in reduced capital flows
Fewer tax dollars for schools, highways, and other activities

71. Deglomeration
When industries leave the crowded urban centers and move to other locations
Competition
Outsourcing
Costs too high

72. How has Industrial Production Changed?

73. Post-Fordist
Fordism – dominant mode of mass production during the twentieth century, production of consumer goods at a single site. Post-Fordist (Neo-Fordism) – current mode of production with a more flexible set of production practices in which goods are not mass produced. Production is accelerated and dispersed around the globe by multinational companies that shift production, outsourcing it around the world.

74. Time-Space Compression Through improvements in transportation and communications technologies, many places in the world are more connected than ever before.

75. Time-Space Compression
Just-in-time delivery
rather than keeping a large inventory of components or products, companies keep just what they need for short-term production and new parts are shipped quickly when needed.
Global division of labor
corporations can draw from labor around the globe for different components of production.

76. New Influences on the Geography of Manufacturing
Transportation in industrial location
Break-of-bulk and intermodal connections
Regional and global trade agreements
NAFTA, EU, WTO
Energy in industrial location
Coal…oil and gas

77. Transportation to Industry and the consumers
Break-of-bulk point
Where cargo is transported from one mode of transportation to another
Example: A port where the cargo is transported from a ship to a truck or train
These generate employment, activity, and wealth
Intermodal Connections
Places where two or more modes of transportation meet and helps ease the flow of goods
Reduces the cost of transportation

78. Bulk gaining and bulk reducing industries
Companies assemble products whose size and/or weight is greater after assembly
Example: soft drink assembly; going from an empty bottle to a full bottle
Example: Automobile Assembly
Bulk reducing
An industry in which the final product has less volume than its inputs.
Example: paper production

79. Deindustrialization – a 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 work through a period of high unemployment.
Abandoned street in Liverpool, England, where the population has decreased by one-third since deindustrialization

80. Where are the major industrial belts in the world today and why?
Primary Industrial Regions
Western and Central Europe, Eastern North America, Russia and Ukraine, and Eastern Asia
Each of these regions consists of one or more core areas of industrial development

81. Newly Industrialized China – major industrial growth after 1950
Industrialization in the 1960s was state-planned:
focus on: Northeast district
Shanghai and Chang district
* Shanghai is home to one of the world’s largest industrial parks *
Today, industrialization is spurred by companies that move production (not the whole company) to take advantage of Chinese labor and special economic zones (SEZs).

82. As China’s economy continues to grow, old neighborhoods (right) are destroyed to make room for new buildings (below).
Beijing, China

83. Service Economy
Service Industry – Economic activity associated with the provision of services – such as transportation, banking, retailing, education, and routine office-based jobs.

84. Economic Sectors
The largest sector of the economy in postindustrial countries is the tertiary sector.
The primary economic sector is least likely to occur in core countries.

85. Wal-Mart
Requires producers of goods to locate offices in the Bentonville, Arkansas (Wal-Mart’s headquarters) area in order to negotiate deals with Wal-Mart.
Proctor & Gamble put their office in nearby Fayetteville, Arkansas.
How does the presence of these companies in the region change the region’s economy and its cultural landscape?

86. Nike
Headquartered in Beaverton, Oregon, Nike has never produced a shoe in Oregon. Beginning in the 1960s, Nike contracted with an Asian firm to produce its shoes.
Skopje, Macedonia
The swoosh is ubiquitous, but where is the shoe produced?
Nike has a global network of international manufacturing and sales.

87. Modern Production Outsourcing –
moving individual steps in the production process (of a good or a service) to a supplier, who focuses their production and offers a cost savings.
Offshore –
Outsourced work that is located outside of the country.

88. Some barriers to having industry and development
Some countries have high levels of trafficking and foreign debt
Trafficking: when adults and children flee poverty to seek better prospects are manipulated, deceived, and bullied into working in conditions that they would not choose.
Not slavery. A lot of domestic servants. Majority are girls. Many trafficked into prostitution.
Structural adjustment loans: loans that are given to peripheral and semi-peripheral countries with restructuring strings attached.
Given by the World Bank and IMF (International Monetary Fund)
Reforms in the economy or government, such as privatizing government entities, opening the country to foreign trade, reducing tariffs, and encouraging foreign direct investment.
Once a country gets a loan from these types of lenders, they must repay their debt, which is often a huge chuck of their budget.