1. Industrial Activity and Geographic Location
Chapter 22 Notes
Industrial Activity and Geographic Location

2. Economic Geography
Economic geographers investigate the reasons behind the location of an economic activity

3. Location Theory An economic activity is categorized according to:
Purpose
Relationship to natural resources
Complexity
Primary, secondary, tertiary, quaternary, quinary
Location theory attempts to explain the location pattern of an economic activity in terms of the factors that influence that pattern

4. The Location Decision Primary Industries
Because these deal with the extraction of resources, primary industries must be located where the resources are

5. The Location Decision Secondary Industries
less dependent on resource location because raw materials can be transported to distant locations to be converted into manufactured products if profits outweigh the costs of transportation

6. The Location Decision
Establishing a model for the location of a secondary industry is difficult because the location depends on:
Human behavior and decision making
Cultural, political and economic factors
Intuition or whim

7. The Location Decision
Models must be based on assumptions and economic geographers must assume that:
Decision makers are trying to maximize their advantages over competitors
Profit maximization
Variable costs must be taken into account (energy supply, transport expenses, labor costs)

8. The Location Decision Alfred Weber: 1868-1958 German
The Von Thunen of economic geography
Least Cost Theory
Accounted for the location of a manufacturing plant in terms of the owner’s desire to maximize three costs

9. The Location Decision Transportation (most important) Labor
moving raw materials to factory and finished goods to market
Labor
High labor costs reduce margin of profit
current economic boom on Pacific rim
Agglomeration
number of similar enterprises clustered in the same area
Shared talents, services and facilities
when excessive, can lead to high rents, rising wages, circulation problems

10. Weber Sparked spirited debate among economic geographers
Some argued that Weber’s model did not adequately account for variations in costs over time
Substitution principle: when one cost decreases can endure higher costs in another area
Model suggests that one particular site would be optimal but the business could flourish in more than one area
Taxation policies are not accounted for by the model

11. Factors of Industrial Location
Raw Materials
resources involved in manufacturing
steel plants along Atlantic seaboard re. iron shipped in from Venezuela
Europe’s coal and iron ore regions
Iron smelters built near coal fields
Japan’s colonial expansion into E Asia dependencies (China/Korea)due to raw materials available
Japan’s cheap labor allowed them to purchase and transport goods from other locales (substitution principle)
European colonization for resources, periphery to core

12. Factors of Industrial Location
Labor
a large, low-wage trainable labor force will attract manufacturers
Japan’s postwar success based on skills and low wages of workforce, low quality high quantity initially
China emerged with large labor force in 80’s
Taiwan and South Korea emerged to challenge Japan in mid ‘90’s due to cheap labor
pre-NAFTA US and Mexico

13. Factors of Industrial Location
Transportation
highly developed industrial areas are places that are served most effectively by transportation facilities
efficiency
alternative systems
container systems
for most goods, truck is cheaper over shorter distances, railroads cheaper over medium distances, and ships cheapest over longest distances
must consider loading/unloading, actual transportation (cost of transportation increases with distance at a decreasing rate), and weight and volume

14. Factors of Industrial Location
Infrastructure
transportation, telephone, utilities, banks, postal, hotel
China-inadequate local and regional infrastructure
Vietnam-inadequate power, water, transportation

15. Factors of Industrial Location
Energy
used to be much more important than it is today
early British textile mills had to locate near water power
rarely a problem today, except industries needing a huge amount of energy--- metal processing and chemical industries may locate near hydropower (TVA or Pacific Northwest)

16. Other Factors agglomeration political stability
receptiveness to investment
taxation policies
environmental conditions (Hollywood)