1300 Chapter 10 - Economic Geography

Economic Geography

• How people earn their living, how livelihood systems vary by area, and how economic activities are spatially interrelated and linked.
• The study of the location, distribution and spatial organization of economic activities across the Earth

Categories of Activity

• Based on increasing complexity and distance from primary subsistence activities

Primary Activities

• Harvesting or extracting something from the earth
• Hunting and Gathering, agriculture, mining, fishing, etc…

Secondary Activities (Form Utility)

• Those activities which add value to goods (and services) by changing their form or combining them into other commodities
• Manufacturing and processing industries as well as the energy and construction industries

Tertiary Activities

• Specializations which provide goods and services to the community and the individual
• Middlepersons between the producer and the consumer

Quaternary Activities

• The processing and dissemination of information
• The administration and control the previous levels (management)

Quinary Activities

• High level decision-making in large organizations

Types of Economic Systems

• Subsistence Economy
• Production of what is needed by the producers and their immediate kinship group
• Subsistence farming and hunter-gatherer groups
• Commercial Economies
• Producers market their goods and services and price is determined by supply and demand.
• Market competition is the primary force shaping production decisions and distribution
• Capitalism
• Planned Economies
• Governments control both supply and price
• Production and distribution patterns tightly controlled by central planning departments
• Communism (Soviet Union, Cuba, North Korea)
• Most nations/peoples operate in a mixture of all three of these economies

Stages of Development

• From least to most developed
• GDP, stage of industrialization or post-industrialization
• Seem to not explain outside interference and interrelations
• Degree of Exploitation (World Systems Theory)

Primary Activities

Food Acquisition

· Sufficient food in the world for everyone to be feed

· Uneven distribution of food resources

o Mainly in Africa and other Third World nations

· Hunting and Gathering

o Pre-agricultural food acquisition

Agriculture

• The growing of crops and the tending of livestock
• Depends on proper soils, moisture, growing season, etc…
• Greatly affected by advances in technology

Subsistence Agriculture

• Farming to provide for the immediate needs of the people involved
• Found primarily in Africa, Latin America, and South Asia
• Extensive Subsistence Agriculture
• Large areas of land and minimal labor input
• Generally low population densities and low productivity
• Nomadic Herding
• The wandering but controlled movement of livestock
• Solely dependent upon natural forage
• Greatest amount of land area per person
• Animals display hardiness, mobility, ability to subsist on local forage
• Primary subsistence form of the herder
• Movement tied to climate changes, seasons, and altitude
• Transhumance – seasonal movement to exploit local, climatic and geographic variations
• Shifting Cultivation
• Generally found in tropical environments (warm, moist, low-latitude areas)
• Swidden, Slash-and-Burn, etc…
• Shifting fields as nutrients decrease (nomadic agriculture)
• Subsistence or cash crops
• Efficient for low population densities with plenty of land and limited technological levels
• Destructive at higher population densities
• Intensive Subsistence Agriculture
• Small areas of land with high labor input
• Population densities and productivity are both high
• About 45% of the world’s population
• Shift from family foodstuffs to cash cropping
• Rice – primary example
• Birds, cattle, hogs, goats
• Can be found in urban areas

Intensification

• Increasing productivity of existing cropland
• Increase irrigation, fertilizer, pesticides, and labor
• Green Revolution
• Genetic improvements in crops
• Uneven availability
• Generally oriented toward commercial crops
• Costly
• Increased levels of mechanization
• Ecological damage due to fertilizers and pesticides
• Loss of crop and genetic variety
• Increased risk of disease and loss
• Groundwater depletion

