World Geography 3202

Unit 5: Secondary and Tertiary Activities

PATTERNS IN MANUFACTURING

Chapter 13

Three Sectors of the Economy1. Primary – Involves the collection or extraction of raw materials from

the earth. Farming, fishing, mining, forestry are the classic parts or examples of the primary economy.

– The farmer takes plants from the land, the forester takes trees from the forest, the fisher takes fish from the ocean and the miner takes ore from the ground.

– All involve collecting natural resources.

Introduction to Manufacturing

2. Secondary – Involves processing or manufacturing raw

materials into products for people to buy. All the activities start with a raw material and convert it to a product for sale.

– It is often referred to as the “manufacturing or processing” sector.

– There are a multitude of examples for secondary processing.

– Sometimes referred to as “Value adding” (Example: the tree would be much less expensive to buy than the lumber. The processing (sawmilling) to make lumber has added value).

3. Tertiary Economic Activity – It involves providing service to people. It is often

referred to as the service industry. Does not deal with raw materials

– Nurses, doctors, lawyers, teachers, waitresses, hairdressers, sales people all provide services for other people. Tourism is an important part of the tertiary sector.

Manufacturing: A Systems Approach1. Inputs: materials & factors that go into

making a product (Examples: raw materials, electricity, buildings, land, labor, capital, machinery).

• There are two types of inputs:1. Human: Made by people (i.e. steel)2. Natural: Nature (i.e. sunshine)

2. Manufacturing Processes: 3 types of processes that change a raw material to a usable form: 1. Conditioning: minimal change to a resource (Example: logs into lumber; fish into fillets). 2. Analytical: one resource converted to a number of different products (Example: cow into leather, milk & cheese).

• 3. Synthetic: several resources are combined to make one resource(Example: light bulb has glass, tungsten, nitrogen and aluminum).

3. Outputs: it is the finished product from a manufacturing process. For example, the output from the fish plant is fish sticks or frozen fish fillets.

1. Labour Intensive vs. Capital Intensive (Process)– “Labor intensive”: requires a lot of person hours to

produce the product (Example: jewelry making).– “Capital intensive”: requires a lot of expensive equipment

to make the product (Example: automotive plant).

Types of Manufacturing

– Some manufacturing businesses might be more difficult to classify because they require large quantities of both capital and labour.

Labour versus Capital

2. Heavy vs. Light Industry (Output)– Manufacturing businesses can be classified based

on the output.– Heavy industry: produces big expensive products

for other industry (Ex. Ship yard, tractor production).

– Light Industry: produces products for consumers (Ex. Pop, clothing manufacturing).

• Some manufacturing businesses might be more difficult to classify because they produce items that might be used by business or by private people.

Heavy Industry or Light?

1. Site/Physical Cost Factors– Three major factors of site (physical location) a) Proximity to raw material: Heavier & bulkier the raw

material the closer the industry will be located to the resource to reduce transportation costs. • “Resource Oriented Industry”

– industries located close to the resource because it is to heavy/bulky to transport;

– communities frequently spring up around resource industries. Labrador City, Churchill Falls, Grand Falls-Windsor and Bonavista are good examples.

Location of Industries

b) Land: price, level, good drainage, dense well-settled soil

c) Energy: not as important a factor today due to our ability to transport power long distances.

2. Human-based Cost Factors– “Market Oriented Industry”• Industries that are located close to the market

(people). The inputs are not bulky or heavy, and are transported near the market for manufacturing. The soft drink industry is a good example.

– Market vs. Resource Oriented Industries: • Let’s examine the influence of weight gain & weight loss on the

location of industry• Market Industry:

• Smaller parts are shipped and put together for manufacturing. i.e. Smaller parts are shipped to manufacture lightbulbs, soda pop, and furniture.

• Output (product) weight is greater (weight gain) than the input resources, therefore, it is located near market.

• Resource Industry• Large, heavy inputs are broken into smaller pieces.• It is too heavy and costly to ship the resource, so it is broken down. This

creates weight loss. If product weight is less (weight loss) than the input resources, the industry is located near the raw material or resource. i.e. Logs are sawed into smaller sections to make lumber.

– Agglomerating Tendency • Agglomerating tendency refers to factories producing

related products locating close to each other for mutual benefit (Ex. Auto plants & tire factories).

- Industrial Parks • Industrial parks provide many advantages for a

business. Existing infrastructure of roads, on and off ramps to highways, large building lots, sewer, ample electricity, and close location to related industries make industrial parks attractive for manufacturing businesses.

– Labour force characteristics that attract business • Wages: lower wages in some developing countries like Mexico,

and the Philippines attract manufacturers• Training: highly skilled labourers can attract businesses that

require welders, mechanics, carpenters etc. • Benefits (EI, Pensions etc): lower costs of employment insurance,

pensions , etc. can attract business just as easily as low wages. • Availability: a high unemployment rate might attract business,

especially if large numbers of workers are required.

