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10_ind - 2 Origins of Industry In the modern world industry...

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Unformatted text preview: 2 Origins of Industry In the modern world, industry means “the manufacturing of goods in a factory.” Industrial activities certainly existed before the modern world – as cottage industry: Industry – Small scale. – Home based (often family based). Origins of Industry Distribution of Modern Industry Industrial Location Problems of Modern Industry Cottage industry still exists – but it’s of little economic importance since the industrial revolution. Image source: Burke, James. 1985. The Day the Universe Changed. Boston: Little, Brown & Co. 1 3 The Industrial Revolution Revolution is a misleading term – it was a process, not a single event. The revolution happened because of a coming together of many social, economic, political and technological changes. The revolution begins in Great Britain around 1750 – why here? Why then? Diffusion of the Revolution: By Industry 4 Iron and steel [more iron means more transportation, which means more use for iron, which means more need for mining, which means more need for transportation, better engineering, etc.] Textiles [new machines meant more cloth, which meant more need for dyes and bleaches, which meant more and better chemistry, which lead to new ways to preserve food, etc.] Ceramics [new methods meant cheaper, better ceramics, which meant individual plates and bowls, which improved sanitation, which also lead to the development of ceramic sewer pipes, toilets, etc.] – Changes in agriculture (new crops, new agricultural practices, new agricultural machines). – Changes in technology (especially the steam engine – James Watt's improved model of 1769). – Changes in culture (the end of the guilds, the rise of capitalism, the English nonconformists). 5 Elements of the Revolution James Watt’s steam engine Watt’ Diffusion of the Revolution: From the UK 6 The revolution spread from Britain first to: – Western Europe – The United States – Eastern Europe – East Asia Canal over river The iron bridge at Coalbrookdale And now – the rest of the world? Source: Burke, James. 1985. The Day the Universe Changed. Boston: Little, Brown. 1 7 Industrial Regions of the World 8 North American Manufacturing 9 10 Eastern European Manufacturing Western European Manufacturing 11 New Industrial Regions 12 ASIA – China is the world’s largest manufacturer of textiles, clothing, steel, and many kinds of small appliances and toys. – China’s assets include the world’s largest supply of low-cost labor, and the world’s largest consumer market (at least potentially). East Asian Manufacturing LATIN AMERICA – Mexico and Brazil are the largest manufacturing centers in Latin America. – Following a shift to more open markets, Latin America has become very attractive to foreign-owned manufacturers. CENTRAL EUROPE – Since the fall of Communism in the 1990s, Central European countries (especially Poland, the Czech Republic, and Hungary) have become important manufacturing centers. – Labor costs are lower here than in Western Europe, yet very near to Western European markets. In all three of these cases, note the importance of low cost labor and outsourcing (“the new international division of labor”). 2 13 Industrial Location Industrial Location: Situation 14 Proximity to Inputs (“raw materials”): In a primary economic activity – like agriculture, fishing, forestry, or mining – there isn't much location choice – you go where the soil is good, where the gold is, etc. – If an industry's inputs are heavy, bulky, or fragile, then it may make sense to locate near where those inputs come from. – Examples: copper, steel, canned tomatoes – Because what goes into the factory is heavier or bulkier than what comes out, these are often called weight-reducing or bulkreducing industries. Proximity to Outputs (“markets”): – If an industry's outputs are heavy, bulky, or fragile, then it may make sense to locate near the market. – Examples: beer, glass, concrete – Because what comes out of the factory is heavier or bulkier than what goes in, these are often called weight-gaining or bulkgaining industries. – Other industries may also locate near markets: Single-market manufacturing Perishables But industry – manufacturing, construction, any operation that modifies a product and adds value – can try to choose the best possible location based on rational economic factors. 15 Changes in Manufacturing Location Transportation 16 Depending on what is being manufactured, the cost and method of transportation may also have an impact on industrial location decisions. Methods of transportation: – Ship (very low cost, very slow, best suited to long distance). – Rail (low cost [usually], slow to moderate speed [usually], suitable for long or medium distances). – Trucking (high cost [per ton], moderate to high speed, extremely flexible, suitable for long, medium or short distance). – Air (very high cost, very high speed, suitable for medium or long distance). – Pipeline (very low cost, but only suitable for bulk liquids) “Just-in-Time Delivery” Source: http://www.steelbb.com/us/steelmaps/#Pipe&tube; http://midwest.chicagofedblogs.org/archives/2005/10/ Break of Bulk Points 17 Industrial Location: Site Site describes the physical (or fixed) characteristics of a location. Different industries have different needs, and different sites are best suited to different industries. Site factors include the availability and cost of: – – – – Break-of-bulk points (or “break-bulk points”) – A break-of-bulk point is place where you transfer goods from one kind of transport to another. – Every time you go from one transportation method to another – from rail to truck, for example – it takes time and costs money. 18 Land (some industries need large areas) Power (some industries need large amounts of power) Labor (unskilled or skilled, depending on the industry) Capital (money to start or expand a business) It isn’t always possible to find a perfect location – so compromises have to be made. Some industries today are footloose – they can locate essentially anywhere. 3 19 Labor Intensive Industries Problems of Modern Industry Stagnant demand: “The New International Division of Labor” Both unskilled & skilled labor – but not necessarily in the same places. – The best markets for manufactured goods are in the developed world – but the population of the developed world isn't growing. – Demand for many consumer goods is stagnant because markets are saturated – for many goods there is a limit to how much or how many consumers are willing to buy. – “The Decline of Shoddy” – increased global competition means that shoddy goods get replaced – but goods that don't break don't need to be replaced, so demand stays low. – Unskilled ≅ “Fordist” – Skilled ≅ “Post-Fordist” Transnational corporations often focused on lower cost labor in LDCs – outsourcing. 20 Improved technology has increased demand for some products, but decreased demand for others. Increased capacity at the global scale means increased competition – manufacturing is no longer concentrated in just a few countries – all the developed and many developing countries have advanced manufacturing capabilities. Maquiladora Source: http://www.mexicomaquila.com/mi.htm Industrial Problems in More Developed Countries 21 22 Distance from markets (remember the “core and periphery” model). Lack of infrastructure. Dominance by transnational corporations: Trading Blocs (yes, that’s spelled correctly!): – Trade within blocs is increased – but trade with the outside world is decreased. – Competition tends to take place between blocs – rather than on a country-by-country basis. Industrial Problems in Less Developed Countries Industrial Problems in Less Developed Countries – Dependence on more developed countries (for supplies and markets). – Concentration on low-skilled labor. – The “race-to-the-bottom.” 23 Peripheral economies – Remember – as we discussed before, ¾ of all foreign investment is still between developed countries. 4 ...
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