Chapter 12

Industry and Services

Industrial Revolution• Some industry existed before the industrial revolution

– “cottage industries” in India and China– Europe’s revolution made industry cheaper and faster– Companies created during the Industrial Rev. were

aggressive and promotes the future of colonization • British East India Tea Company

• Revolution began late 1700s in Europe– New machines, used steam power– Built factories and cities near coal mines and railroads

• Revolution diffused from London to Europe mainland in 1800s– Built along coalfields still and ports built on rivers– Railroad created new manufacturing cities (Paris)

Location Theory• Location theory- explains the location of an

economic activity based on the factors that influence the activity– Primary- based on location of resources– Secondary- based on human behavior

(culture, customers)• Friction of distance- further away you ship

raw materials, more time and money

Weber’s model• German who created a model to explain

location of manufacturing– Least cost theory: based on transport cost,

labor cost and agglomeration (companies cluster in the same area)- create a least cost combo of the three

• Big cities = high rent and high labor causing deglomeration where companies leave the city for suburbs (Lake Mary)

Hotelling’s model

• Locational interdependence- location of an industry is intertwined with it’s competition (pg. 368 ice cream)

Losch’s model

• Tried to find where to put manufacturing plants to maximize profits based on consumer demands

Economic Sectors• Primary- jobs that deal with taking things from

the earth (farmer, coal miner)• Secondary- processing raw materials (paper

company, making boxes of cereal)• Tertiary- service jobs that aid or help people

(waitress, doctor)– Quaternary- exchange of money (bankers)– Quinary- exchange of information (scientist)

Major industrial regions of the world

• Four main industrial regions: West/Central Europe; East North Am.; Russia/Ukraine; Eastern Asia

• Europe- principal coal deposits in France, Belgium, Germany, Czech Republic, and Poland– Major industry boom in Germany (still today)

• North America– Began in New England– Grew in power after WWI and WWII– Manufacturing belt (pg. 372) Iowa, Ohio, and

down the Miss. River– Break of bulk point- cargo is transferred from

one type of transport to another (ship to train) • Mainly NY

• USSR_ focused on industry in the western area (Moscow to St. Petersburg)

• Ukraine became an industrial powerhouse that was annexed by USSR

• East Asia- Japan and China- both avoided colonization and grew as industrial countries

• Energy a new factor in the world with US consuming 27% if the world’s oil but only producing 18%– Heavily dependent on foreign oil

Industrial Production Change• Twentieth century boom began with Henry Ford

and the assembly line– Mass production called Fordist

• Currently in Post Fordist where production is distributed across the globe though “outsourcing”– Time space compression (use of technology)

makes global interaction easier

Industrial belts today• Deindustrialization- where companies

move to areas of cheaper labor; then richer countries become service oriented– Europe and US highly deindustrialized– Manufacturing belt of US now the Rust Belt– China is the main source of outsourced work

Service Economy• Fordism began to decline after WWII with

the decline in the cost of transport of goods– If oil prices go up then the price of transport

goes up

• Shift for the US to service and technology industries– Tertiary- service sector– Quaternary- collection of information and

finance– Quinary- research and higher learning– All grown rapidly in past 30 years

• Service industries growing mainly in the core

• Service industries expanding in mainly the core countries and labor dispersed to other countries– This shift encourage the core-periphery model– Still some poor areas in core countries

• Service industries moving to the Sunbelt (SW and SE)

• Location now less of an issue because of technology– Some service industries depend on

location (hotels; retail)• Location of service industries can completely

change cultural landscape (Wal-Mart)• Quaternary services can be located anywhere

(small towns)

• High tech corridors (Silicon Valley, CA) where research and tech development are clustered together (Techno pole)– Boston area creating a new techno pole– Only need to be near transport and

communication networks

• Footloose industries- business that have no storefront