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