1. Industrial and Economic Development
Unit 6

2. Economic Classification
Production / Consumption / Distribution
Sectors
Primary
Secondary
Tertiary
Quaternary

3. Economic Sectors
Primary
Raw Materials
Secondary
Processing

4. Economic Activities Tertiary Quaternary Moving / Selling / Trading
Services
Quaternary
Information
Quinary
Decision Making

5. Industrialization Industrialization Decline in primary activities
Manufacturing
Machines
Decline in primary activities

6. Industrial Revolution
Machine Power
Fueled by engines
Steam
Coal and water
Textile Production

7. Industrial Revolution
Factories
Moving Water
Coal allows movement
Infrastructure
Trains / Rails
Transportation of goods

8. Assembly Line Production
Henry Ford
Assembly Line Production
Interchangeable parts
Mass Production
Division of Labor

9. New Industrial Concepts
International Division of Labor
Just in Time Production

10. Weber’s Least Cost Theory
Factory Location
Least Cost to the Factory / Company
Assumptions
Cost of Transportation
Weight
Distance
Maximize Profits
Minimize Cost

11. Weber’s Least Cost Theory
Assumptions
Markets are fixed
Labor is fixed
Uniform Landscape
4 Main Drivers
Transportation
Labor
Agglomeration
Deglomeration

12. Weber’s Least Cost Theory
Transportation and Distance
Weight and Distance
Types of Distance
To raw materials
Distance to energy
Perishable

13. Weber’s Least Cost Theory
Transportation and Distance
Weight Losing vs Weight Gaining
Heavier to lighter vs Lighter to Heavier
Weight Losing
Heavier to Lighter
Raw Material
Weight Gaining
Lighter to Heavier
Market

14. Weber’s Least Cost Theory
Fixed Transportation Costs
Light Weight / High Value
Footloose Industries

15. Weber’s Least Cost Theory
Labor Cost
Wages and …….
Machines and Labor
Labor vs Transportation
Substitution Principle

16. Weber’s Least Cost Theory
Agglomeration
Several Industries come together
Share Cost
High Tech Corridor
Silicon Valley
Movement of Skilled Labor
Backwash effect

17. Weber’s Least Cost Theory
Locational Interdependence
Location due to competitors
Dominate markets
Competitors close by

18. Weber’s Least Cost Theory
Deglomeration
Too crowded / congested
Traffic / Pollution / Etc

19. Weber’s Least Cost Theory
Criticisms
Markets and Labor
Mobile

20. Current Industrial Patterns
Develop faster / Richer?
Levels of Development
Material condition of people
Everywhere / some level of development

21. Current Industrial Patterns
Classification
MDC / LDC
Social / Demographic / Economic

22. HDI Human Development Index Compare Development 4 Areas
Life Expectancy (Demographic / Health)
Avg Education (Social)
Literacy Rates (Social)
Standard of Living (Economic)

23. HDI Economic GDP More Developed Less Developed Gross Domestic Product

24. HDI PPP GDP Drawbacks Purchasing Power Parity Relative Wealth
Not the whole picture
Informal Sector

25. HDI
Informal Sector
Meets Demand
Less Expensive

26. Other Data
Raw Materials
Consumer Goods
TV’s and Radios
Women’s Rights

27. Big Mac Index Big Macs Thailand / 1.78 -> 8,440
PPP
Thailand / > 8,440
US / > 42,000

28. Development Gap
MDC’s and LDC’s
MDC’s
Faster
Gap Widens
Examples:

29. Development Gap Regional Split Northern vs Southern Hemisphere
North-South Gap

30. Development Gap Structuralists vs Liberals Structuralists
Global Economic Structure
Dependency Theory
Dependent on MDC’s

31. Development Gap Dependency Theory Wallerstein’s World System Analysis
Core Periphery and Semi Periphery
Core and Periphery
Colonization of Africa

32. Development Gap
Rostow’s Model
Similar Path of Development
5 Stages

33. Rostow’s Model Stage 1 Traditional Society Subsistence
Consumed by Producer
Gov’t Produced Resources

34. Rostow’s Model Stage 2 Before “Takeoff” Economic Activity Investments
Technology / Infrastructure
Surplus is traded
Productivity

35. Rostow’s Model Stage 3 Takeoff Rapid Growth Industrialization
Agriculture

36. Rostow’s Model Stage 4 Maturity Diffusion of Technology Industry
Skilled Labor

37. Rostow’s Model Stage 5 Mass Consumption Services Oriented
Higher Incomes
Consume Products

38. Critics of Rowstow America / Western Experience Dependency
Independent Agent
Not a player in the larger scheme

39. Reduce Development Gap
Self Sufficiency
Provide for its own
Evenly distribute investments
Reduce Poverty

40. Reduce Development Gap
Closed Economic State
Limited imports
High Tariff
Used in China, India, Africa
Corruption / Inefficiency

41. International Trade Trade with Foreign Nations / Companies
Identify success
Invest
Compete
Comparative Advantage
Create comparable products / cheaper

42. Economic Globalization
Global Interconnectedness of business
Starbucks, McDonalds, MTV
Multinational / Transnational Corporations
HQ / Production
Conglomerate
Large company owns smaller
Coke and bottling companies

43. Economic Globalization
Outsourcing
Production facilities
Many reasons
Taxes, wages, land, environment

44. New Industrial Countries
Asian Tigers
Tech boom
Taiwan, Hong Kong, South Korea, Singapore
Asian Tigers, Japan, China
Pacific Rim Economic Region

45. Foreign Direct Investment
LDC
Investment from foreign company
Special Economic Zones
Taxes, Regulations
Export Processing Zones
Labor Restrictions, Taxes
Free Trade Zones
Duties / Tariffs

46. Maquiladoras Maquiladoras Zone Maquiladora Northern Boarder
Free Export
Created by Mexican Government
Provide Jobs
Problems

47. International Division of Labor
Global Scale
World Wide Production
Assembled Elsewhere
Automobiles
Cheap Transportation

48. Free / Fair Trade Foreign Direct Investment Free Trade
Invest by Foreign companies
Good
Bad
Free Trade
Outsourcing Work
Regulations

49. Free / Fair Trade
Fair Trade
Outsource Work
Some regulation

50. IMF / World Bank Improve Socioeconomic Statuses Loans at Low Rates
Stipulations
Economic Improvements
Move toward Privatization
Private instead of Public
Greater efficiency

51. IMF / World Bank Pay for free services
Privatization = improved services

52. Non Government Organizations NGO
Non profit
Help LDC’s
Doctors w/out Boarders
Save the Children
Social / Human Rights Issues

53. Environment Earth’s sustainability
Impact due to increased access / travel
Eco Tourism
Environmentally Friendly Travel / Vacations

54. Environment Sustainable Development
Human Consumption / Earth’s resources
UN Commission on Sustainable Development

55. Environment Global Warming / Climate Change Greenhouse Gases
Trapped Heat = Warmer Temps