Commercial Agriculture

• Agricultural production for sale in a market
• Production Controls
• Specialization – focus on one or a limited number of crops
• Off-Farm Sale – instead of subsistence
• Interdependence – between producers and consumers in markets
• Market uncertainty
• Shift from “family” farms to “industrial” farms
• Intensive Commercial Agriculture
• Production of high yield corps with high market value
• Fruits, vegetables, dairy products
• Dairy farms and Truck Farms
• Close proximity to markets
• High transportation costs
• Livestock-grain farming
• Growing grain to be fed to livestock
• Close to good transportation networks
• Dependent upon price of secondary production
• Location many times dependent upon land use restrictions and environmental standards
• Intensive agriculture leads to environmental degradation and pollution
• Extensive Commercial Agriculture
• Lower yield crops on large plots of land
• Wheat (cereal) Farming
• Expensive product and technology
• Low expense per unit of land on large farms
• Livestock ranching
• Generally on land unsuitable for crop agriculture
• Distant from markets
• Dependent upon good transportation networks
• Generally commercial ranching leads to overgrazing and environmental degradation
• Special Crops
• Mediterranean Agriculture
• Grapes, olives, oranges, figs, vegetables, etc…
• Dependent upon long, warm growing season and sunlight
• Tend to be very agriculturally fertile lands
• Generally require irrigation systems for intensification
• Plantation System
• Foreign involvement into an indigenous economy
• Often employs a foreign labor force
• Foreign crops introduced into new areas
• Specialized crops – tobacco, sugar cane, coffee, bananas
• A northern European development – Colonial period

Von Thünen’s Isolated State Model

• Postulated a central market center surrounded by concentric zones of land use.
• Land use was determined by transportation costs.
• Very basic model with many oversimplifications.
• Most intensive agriculture was found close to the market
• Less intensively produced commodities produced farther away
• Transportation needs and cost affect location of activity
• High market value and high transport cost along will be found close to market
• Commodities with lower transportation and production costs and which are less perishable will be produced at greater distances

Fishing

• Gathering industry
• Inland Catch
• From ponds, lakes, and rivers
• Around 7% of total fish catch
• Fish Farming
• Fish farms…
• Marine Catch
• From coastal waters or the High Seas
• 61% of total fish catch
• Mainly from coastal waters on the continental shelves
• Mainly in northern waters
• Marine Catch is seriously affected by pollution and over fishing

Maximum Sustainable Yield

• Largest volume or rate of use which will not impairs its ability to be renewed or maintained for future productivity

Tragedy of the Commons

• When the resource is available to all, individual users (in the absence of controls) will exploit the resource to its maximum extent, without regard for others, leading to the eventual depletion of the resource

Aquaculture

• The breeding of fish in fish farms in both fresh and salt water
• 30% of total fish catch

Primary Products and Activities

• Fishing
• Forestry
• Mining and Quarrying

Trade in Primary Products

• About 25% of all trade is in primary products
• Traditional – Industrial Trade
• From less-developed nations to more developed ones
• Toward production, manufacturing, and processing regions
• Manufactured goods back throughout the world
• Post-industrial Trade Patterns
• Less developed states increasingly producing 2^nd stage goods as well as primary products
• Importation of cheap manufactured goods by First World States
• Alternate materials being found for many minerals and other primary materials
• Trade is increasingly hampered by artificial/political trade barriers and subsidies implemented by First World States

Secondary Activities

Manufacturing

• Symbol of Industrial power and advancement
• Standardized, low-cost goods
• Improvements in transportation and innovation
• Rise of the middle class
• Locations dependent more on Cultural and Economic patterns instead of physical geography
• Economically Rational
• People make decisions based on universal concepts of what is most cost-effective and advantageous
• Maximization of Profit
• The goal of producers and sellers

Industrial Location Models

• Based on the best combination of the Variable Costs
• The costs involved in transportation, labor, production, land, etc…
• Measured against the profit of the item being produced

Least Cost Theories

• Weberian Analysis (early 1900’s)
• Transportation Costs
• Based on a formula for determining the cost of the transportation relative to the raw materials and the finished product
• Material-oriented (weight loosing) Industry – where the product weighs less than the raw material
• Located close to source of raw material
• Market-oriented (weight gaining) Industry – where the product weighs more than the raw material
• Located close to the market for the product
• Labor Costs
• Unskilled labor
• Common – can be found anywhere
• Skilled (Deskilled) labor
• Limited resource – generally found in clusters
• Silicon valley, around urban areas and universities
• Agglomeration Costs
• Clustering of productive activities and people
• The trend of supporting activities to cluster together to reduce transportation costs and increase access to people
• Too much competition or over taxation lead to deglomeration
• Substitution Principle
• The concept of offsetting (substituting) a high cost activity with a low cost one (i.e. accept higher transportation costs to acquire low labor and agglomeration costs…)
• Increases the places where industry may be profitably located
• Spatial Margin of Profitability
• Expands the substitution principle to create areas where industry can be located.

