LEC1-Economic Geography Introduction

8/12/2019 LEC1-Economic Geography Introduction

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Introduction to GGR 221- New

Economic Spaces

• Deborah Leslie

• http://www.utoronto.ca/culturaleconomy/

• [email protected]• Course blackboard site: go to utoronto portal



What is economic geography?

• location of different types of economic

activities, the economies of particular regions,

and economic relationships between places



I sit at a mahogany table from Honduras. The carpet on which it

stands has been manufactured at Kidderminster in England fromwool brought by a sailor from the River Plate or New South

Wales. The tea in a Berlin porcelain cup came from China or

Assam, the coffee from Java, the sugar from Lower Saxony,

Brazil or Cuba. I smoke Puerto Rican tobacco in my pipe whose

stem grew in Hungary, the material for its Meerschaum bowl,

carved in Thuringia, was dug in Asia Minor, the amber mouth

piece came from the Baltic Sea, and the silver for the rim from

the silver mines of the Erzgebirge, Harz or perhaps from

Potosi ... Karl Andree (1867)



• where are goods and services produced?

• under what conditions?

• how is it that a good produced in one placeends up at another? By what means?

• who buys them?

• How has the production of goods and servicesevolved over time?

• What is the appropriate role of government?

• what, who, how, where, why and so what?



• distinct from economics- less abstract and

generalizing

• Geography matters!

• "I realized that I spent my whole professional

life ... thinking and writing about economic

geography, without being aware of it" Paul

Krugman, Economist (NY Times)



• Krugman:

• a) transportation costs encourage

manufacturers to locate close to other

manufacturers

• b) makes region attractive to workers

• c) draws other manufacturers to be close tomarket

• d) manufacturing concentrates in core area and

supplies periphery- cumulative causation



• central geographical concepts (Coe, Kelly and

Yeung, 2013)

• a) location and distance

• b) territory

• c) place



• d) scale: geographical levels of human activity

• global

• macro-regional

• national

• regional

• urban

• local

• lived places i.e. workplace and home

• body



External reasons to study economic

geography



• a) The transformation of the manufacturing

system

• from “Fordism” to “post-Fordism”



Crisis and bailouts to North American Auto

Industry, and 2013 Canadian Renewal of

Auto Industry Investment Fund



• clustering and agglomeration



• b) The transition to an knowledge/creative

economy

• i) increased input of information into the

production of goods: R&D, technology, and

design

• ii) production of signs, symbols, information

• new creative clusters/ districts



MARS and Liberty Village



• c) financialization

• proliferation of financial markets and

institutions

• economic relations increasingly embedded in

financial transactions



Subprime mortgage crisis



Stock market crash



• d) Globalization

• Canada linked to the global economy in four

main ways:

• i) ecological depletion



Tar Sands



• ii) technological dependence and the brain

drain



• iii) continental integration

• across all states and regions

• iv) cultural deterritorialization



Pinewood Studios, Toronto



• we live in challenging economic times, andeconomic geographers are well positioned tounderstand the inherently geographical natureof recent changes



Internal reasons to study economic

geography.

• economic geography is intellectually vibrant.

• characterized by a willingness to experiment

• never more intellectually porous and

adventurous than in current period



• Main historical traditions/theories:

• a) modelling tradition (positivism)

• b) behaviouralism

• c) Marxian political economy (structuralism)



• d) new economic geography: influenced bynew economic sociology, institutionaleconomics, postmodernism/ poststructuralism



Conclusion

• economic geography diverse, polycentric

• opens up a broad and inclusive debate on how

the economy is organized geographically and

how it could and should be organized









Staples Theory and the Forest

Industry in British Columbia



• W. A. McIntosh: “Canada is a nation created in

defiance of geography”.

• John A. Macdonald’s National Policy

designed to strengthen east-west linkages

• a) tariff barrier

• b)transcontinental railroad



Harold Innis



• need theory sensitive to historical and

geographical context. “Dirt economics”.

