Econ Geog

Econ GeogEcon Geog

Economic Geography:Economic Geography: study of flow study of flow of goods and services across spaceof goods and services across space• Look at ways in which people provide for Look at ways in which people provide for

themselves across the globethemselves across the globe• Geographic patterns of inequality at Geographic patterns of inequality at

different scalesdifferent scales• Globalization:Globalization: is a MAJOR thread is a MAJOR thread

throughout econ geog….free trade, intnl throughout econ geog….free trade, intnl trade, international econ alliances, etc.trade, international econ alliances, etc.

Industrial RevolutionIndustrial Revolution

Industry:Industry: manufacturing goods in a manufacturing goods in a factoryfactory

Industrial Revolution:Industrial Revolution: • GB – late 1700s – diffused to W. Eur and U.S.GB – late 1700s – diffused to W. Eur and U.S.

• Technology and mechanization led to Technology and mechanization led to unprecedented increase in productionunprecedented increase in production

• Iron and textiles = 1Iron and textiles = 1stst to industrialize to industrialize

Where is Industry Distributed?Where is Industry Distributed?

For 200 yrs industry was limited toFor 200 yrs industry was limited to• N. Europe – GB, France, Russia, N. Europe – GB, France, Russia,

GermanyGermany• E. Asia – JapanE. Asia – Japan• N. America – U.S.N. America – U.S.

• These countries dominated ind These countries dominated ind production/innovation until mid 20production/innovation until mid 20thth C C

Where is Industry DistributedWhere is Industry Distributed

In recent yrs – shift in geography of In recent yrs – shift in geography of industrializationindustrialization• Major corporations have moved factories Major corporations have moved factories

to LDCs (cheap labor)to LDCs (cheap labor)• Older industrial countries have shifted to Older industrial countries have shifted to

service based economiesservice based economies – research and – research and development, marketing, tourism, sales, development, marketing, tourism, sales, telecommunications, etc.)telecommunications, etc.)

• Service jobs are safer, more pay, less Service jobs are safer, more pay, less pollution, and overall higher satisfactionpollution, and overall higher satisfaction


• BUT service jobs require more BUT service jobs require more education/training than factory workeducation/training than factory work

• i.e. difficult transition – factory lose jobs i.e. difficult transition – factory lose jobs as factories outsource, must go back to as factories outsource, must go back to school or switch careers in mid lifeschool or switch careers in mid life

• Mill towns/factory towns – ghost towns Mill towns/factory towns – ghost towns or reinvent themselves with new econ or reinvent themselves with new econ nicheniche


Deindustrialization:Deindustrialization: when industrial when industrial factories leave an area and take that factories leave an area and take that region’s econ base with themregion’s econ base with them• Ex: Rust Belt:Ex: Rust Belt: Great Lakes region was Great Lakes region was

home to all auto manufacturing but GM home to all auto manufacturing but GM and other companies have relocated – and other companies have relocated – debilitating for the economy of the debilitating for the economy of the region and the workers thereregion and the workers there

• Backwash EffectBackwash Effect: when one region’s : when one region’s econ gain is another’s lossecon gain is another’s loss

The Rust BeltThe Rust Belt

Where are industries distributed Where are industries distributed and why there?and why there?

All industries seek to maximize All industries seek to maximize profits by minimizing production profits by minimizing production costscosts

Critical question: Where is the most Critical question: Where is the most profitable place to locate a factory??profitable place to locate a factory??

Alfred Weber: Least Cost Theory:Alfred Weber: Least Cost Theory: firms look at the following to decide firms look at the following to decide where to locate……..where to locate……..