Transportation Variables

• Water transportation is cheapest form of transport
• Railways and highways increase attractiveness of inland points
• Footloose Activity
• Where transportation is not a relevant variable
• Ubiquitous Industries
• Inseparable from markets and widely distributed
• Highly perishable commodities for immediate consumption

Agglomeration (External) Economies

• Savings from shared transport facilities, social services, public utilities and communications networks, etc…
• Infrastructure (see previous point)
• Concentrations of skilled and unskilled labor
• Access to markets and auxiliary services and businesses
• Multiplier Effect
• Each additional industry/business makes the area more attractive for other businesses.
• Urbanization

Flexible Production Systems

• Ability to move rapidly between different levels of output and from one process or product to another

Just-in-Time Production (JIT)

• Reduce inventories (storage costs) by having supplies arrive just in time for use and for producing products just in time for sale.
• Frequent ordering of small amounts of goods for immediate use (lean manufacturing)
• Encourages suppliers to locate near users
• Subject to massive interference due to failure of one part of the chain
• Weather
• Strikes
• War
• Etc…

Comparative Advantage

• Economies improve through specialization and trade
• Regional specialization
• Areas must have different advantages and free trade policies
• Outsourcing
• Producing parts or products abroad for domestic sale
• Subcontracting production and service work to outside contractors
• Adjunct Professors…
• Maquiladoras – formed along U.S.-Mexican border following NAFTA
• Close to U.S. markets but with cheap labor and reduced environmental and labor oversight
• Offshoring
• The hiring of foreign workers or moving aspects of a business to a foreign provider
• Call centers, etc…
• Dependent upon modern telecommunications and transportation

Transnational Corporations

• Apply all of the above
• Foreign Direct Investment (FDI)
• The purchase or construction of factories and other assets by TNCs
• Dependent upon modern communications and transportation networks

World Manufacturing Patterns and Trends

• Four major manufacturing regions
• Eastern Anglo America
• Western and Central Europe
• Eastern Europe
• Eastern Asia
• Remain mostly areas of primary industrialization in the 18^th Century
• World Industrialization spreading to other areas
• The East Asia region
• Brazil and Argentina, India, Southern Africa, Southern Asia
• Newly Industrialized Countries (NICs)

Tertiary Activities and Beyond

• Services and management for the primary and secondary sectors as well as to the general populace and individuals
• Replace Primary and Secondary Activities in Post-Industrial States
• U.S. is a leader in this process
• Apply to both “low-order” or traditional activities as well as to “high-order” knowledge-based services
• Barber
• Shopkeeper
• Computer programmer/IT Specialist
• Consultants for businesses

Tertiary Activities

• Tertiary applies mainly to the low-order activities
• Place Utility
• Wholesaling or retailing of goods
• Effective Demand
• Wants made meaningful through purchasing power
• Determine where Tertiary activities locate
• Growth through Outsourcing
• Location Tendencies
• Proximity to universities
• Avoidance of areas with strong unions
• Locally available venture capital
• Areas with favorable quality of life
• Good communication and transportation infrastructure

Tertiary Activities and Beyond

• Difficult to sometimes distinguish between Tertiary and Quaternary Activities
• Quaternary services generally involve:
• Specialized knowledge
• Technical skills
• Communication skills
• Administrative competence
• Over 80% of workers in the U.S. labor force (including Tertiary)
• Difference between Quaternary and Quinary appears to be level of salary and benefits…

Services in World Trade

• 20% of total world trade
• Dependent entirely upon advances in telecommunications and data transmission
• Cluster in national centers and regions with connections with existing centers