3. Government Influence– Subsidies: affect the location of industry. Subsidies are

financial aid from government• Subsidies allow businesses to locate farther from the

resource. • Subsidies allow governments to encourage industry in rural

areas.Examples: – ice breakers in Botwood; – roads in Labrador; – cost of coastal transportation in Labrador; – cost of crossing the Gulf.

– Tax breaks affect the location of Industry. • Provinces like Newfoundland have attempted to attract

business by offering tax breaks. The company obtains a financial break while the province gets the advantage of putting people to work.

4. Industry Location; The Global Picture – Look at figure 13.6 on page 223 of your text book. – The highly industrialized areas on the earth's

surface are concentrated in 4 definite regions: • North America • Western Europe • Japan • Australia

– Do you see any other patterns?

Activity– Read the case study "Human and physical factors

in Japan's Car Industry" on pages 227-228 and complete questions 18 & 19 on page 228 of your text book.

Industrial Waste • Industry has waste output as well as product output.• Three of the many types of waste are outlined below. – 1. Green house gasses; ex. Carbon dioxide,

Chlorofluorocarbons & methane. Causes global warming & associated problems.

– 2. Acid Rain; ex. Sulfur & nitrogen. Decreases soil fertility, kills fish, corrodes buildings

– 3. Breaking down the ozone layer: Refrigerants & sprays emit chlorofluorocarbons (CFC’s). The ozone layer protects humans from harmful cancer causing UV rays.

Industry & Environmental Threats

• When we look at the maps on p. 238 and realize prevailing winds play a role we can see that pollution does not recognize political or economic boundaries.

Roles of Stakeholders and Environmental Threats

It is the extreme views that define the middle. • Interest Groups: often fill the extremist role.

They raise valid points of concern and argue them vehemently. (i.e. Greenpeace, World Wildlife Fund)

• Government: has the role of balancing environmental concerns & encouraging economic development.

• Business: Concerned with profit

Averting environmental threats posed industry. • 1. Take a global perspective:– Prevailing winds transport acid rain from

industrialized areas.– The winds are depositing acid rain/pollutants in

locations down wind from the industrialized area. (i.e Japanese nuclear accident)

– The acid rain map (p. 238), the industrialized country map (p. 223) and the prevailing winds map (p. 64) demonstrate this

Actions to Avert Environmental Threats

• 2. Cooperation and consultation:– Solutions to industry related problems will have

to be dealt with by between different nations.– The major environmental summits that have been

held in recent years are examples. The recent Kyoto summit and Rio de Janeiro summit held several years ago attempted to get countries to reduce their carbon dioxide emissions.

• Solutions to solving the acid rain problem include: – government regulation to reduce sulfur & nitrogen

emission; – development of sulfur filtering equipment; – tax breaks for companies if they reduce pollution

output; – meetings and consultation between business,

environmentalists and government to decide on a plan of action.

• Moral and social issues are concerned with right and wrong

• There are many social/moral issues associated with manufacturing operations. Examples include:– child labour– safety of workers– fair wages (fair trade)– a company’s responsibility to be environmentally

friendly

Moral Issues and Industry

• Business drives the economy and provides us with our high standard of living here in the western world.

• The question we have to keep asking ourselves is "are industries acting within the moral parameters of our society". Are we taking advantage of others? Are profits put ahead of people? Environment?

• In Canada, and most well developed nations, there are strict regulations about safety, wages, waste emissions, age of workers, and corporate responsibility.

• In some developing nations the regulations might not be in place. Or they might be relaxed in the hope of stimulating business instead of inhibiting it.

• What are a company’s moral responsibilities?– Profit versus People– Profit versus Environment

Video: Sweatshops

• http://documentaryheaven.com/behind-the-swoosh/

• “Nike Sweatshops: Behind the Swoosh”

Video: Child Labour

https://www.youtube.com/watch?v=2z5YpSDuVVU

Tertiary Activity – It is involved with providing services to people– Ex. Doctor, lawyer, waitress, banking, tourism,

mechanic, teacher, etc.

Tertiary Activity

Private vs Public Economic Activity• There are two ways economic activity can be classified. They

are private and public.

– Private tertiary service:• operated by private business• requires that a profit be made from the service• Ex. Mechanics, lawyers, tourism, banks, insurance

– Public tertiary service:• operated by government (towns, cities, provincial and federal governments)• Do not require a profit. Funded through taxes• Ex. Water and sewer, police, fire protection, highway maintenance

Types of tertiary Activity

– The four types of tertiary activity are: • 1. Distributive Activities:

– involve the transportation and sale of all products from manufacturer to consumer

– ex. truck driver, warehouse manager, sales person • 2. Financial Activities:

– involves banks, insurance companies, financial advising companies, and trust companies.