Least Cost TheoryLeast Cost Theory

1.) 1.) Transportation CostsTransportation Costs: must move : must move raw materials (raw materials (inputsinputs) to plant and ) to plant and finished product to marketfinished product to market• Market Orientation Firms:Market Orientation Firms: if finished if finished

product weighs more or is perishable, product weighs more or is perishable, then locate the plant closer to the then locate the plant closer to the market than the raw materials….4 types market than the raw materials….4 types of market orientation:of market orientation:

Least Cost Theory – Market Least Cost Theory – Market Oriented FirmsOriented Firms

• A.) A.) Bulk Gaining Industry:Bulk Gaining Industry: product gains product gains volume or weight during production (TV, volume or weight during production (TV, refrigerator, soft drinks)refrigerator, soft drinks)

• B.) B.) Single Market Manufacturer:Single Market Manufacturer: product sold product sold mainly in one locationmainly in one location

• C. C. Perishibility:Perishibility: fresh fruits, milk, bread, fresh fruits, milk, bread, newspaper – must be near marketnewspaper – must be near market

• D.D.Ubiquitious Industry:Ubiquitious Industry: industry distr is in industry distr is in direct proportion to the distr of the population direct proportion to the distr of the population (i.e. near large metro areas with people = (i.e. near large metro areas with people = labor and market) i.e. hospitals, big businesslabor and market) i.e. hospitals, big business

Least Cost Theory – Least Cost Theory – Material/Resource OrientationMaterial/Resource Orientation

Material/Resource Orientation:Material/Resource Orientation: raw raw materials (materials (inputs)inputs) weigh more (or are weigh more (or are perishable) than the finished product perishable) than the finished product so locate plant closer to raw so locate plant closer to raw materials than to market. These are materials than to market. These are called called Bulk Reducing IndustriesBulk Reducing Industries: final : final product weighs less than the inputs product weighs less than the inputs

(i.e. paper mills, steel, copper – most (i.e. paper mills, steel, copper – most mining, tomato cannery, etc.)mining, tomato cannery, etc.)

Least Cost Theory – Other Least Cost Theory – Other transportation variablestransportation variables

Footloose firms:Footloose firms: industries w/ products industries w/ products that are lightweight and valuable and can that are lightweight and valuable and can locate anywhere (i.e. diamond of computer locate anywhere (i.e. diamond of computer chips)chips)

Spatially fixed costSpatially fixed cost: cost of product does : cost of product does not change no matter where factory is not change no matter where factory is locatedlocated

Spatially Variable cost:Spatially Variable cost: price of product price of product varies depending on where factory is varies depending on where factory is located and where product is producedlocated and where product is produced

Least Cost Theory - Least Cost Theory - TransportationTransportation

• Longer distance is cheaper per mileLonger distance is cheaper per mile• Ships best for longest distancesShips best for longest distances• Air – most expensive but fastestAir – most expensive but fastest• Break of Bulk Points:Break of Bulk Points: cost of transport cost of transport

for some inputs is cheaper than another for some inputs is cheaper than another type of transport – so you use multiple type of transport – so you use multiple methods of transport. BBP = transfer methods of transport. BBP = transfer point (usually a seaport or airport)point (usually a seaport or airport)

Least Cost Theory - Least Cost Theory - AGGLOMERATIONAGGLOMERATION

Agglomeration:Agglomeration: when many when many companies of the same industry companies of the same industry cluster together in a small area to cluster together in a small area to draw from the same set of collective draw from the same set of collective resources (i.e. computer companies resources (i.e. computer companies in Silicon Valley, motion picture in Silicon Valley, motion picture industry in LA, fashion in Paris)industry in LA, fashion in Paris)


Multiplier Effect:Multiplier Effect: as more firms from as more firms from same industry locate in an area, same industry locate in an area, more resources become available more resources become available and cements that region’s specialty and cements that region’s specialty even more (ex: CA became known even more (ex: CA became known for high tech firms, it attracted more for high tech firms, it attracted more computer experts, which attracted computer experts, which attracted more high tech firms, etc.)more high tech firms, etc.)


Ancillary Activities:Ancillary Activities: agglomeration agglomeration results in ancillary activities – i.e. the results in ancillary activities – i.e. the supporting cast. Economic activities supporting cast. Economic activities that surround/support the primary that surround/support the primary industry of the region. These can industry of the region. These can include a range of activities – include a range of activities – shipping, food services, etc.shipping, food services, etc.


