Chapter 9 Economic Geography: Manufacturing and Services

9.1 Components of the Space Economy

  • In the economic sphere recognize:   * Regions of industrial concentration   * Areas of employment and functional specialization   * Specific factory sites   * Store locations   * Tourist destinations
  • Basic Economic Concepts   * Intensity of spatial interaction decreases with increasing the separation of places   * Observed importance of complementarity and transferability in the assessment of resource value and trade potential

9.2 Secondary Activities: Manufacturing

  • Secondary Activities are transforming raw materials into products that can be used to pour iron and steel to produce plastic toys, assembling computer components, or sewing jeans
  • Principles of location   * Spatially fixed costs     * They are relatively unaffected no matter where the industry is located within a regional or national setting   * Spatially variable costs     * They show significant differences from place to place
  • Locational Decisions in Manufacturing   * Require multiple spatial scales of analysis     * International     * Regional     * Local/Specific to individual enterprises   * Power Supply     * Power supplies with low transferability may serve to attract energy-intensive activities   * Raw materials     * All manufactured goods have their origins in the processing of raw materials   * Labor     * Labor costs are highly variable across space, increasingly affecting location decisions and industrial development     * There are 3 important considerations for labor:       * Price       * Skill       * Amount   * Transportation modes     * Essential factor of industrial location that it is difficult to isolate its separate role   * Market     * Everything is produced to supply a market demand
  • Transportation and location   * Freight rates     * Charges made for loading, transporting, and unloading of goods   * Terminal Costs     * The charges for paperwork, loading, packing, and unloading of a shipment   * Break-of-bulk points     * Sites where goods have to be transferred or transshipped from one carrier to another
  • Industrialization Location Theory   * Industrial locational decisions are based not on a single factor, but on the interplay of a number of considerations   * Each type or branch of industry has its own specific set of significant plant siting conditions
  • Contemporary Industrial Location Considerations   * The behavior of individual firms seeking production sites under competitive market conditions   * It does not account for the locational behaviors that are uncontrolled by “factors,” directed by national or regional economic development planning goals or influenced by new production technologies and corporate structures   * Political Considerations     * Political factors affect the location decision process   * Agglomeration Economies     * Are benefits that firms enjoy due to factors outside the firm   * Just-in-Time and Flexible Production   * Comparative Advantage, Offshoring, and the New International Division of Labor     * The capitalist division of labor from individual workers to the economies of entire regions and countries
  • Transnational Corporations (TNCs)
  • Businesses are increasingly stateless and economies borderless as giant transnational corporations (TNCs)
  • There are 3 ways high-tech industries impact the patterns of economic geography   * High-tech activities are major factors in employment growth, manufacturing output, and the total gross value added (GVA)1 for many individual countries   * High-tech industries have tended to become regionally concentrated in centers of innovation, frequently forming self-sustaining, highly specialized agglomerations   * The offshoring of less-skilled production and assembly tasks has spurred the economic development of newly industrializing countries

9.3 High-Technology Manufacturing

  • The old fashion location theories are less effective for explaining the location of high-technology research, development, and manufacturing activities

9.4 World Manufacturing Patterns and Trends

  • Mexico, Brazil, China, and others of the developing world have created industrial regions of international significance
  • Deindustrialization   * Declining relative share of manufacturing in a nation’s economy   * Got worse during the past two decades

9.5 Tertiary Activities

  • Tertiary activities consist of business and labor specialties that provide services to the primary and secondary sectors, to the general community, and to individuals
  • Types of Service Activities   * Tertiary and service are broad and imprecise terms that are not limited to the number of activities   * Whoever purchases the services, we distinguish between consumer services and producer services
  • Locational Interdependence Theory for Services   * The locational controls for tertiary enterprises are simpler than those for the manufacturing sector
  • Consumer Services   * Supply of consumer services must match the spatial distribution of effective demand   * Tourism     * The growth of tourism is part of a broader shift     * The tourism industry has experienced a post-Fordist transition   * Gambling     * Fast-growing industry that draws large numbers of tourists and in the process remakes places and local economies
  • Producer Services   * Specialized activities performed for other businesses

9.6 Services in World Trade

  • Service activities have been major engines of national economic growth
  • They become an increasing factor in international trade flows and economic interdependence

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