• 3. Personal Service:– involves a wide range of services to individuals– Ex. legal services, food services, entertainment and

counselling services. • 4. Government service:

– operated by government– not for profit. Actually costs tax payers money– Ex. Education, health care, mail, water, sewer, roads. Hence

the term public servant

Private or Public Tertiary Service?

• It is important to note that many careers in the tertiary sector can not be classified as public or private.

• A teacher can work in the public school system which is public service, or s/he can work for a private college, which is private service.

• Two key factors that determine the location of service industries. – 1. Market size: services must be located close to a

large enough market to produce DEMAND. – 2. Price: services are only viable as businesses if

the demand is high enough & the price is reasonable.

Tertiary Activity

Tertiary Activity and Population

• Is there a relationship between service available and population?

• Yes! Larger populations support a wider range of services. – For example, consider health services, education,

recreation facilities, shopping facilities, hotels, and restaurants. The range and amount of services available is directly related to community size.

• Tourism is one of the fastest growing sectors of the economy. It is also one of the most profitable.

• If your country happens to be located in a sunny area, or to have good ski slopes, or to have cultural attractions, then people will flock there and spend money.

Tourism –Case Study of a Tertiary Industry

International Tourism• From a country’s point of view, international tourism is a good thing

because it is new money coming into the economy.

• International tourism has increased dramatically for 6 reasons:– 1. people have increased leisure time due to available technologies; – 2. retired people have secure incomes and are able to travel; – 3. people have increased discretionary spending money; – 4. travel has become easier and less expensive; – 5. travel agencies have packaged attractive "all expenses paid" trips; – 6. advertising has been effective using attractive & exotic pictures.

• Travel agents see that people are usually looking for one of three different kinds of vacations:– 1. Climate oriented (skiing & sun bathing are at

opposite extremes but both rely on climate) – 2. Landscape oriented (some people like to view

the sites) – 3. Culture oriented (cultural land marks are of

interest to people ex. Athens)

The quaternary sector of the economy is a specialized part of the tertiary sector. – Quaternary activity: refers to data collection and

information processing (i.e. engineering, scientific research)

– Activities which involve the collection, recoding, arranging, storage, retrieval, exchange, and dissemination of information.

– Computers, cell phones, e-mail, and the WWW are some of the examples of new information technology which drives the quaternary sector.

Quaternary Activity

Factors Affecting Location of Quaternary Activity

• 1. People:– Populations of people concentrated in an area make

the information sector viable. People create demand– Historically, information technology like cable TV,

telephones, and radio flourished in areas where there was a population large enough to support them.

• 2. Infrastructure– Infrastructure is required for the communication

of information.– The infrastructure has been closely linked to

population.

Factors that Account for Patterns in Mass Communication.

• Mass communications is very closely connected with economic and industrial development.

• In the emerging “telesphere” of global communications, there are islands and continents of activity

• “Telesphere” is the emergence of telephone lines, data lines, satellites and infrastructure connecting computers and people all over the world

• Parts of the world that are economically developed, have well developed systems of mass communications

• Parts of the world that are NOT well developed, do NOT have well developed mass communication systems

– An advantage the lack of infrastructure might present for less developed nations is that they are not tied to the old and outdated infrastructure.

– It might be the time for lesser developed nations to build infrastructure and increase their share of the information technology market.

• Key Ideas: Remember!– The areas of connectivity are closely associated

with development.– There are deserts or areas where there is no

activity because there is no connectivity. These places lack necessary infrastructure (i.e. electricity grids). See the map!

Economic Development and Communcations

Mass Communication Affecting Workplace Location.

• As more and more people work in the information sector, we see a trend towards reducing urbanization.

• People can live in rural areas and use communications technology to do their work

• People will not be tied to an office building if they could work at home. They could work at home and submit work electronically.

• Remember the “Agglomerating Tendency?”• Agglomerating tendency is when businesses

providing related products and services locate close to each other. (i.e. a tire factory locating near an automobile plant)

• Impacts of improvements in information technology, mass communications and infrastructure:1. Some businesses (and employees) will not need to

be located physically near each other. Key Idea!2. If Infrastructure improves to the point it overcomes

distances, information technology will be a new source of employment and economic activity in rural, depressed regions. Key Idea #2!

• Economists recognize that the tertiary industry has expanded significantly in the last 100 years.

• The entire tertiary sector is growing and is becoming a much larger part of the economy of developed nations.

• In Canada, the tertiary sector has grown from 36% of GNP to 73% of GNP over the last 100 years.