Agglomeration leads to Agglomeration leads to regionalization:regionalization: unique specialization unique specialization from region to regionfrom region to region

Deglomeration:Deglomeration: opposite of opposite of agglomeration – when a firm leaves agglomeration – when a firm leaves an agglomerated region to start up in an agglomerated region to start up in a new placea new place

Least Cost Theory – AgglomerationLeast Cost Theory – AgglomerationRegional Specialization – Silicon valleyRegional Specialization – Silicon valley

Least Cost Theory –Least Cost Theory –LABORLABOR

Labor intensive industryLabor intensive industry = one where the = one where the cost of labor is a high percentage of cost of labor is a high percentage of production (ex: textiles)production (ex: textiles)

Outsourcing:Outsourcing: move production abroad for move production abroad for cheap labor. You’re willing to pay more cheap labor. You’re willing to pay more for transportation b/c of cheap labor. for transportation b/c of cheap labor. Outsourcing usually goes to semi-Outsourcing usually goes to semi-periphery – cheap labor, decent periphery – cheap labor, decent infrastructure, no environmental regsinfrastructure, no environmental regs

Least Cost Theory – Least Cost Theory – LABORLABOR

Textiles has followed cheap labor – Textiles has followed cheap labor – originally in NE b/c of cheap originally in NE b/c of cheap immigrant labor, late 1800s/early immigrant labor, late 1800s/early 1900s moved to SE to avoid unions, 1900s moved to SE to avoid unions, post WW II moved overseas to LDCs post WW II moved overseas to LDCs in Asia (50s in Hong Kong and Japan, in Asia (50s in Hong Kong and Japan, 70’s in China and Korea, today in 70’s in China and Korea, today in Indonesia, BangladeshIndonesia, Bangladesh

Least Cost Theory – Other things a Least Cost Theory – Other things a firm may consider……firm may consider……

Land:Land:• Factories today usually rural or suburbanFactories today usually rural or suburban• Need large tracts of land (1 story – more Need large tracts of land (1 story – more

efficient)efficient)• Amenities – climate, cost of living, re Amenities – climate, cost of living, re

opportunities (i.e. Sun Belt)opportunities (i.e. Sun Belt)• Communities engage in bidding wars – zoning, Communities engage in bidding wars – zoning,

tax breaks, environmental conditions, etc. to tax breaks, environmental conditions, etc. to offer most attractive package (i.e. Dell in NC)offer most attractive package (i.e. Dell in NC)

Least Cost Theory – Other things a Least Cost Theory – Other things a firm may consider….firm may consider….

CapitalCapital• Money available to expand or open new Money available to expand or open new

factoriesfactories• May go to area where banks are willing May go to area where banks are willing

to make high risk loans (i.e. Silicon to make high risk loans (i.e. Silicon Valley)Valley)

Factory WorkFactory Work

Fordism:Fordism: mass production and mass production and assembly lines (each worker assembly lines (each worker assigned one specific task to perform assigned one specific task to perform repeatedly). Started by Ford in early repeatedly). Started by Ford in early 2020thth C C

Factory WorkFactory Work

Post-Fordism:Post-Fordism: more flexible – work in more flexible – work in teams and often master a wide array teams and often master a wide array of tasksof tasks

Weber’s factors to consider = Weber’s factors to consider = site and situation factorssite and situation factors

Site Factors: land, labor, capitalSite Factors: land, labor, capital

Situation Factors: transportation Situation Factors: transportation costs – i.e. relative location to costs – i.e. relative location to inputs/raw materials and to marketinputs/raw materials and to market

Summary of Location PrinciplesSummary of Location Principles

Access to materials for productionAccess to materials for production Adequate supply of cheap laborAdequate supply of cheap labor Proximity to shipping and marketProximity to shipping and market Decrease production costs (cheap Decrease production costs (cheap

land, cheap labor, and favorable land, cheap labor, and favorable govn’t policies)govn’t policies)

Natural factors, climateNatural factors, climate Firm’s history and personal Firm’s history and personal

inclinationsinclinations

Industrial ProblemsIndustrial Problems

Over production – global capacity to Over production – global capacity to produce manufactured goods has produce manufactured goods has increased more rapidly than demandincreased more rapidly than demand• Consumption leveled off since 1970s b/cConsumption leveled off since 1970s b/c

No population increaseNo population increase Wages have not risen as fast as pricesWages have not risen as fast as prices Market SaturationMarket Saturation: everyone already has : everyone already has

one (TV, cars, microwaves, etc.)one (TV, cars, microwaves, etc.) Higher quality goods last longerHigher quality goods last longer

Industrial Problems in MDCsIndustrial Problems in MDCs

Must protect markets from new Must protect markets from new competitorscompetitors

Trading Blocs:Trading Blocs: industrial competition industrial competition in MDCs is betwn blocs, not countriesin MDCs is betwn blocs, not countries• NAFTA, EU, ASEANNAFTA, EU, ASEAN• Cooperation within bloc, competition Cooperation within bloc, competition

betwnbetwn• Seek complementary trade within blocSeek complementary trade within bloc


Transnational CorporationsTransnational Corporations – locate – locate aspects of production in various aspects of production in various countries. i.e. take advantage or countries. i.e. take advantage or regional diff in wages, tax laws, labor regional diff in wages, tax laws, labor laws, natural resources, etc.laws, natural resources, etc.• Ex: Nike – HQ in Oregon, but factories Ex: Nike – HQ in Oregon, but factories

span the globespan the globe


Most transnational corp are Most transnational corp are conglomerate corporations:conglomerate corporations: firms firms that consist of many smaller firms that consist of many smaller firms that serve different functions (ex: GM that serve different functions (ex: GM – many smaller firms that operate all – many smaller firms that operate all over the world, and produce a wide over the world, and produce a wide variety of goods and servicesvariety of goods and services

Industrial Problems in LDCsIndustrial Problems in LDCs

Distance from markets – far from Distance from markets – far from wealthy consumers in MDCswealthy consumers in MDCs

Poor infrastructure (roads, Poor infrastructure (roads, technology, communication, etc.)technology, communication, etc.)

Cheap labor = best drawing card for Cheap labor = best drawing card for industry. industry. Intnl division of labor:Intnl division of labor: low low paid, low skilled work done in LDCs, paid, low skilled work done in LDCs, high skilled work in MDCshigh skilled work in MDCs

Industrial Problems in LDCsIndustrial Problems in LDCs

Export Processing Zones:Export Processing Zones: zones zones officially designated for officially designated for manufacturing – have accessible manufacturing – have accessible facilities, lax environmental regs, and facilities, lax environmental regs, and tax exemptions, cheap labor. Ex: tax exemptions, cheap labor. Ex: Maquiladoras along US/MX border. Maquiladoras along US/MX border. Pros – jobs for MX, cheap labor for Pros – jobs for MX, cheap labor for US. Cons – often plagues w/ high US. Cons – often plagues w/ high crime, govnt corruption, pollutioncrime, govnt corruption, pollution

Industry today…..Industry today…..

OutsourcingOutsourcing Export processing zones - Export processing zones -

maquiladorasmaquiladoras TourismTourism All of these exploit LDCs/periphery. All of these exploit LDCs/periphery.

Neocolonialism:Neocolonialism: econ and political econ and political controls are exercised by developed controls are exercised by developed states over the economies and states over the economies and societies of independent countries in societies of independent countries in the developing worldthe developing world

DEVELOPMENTDEVELOPMENT

Development: process of improving Development: process of improving material conditions of people w/ material conditions of people w/ diffusion of knowledge and diffusion of knowledge and technology – continuous process of technology – continuous process of trying to improve health, living trying to improve health, living conditions, and prosperityconditions, and prosperity

Wallerstein’s World Systems ModelWallerstein’s World Systems Model• N/S DivideN/S Divide (see handout) (see handout)

Development Varies Across SpaceDevelopment Varies Across Space

Dev can be broken into econ, social, or Dev can be broken into econ, social, or demographic factorsdemographic factors

Human Development Index (HDI):Human Development Index (HDI): created created by UN to look at all 3by UN to look at all 3• Life exp, educ (literacy rate and amnt of ed), Life exp, educ (literacy rate and amnt of ed),

income (GDP)income (GDP)• Highest possible – 1.0 (100%)Highest possible – 1.0 (100%)• Norway – highest - .944Norway – highest - .944• U.S. never first, but always highU.S. never first, but always high• Lowest - sub Sahara Africa (Sierra Leone .275)Lowest - sub Sahara Africa (Sierra Leone .275)