Tertiary & Quaternary Activity Trends

• As the secondary sector of the economy grew, there were more people working in urban areas as manufacturers. The concentration of people meant there was more need for services.

• Service industries grew in turn. The people working in the tertiary industry need services too so the growth of the service industry continues.

Economic Indicators • “Indicators" are used to give some measure to

the concept of development.• Two type of indicators developed by social

scientists: 1. economic and 2. social indicators.• There is debate over which indicators are a better

measure of development.• A variety of indicators provide the best way to

determine the level of economic development.

Standard of Living Indicators

Economic Indicators • A number of economic indicators provide a

measure of economic development.• Two of these indicators are:– 1) Employment Structure– 2) GNP per Capita

Indicators: 1. Employment Structure: • “Employment Structure” is the percentage of

people working in each economic sector• “Developed" countries have been able to

move their economy beyond the primary sector. Economy is shifted to the secondary sector, which in turn grows the tertiary sector.

Employment Structure for Country "X" Primary sector (fishing, farming, mining): 60% Secondary sector (manufacturing): 15% Tertiary sector (service): 25%

• Economists would look at country X and realize that it is a developing country. Why? A majority of people are employed in the primary sector

• Key Idea! A developed country would have a great majority of its workers in the secondary and tertiary sectors of the economy.

• Note: There is a difference between developing and developed countries

• 1. Developing (poorer) versus Developed (wealthy)

Employment Structure for Country Y Primary sector 5% Secondary sector 25% Tertiary sector 70%

• Economists would classify country Y as a developed country. Why?

• It has the vast majority of its workers in the secondary and tertiary sectors of the economy!

GNP per Capita • GNP refers to the total value of the production of goods

and services in a nation• The GNP per capita takes the dollar value of all goods

and services produced and divides it by the population.• GNP per capita = Total value of goods &

services/population • It is measured over a year, together with any money

earned from investment abroad, less the income earned within the nation by non-nationals

• It is possible that country X would have a much higher GNP per Capita.

• The major flaw with GNP per Capita as a measure of standard of living is that the measure is an average! An average assumes that the wealth in the country is evenly spread. This is often not the case.

• For example, if one or two families in the country are very rich and control most of the money, then many of the people could be living in poverty even though the GNP per capita is high.

• Look at Figure 13.12 on page 231 of your text. This map shows you a comparison of countries based on GNP per capita. The disparity between countries should reveal a familiar pattern.

• NOTE: GNP and GNP per capita are usually expressed in U.S. Dollars.

Social Indicators

• 1. Infant Mortality Rate (IMR):– Measures the number of deaths of children under

one year of age per 1000 live births– Indicator of the health of a country– World IMR is 49.4

• 2. Literacy Rate:– Measures ability of people to read and write– Focus upon 15 year olds– Global literacy rate for males is 88% and females is 79%

• 3. Life Expectancy Rates:– Refers to the average number of years a person

would be expected to live– Reflect quality of healthcare, wars, obesity and

HIV infection– Worldwide: the male life expectancy is 68.5 and

female is 73.5

Worldwide Life Expectancy

• The level of development in a country refers to two types of development:

1. economic development2. social development

• “Economic Development” refers to how well the economy is doing, and how much money people have at their disposal.

• “Social Development” It refers to more human indicators of well being. It includes life expectancy, infant mortality rate, literacy rate, availability of communications.

• Generally speaking, people in more developed countries are better off and have an easier life than people in lesser developed nations.

• The term “Standard of Living" is used to describe how well off people are. Standard of living equates to quality of life.

Defining Development

• The level of development among nations is far from equal.

• Some countries have a very high standard of living with long life expectancy, equal rights, high average wages, strong economies, great health care and high literacy rates

• Other countries have a short life expectancy, fierce discrimination against woman, very low wages, faltering economies, little health care and very low literacy rates.

Worldwide Disparity• The United Nations recognizes the disparity and has set forth

eight "millennium goals" to reduce the disparity among nations.– Eradicate extreme poverty and hunger – Achieve universal primary education – Promote gender equality and empower women – Reduce child mortality – Improve maternal health – Combat HIV/AIDS, malaria and other diseases – Ensure environmental sustainability – Develop a global partnership for development

• By the year 2015 all 189 United Nations Member States have pledged to meet the above goals.

Developed and Developing World

Patterns in Developed and Developing Countries

• A number of indicators suggest that:– North America, Western Europe, Japan, Australia

are well developed– Central Africa and South East Asia are poorly

developed– South America, North and South Africa and much

of North Central Africa is developing

Assigned Readings & Activities– "Employment Structures and Development

Indicators" on page 230-233 of your text book and complete questions #22-28

– "Tertiary Activity & Economic Development" on Pages 241-243 of your text book.