Economic Factors of DevelopmentEconomic Factors of Development

GNP and GDP (omits investments GNP and GDP (omits investments abroad)abroad)

Per capita (divide by population)Per capita (divide by population) Annual per capita GDP more than Annual per capita GDP more than

$20,000 in MDCs and @ $1,000 in $20,000 in MDCs and @ $1,000 in LDCs – this gap is wideningLDCs – this gap is widening


Types of jobs….Types of jobs….• Primary activities:Primary activities: w/ land – fishing, w/ land – fishing,

farmingfarming• Secondary:Secondary: manufacturing, industry manufacturing, industry• Tertiary:Tertiary: service service

Quaternary:Quaternary: research and development – research and development – generating/exchanging knowledge generating/exchanging knowledge (teaching, banking, law, accounting, etc.)(teaching, banking, law, accounting, etc.)

QuinaryQuinary: high tech scientific research: high tech scientific research

Types of Jobs/Econ ActivitiesTypes of Jobs/Econ Activities


All countries have all types of econ All countries have all types of econ activities. The higher up you go, the more activities. The higher up you go, the more educ required and the better pay. MDC’s educ required and the better pay. MDC’s mostly in tertiary or higher. LDC’s mostly mostly in tertiary or higher. LDC’s mostly in primary. Semi-periphery mostly in in primary. Semi-periphery mostly in secondary.secondary.

Human Res and productivity increase in Human Res and productivity increase in MDCs (workers produce more w/ less MDCs (workers produce more w/ less effort)….higher educ, skilled, machinery effort)….higher educ, skilled, machinery and technologyand technology


Energy Consumption per capita – Energy Consumption per capita – correlates w/ technology and dev.correlates w/ technology and dev.• MDCs =10X more per capita than LDCsMDCs =10X more per capita than LDCs• MDCs consume sign more energy than MDCs consume sign more energy than

they producethey produce• MDCs use coal, natural gas, hydropowerMDCs use coal, natural gas, hydropower• LDCs use firewood, dung, peat, and LDCs use firewood, dung, peat, and

domestic fuels to cook and keep warmdomestic fuels to cook and keep warm• Wood – 60% of fuel use in LDCs and Wood – 60% of fuel use in LDCs and

90% in poorest countries90% in poorest countries

Social Indicators of DevelopmentSocial Indicators of Development

MDCs use money for schools, MDCs use money for schools, hospitals, that provide better educ hospitals, that provide better educ and healthier longer lives – this is and healthier longer lives – this is cyclical b/c better educated and cyclical b/c better educated and

healthier pop can be more healthier pop can be more productive and make more moneyproductive and make more money


Education: MDC’s have greater Education: MDC’s have greater quantity and quality of educquantity and quality of educ• Student – teacher ratio (2X as many Student – teacher ratio (2X as many

students to 1 teacher in LDC)students to 1 teacher in LDC)• Literacy Rate (over 95% in MDCs, less Literacy Rate (over 95% in MDCs, less

than 35% in LDCs)than 35% in LDCs)• Avg student attends school 10 yrs in Avg student attends school 10 yrs in

MDC and a few yrs in LDCs (varies)MDC and a few yrs in LDCs (varies)


HealthHealth• MDCs – better ratio of people to MDCs – better ratio of people to

hospitals, doctors, and nurseshospitals, doctors, and nurses• MDC consume greater calorie MDC consume greater calorie

consumption. In LDCs many get less consumption. In LDCs many get less than daily recommended allowancethan daily recommended allowance

• Different problems……MDCs – problems Different problems……MDCs – problems w/ obesity, elderly population, etc.w/ obesity, elderly population, etc.

Demographic Indicators of Demographic Indicators of DevelopmentDevelopment

Life Expectancy: avg # if yrs a Life Expectancy: avg # if yrs a newborn can expect to live (early 40s newborn can expect to live (early 40s in LDCs, 70s in MDCs)in LDCs, 70s in MDCs)

Infant Mortality: die b/f 1Infant Mortality: die b/f 1stst b-day (less b-day (less than 1% in MDCs, 10% in LDCs)than 1% in MDCs, 10% in LDCs)

CBR – higher in LDCs but droppingCBR – higher in LDCs but dropping Maternal Mortality Rate – sign higher Maternal Mortality Rate – sign higher

in LDCsin LDCs

Gender Issues in DevelopmentGender Issues in Development

Gender inequality exists in every Gender inequality exists in every countrycountry

Two composite measures to look Two composite measures to look at……at……

GDI Gender Related Development GDI Gender Related Development IndexIndex

GDI:GDI: looks at same measure as HDI looks at same measure as HDI but to highlight disparity betwn men but to highlight disparity betwn men and womenand women• Complete equality is 1.0Complete equality is 1.0• Penalized for greater diff betwn men Penalized for greater diff betwn men

and womenand women• Highest GDIs in Europe and N. America; Highest GDIs in Europe and N. America;

lowest in Sub Sahara Africalowest in Sub Sahara Africa• Even in MDCs women’s average income Even in MDCs women’s average income

is less than men’sis less than men’s

GDIGDI

• In LDC’s women less likely to attend In LDC’s women less likely to attend school and have lower literacy rates school and have lower literacy rates (99/100 women to men in MDC high (99/100 women to men in MDC high school; 60/100 in LDC high schools)school; 60/100 in LDC high schools)

(remember this affect on pop growth)(remember this affect on pop growth)

• Globally women outlive men, but outlive Globally women outlive men, but outlive men much longer in MDCs than in LDCs men much longer in MDCs than in LDCs (mostly b/c of maternal mortality rate)(mostly b/c of maternal mortality rate)

Gender Empowerment Measure Gender Empowerment Measure (GEM)(GEM)

Measures econ and political powerMeasures econ and political power 4 factors….4 factors….

• IncomeIncome• Professional jobsProfessional jobs• Managerial jobsManagerial jobs• Elected positions (no country has a natnl Elected positions (no country has a natnl

Congress w/ majority women…highest in Congress w/ majority women…highest in Eur w/ @ 30%....U.S. has @ 15%)Eur w/ @ 30%....U.S. has @ 15%)

Every nation has a higher GDI and Every nation has a higher GDI and lower GEM i.e. means women lower GEM i.e. means women possess a greater share of a nation’s possess a greater share of a nation’s resources than power over allocation resources than power over allocation of those resourcesof those resources

Even in MDCs women’s average Even in MDCs women’s average income is less than men’s…WHY?income is less than men’s…WHY?

LDCs Obstacles to DevelopmentLDCs Obstacles to Development

While LDCs have improved, gap betwn While LDCs have improved, gap betwn MDC and LDC has increased. MDC and LDC has increased.

WHY? WHY? Circular/cumulative causation:Circular/cumulative causation: process where tendency for econ growth process where tendency for econ growth are self-reinforcing….i.e. it takes money are self-reinforcing….i.e. it takes money and development to foster money and and development to foster money and developmentdevelopment

Solution? LDCs must dev at a faster rate, Solution? LDCs must dev at a faster rate, but how? Two prominent options….but how? Two prominent options….

Self Sufficiency/Balanced Growth Self Sufficiency/Balanced Growth Approach – China and IndiaApproach – China and India

Country should invest = across all Country should invest = across all sectors of the economy and all sectors of the economy and all regionsregions

Limit imports (tariffs)Limit imports (tariffs) Internal businesses encouraged to Internal businesses encouraged to

produce for own people; not exportproduce for own people; not export

Problems w/ Self-Sufficiency ModelProblems w/ Self-Sufficiency Model

Protects inefficient businesses in own Protects inefficient businesses in own country (protect from international country (protect from international competition, but has little incentive competition, but has little incentive to improve quality or lower price)to improve quality or lower price)

HUGE govnt bureaucracy to manage HUGE govnt bureaucracy to manage econ – leads to abuse and corruption econ – leads to abuse and corruption – Govn’t red tape– Govn’t red tape

Option Two – International Trade Option Two – International Trade ModelModel

Develop through international trade Develop through international trade (look outward). Look outward. (look outward). Look outward. Identify a unique econ asset and Identify a unique econ asset and export globally. Use funds and profit export globally. Use funds and profit to finance other developmentto finance other development

Done in Arabian peninsula and E/SE Done in Arabian peninsula and E/SE AsiaAsia

W.W. Rostow – Dev ModelW.W. Rostow – Dev Model

RostowRostow advocated intnl trade advocated intnl trade approach with a 5 step model approach with a 5 step model towards development. He created towards development. He created the model in the 1950s and based it the model in the 1950s and based it on the pathway the U.S. and Eur on the pathway the U.S. and Eur followed:followed:• Stage 1: Traditional SocietyStage 1: Traditional Society: country : country

dominated by primary econ activities – dominated by primary econ activities – low prod, low tech, low per capita low prod, low tech, low per capita incomeincome

Rostow – Intnl TradeRostow – Intnl Trade

Stage 2: Preconditions to Takeoff:Stage 2: Preconditions to Takeoff: preconditions to econ dev are preconditions to econ dev are commercialization of AG and exploitation commercialization of AG and exploitation of raw materialsof raw materials

Stage 3: Takeoff:Stage 3: Takeoff: foreign investment jump foreign investment jump starts econ. Rapid growth in a limited starts econ. Rapid growth in a limited number of sectors; other sectors still number of sectors; other sectors still dominated by tradntl methods. Country dominated by tradntl methods. Country uses profits to pour into infrastructure uses profits to pour into infrastructure (roads, canals, etc.)(roads, canals, etc.)

Rostow – Intnl TradeRostow – Intnl Trade

Stage 4: Drive to Maturity:Stage 4: Drive to Maturity: Dev and Dev and modern tech diffuse to wider variety modern tech diffuse to wider variety of the econ. Workers become more of the econ. Workers become more skilled and specializedskilled and specialized

Stage 5: Stage 5: high levels of mass high levels of mass consumption and per capita income. consumption and per capita income. Shift from heavy industry to services Shift from heavy industry to services and producing consumer goods.and producing consumer goods.

Criticisms of RostowCriticisms of Rostow

Not all countries will pass through stages Not all countries will pass through stages consecutivelyconsecutively

Model doesn’t account for….Model doesn’t account for….• Global politicsGlobal politics• ColonialismColonialism• Physical geogPhysical geog• WarWar• CultureCulture• Ethnic conflictEthnic conflict• All of these may affect progression and cause All of these may affect progression and cause

different pathwaydifferent pathway

Example of INtnl Trade ModelExample of INtnl Trade Model

4 Asian Tigers/Dragons: S. Korea, 4 Asian Tigers/Dragons: S. Korea, Singapore, Taiwan, Hong KongSingapore, Taiwan, Hong Kong• all poor in natural resourcesall poor in natural resources• Promoted dev by focusing on a handful of econ Promoted dev by focusing on a handful of econ

goods (esp clothing and electronics). i.e. find goods (esp clothing and electronics). i.e. find comparative advantagecomparative advantage – produce item for – produce item for which you have the greatest advantages in which you have the greatest advantages in comparison to other countriescomparison to other countries

• Low labor allowed them to sell products Low labor allowed them to sell products cheaply in MDCscheaply in MDCs

Map – Asia - Map – Asia -

India – China – India – China – initially initially self/sufficiency and self/sufficiency and balanced growth balanced growth modelmodel

4 Asian Tigers – 4 Asian Tigers – International Trade International Trade ModelModel

4 ASIAN TIGERS4 ASIAN TIGERS

South KoreaSouth Korea

TaiwanTaiwan

Hong KongHong Kong

SingaporeSingapore

Problems w/ Intnl Trade ModelProblems w/ Intnl Trade Model

May hinder other LDC’s from May hinder other LDC’s from following this path….following this path….• 1.) 1.) Uneven resource distrUneven resource distr: many : many

country's niche faced lower price on country's niche faced lower price on world market (ex: Zambia and copper – world market (ex: Zambia and copper – world prices for copper have been world prices for copper have been dropping)dropping)

• 2.) 2.) Market stagnationMarket stagnation: market for : market for consumer goods slowing down in consumer goods slowing down in generalgeneral

Problems w/ Intnl Trade ModelProblems w/ Intnl Trade Model

3.) 3.) Increased dependence on MDCs:Increased dependence on MDCs: takeoff industries force LDCs to takeoff industries force LDCs to decrease production of food, decrease production of food, clothing, or other necessities for own clothing, or other necessities for own peoplepeople

Conclusion….intntl trade model is Conclusion….intntl trade model is widely accepted alternative to self-widely accepted alternative to self-sufficiency modelsufficiency model

Statistics……Statistics……

World Bank – since 1990 per capita World Bank – since 1990 per capita GDP has increased more than 4% GDP has increased more than 4% annually in countries w/ intnl trade annually in countries w/ intnl trade model and less than 1% in countries model and less than 1% in countries w/ self-sufficiency modelw/ self-sufficiency model

Statistics…..Statistics…..

1960-1990…..1960-1990…..• India’s GDP increased by 4%/year on India’s GDP increased by 4%/year on

self sufficiency modelself sufficiency model• Thailand’s by 8%/year (intnl trade)Thailand’s by 8%/year (intnl trade)• Taiwan’s by 8%/year (intnl trade)Taiwan’s by 8%/year (intnl trade)• S. Korea’s by 9% /year (intnl trade)S. Korea’s by 9% /year (intnl trade)

• Since 1990s India switched to intnl trade Since 1990s India switched to intnl trade and GDP has increased by 6%/yearand GDP has increased by 6%/year

WTO – World Trade OrganizationWTO – World Trade Organization

Est in 1995 – promotes intnl trade Est in 1995 – promotes intnl trade model. Works to decrease barriers to model. Works to decrease barriers to intnl trade by….intnl trade by….• Eliminating restriction on trade (no Eliminating restriction on trade (no

tariffs, no quotas on imports, no tariffs, no quotas on imports, no subsidies on exports)subsidies on exports)

• Enforcing trade agreements (rules on Enforcing trade agreements (rules on arguments and accusations)arguments and accusations)

WTOWTO

Liberal critics – say WTO is anti-Liberal critics – say WTO is anti-democratic and promotes interests of democratic and promotes interests of large, wealthy, transnational corplarge, wealthy, transnational corp

Conservative critics – says WTO Conservative critics – says WTO compromises gov of countries b/c it compromises gov of countries b/c it can order changes in subsidies, can order changes in subsidies, taxes, etc.taxes, etc.

ALWAYS protestors outside WTO ALWAYS protestors outside WTO mtgsmtgs

WTOWTO

$$$$$ for Development??$$$$$ for Development??

1.) Loans – usually from World Bank 1.) Loans – usually from World Bank or International Monetary Fund (both or International Monetary Fund (both controlled by MDCs)controlled by MDCs)• Together loan @ 50 billion/yearTogether loan @ 50 billion/year• Idea – borrow $$ to improve Idea – borrow $$ to improve

infrastructure to attract infrastructure to attract businesses/investmentbusinesses/investment

• Many infrastructure projects fail – don’t Many infrastructure projects fail – don’t work, don’t pay off, or businesses still do work, don’t pay off, or businesses still do not comenot come

$$$$ for Development?$$$$ for Development?

(Loans)(Loans)• Debt is greater than annual income in Debt is greater than annual income in

30 countries30 countries• Many LDCs cannot even pay interest on Many LDCs cannot even pay interest on

loans, much less the principalloans, much less the principal• Result….many MDC’s becoming more Result….many MDC’s becoming more

hesitant to grant loanshesitant to grant loans

$$$$ for Development??$$$$ for Development??

2.)2.) Foreign Direct Investment – Foreign Direct Investment – Transnational CorporationsTransnational Corporations: flow of money : flow of money and investment from one country to and investment from one country to another through private corporations another through private corporations (increasing trend in late 20(increasing trend in late 20thth C) C)• BUT only ¼ of foreign investment went from BUT only ¼ of foreign investment went from

MDC to LDC (most goes from MDC to MDC)MDC to LDC (most goes from MDC to MDC)• Of all money from MDC to LDC, ½ of that goes Of all money from MDC to LDC, ½ of that goes

to Brazil, China, MXto Brazil, China, MX

Documents

Econ Geog