• Canada’s history can be understood in terms

of a series of staples: fur, fish, timber,

minerals, oil and gas

• staples production: primary resource activities

and primary manufacturing activities in which

resources are major inputs to the production

process



• staples economy: “a region that depends

primarily on the export of raw and semi-

processed materials to a more advanced

manufacturing economy” (Pat Marchak).

• Staples industries are leading sector of

economy and set pace for economic growth

• economic development a process of

diversification around export base.



• spread effects of sector realized through four

types of interlinkages

• a) backward linkages

• b) forward linkages

• c)final demand

• d)fiscal linkages



• two basic impediments stem from staples

production

• a) export mentality

• b) firms are often large, oligopolistic

• Mel Watkins: staples trap: once a region

specializes in producing staples, it finds it very

difficult to reconfigure production into other

types of sectors



• Cyclonics

• result is susceptibility to volatile resource

prices, market demand, crisis

• metaphor of cyclone - boom-bust dynamics

• each staple has own rhythm, timing

• local staples region locked into set of globalrelations producing dependency





• “Orthodox economists ... attempt to fit their

analysis of new economic facts into ... the

economic theory of old countries .... The

handicaps of this process are obvious, andthere is evidence to show that [this is] ... a new

form of exploitation with dangerous

consequences." Innis, 1930.



• orthodox economic theories presume progress

and equilibrium

• for Innis (like Polanyi), markets have to be

organized



• non-market institutions are foundation of

economics rather than abstract laws of supply

and demand

• Innis brings together three concerns ignored in

neoclassical economics

• triad of concepts





• 1. Geography

• a) natural resources and physical geography

• b) spatial relationships- forces of centralizationand decentralization



• 2. Institutions

• a) role of government: i.e. infrastructure

provision

• b) structure of firm: ownership, control,

competition

• c) institution of market: price mechanism of

less importance



• 3. Technology

• law of comparative advantage a theory

developed in terms of the interests of

metropole



British Columbia as a staples

economy: the forest sector



• Canada, 1996 resource industries only 4.6

percent of employment

• but half of all merchandise exports

• many communities dependent on resources







• B.C. 43 million hectares of forest

• Under British North American Act of 1867,

forests are provincial jurisdiction

• over 90 percent of B.C. forest land is owned by

the Crown

• this land is leased to forest companies, who

pay a royalty payment- the stumpage fee



• B.C. a staples economy, dominated by fur

trade, gold, copper, coal, forestry



• “British Columbia was for a while a rich

periphery, but a periphery none the less. And

peripheries are just regions with nothing to

keep them going when the centre stopswanting their products or finds it more

profitable to invest elsewhere” (Pat Marchak).





• Innis’ triad



• 1. Geography

• a) resources- abundance untapped timber

• b) spatial relations- reliance on export markets

• 2. Institutions: role provincial government, low

stumpage rates

• long term leases, open-door policy

• reliance on R&D in donor country





• Cyclone / Crisis in the sector from 1970s

• Since 1997, 27 mills closed, 13,000 jobs lost

• government revenues have declined by $600

million since 1997

lb i l ( ill l d l /



Port Alberni, Employment (MacMillan Bloedel /

Weyerhaeuser)

• 1980 1986 1991 1996 2001

• Woodlands 1700 1090 1060 853 521

• Somas Sawmill 1064 588 509 450 350

• APD Sawmill 650 533 476 541 505

• Plywood mill 450 377 0 0 0• Pulp and paper 1522 1316 1340 948 860

• Source: Barnes, Hayter and Hay, 2001



• Current Challenges

• 1. Foreign Direct Investment- Help or

Hindrance?



• Question of who gets to cut the harvest?

• Rights are auctioned by the province through a

Tree Farm License (TFL) scheme.

• A license is usually for about 25 years, some

conditions apply

• TFLs generally go to large corporations,

generally foreign



• a) foreign firm as catalyst

• i) financial and managerial inputs

• ii) access to international markets

• iii)leading technological know-how



• b) Limitations to the catalytic effect

• i) emphasis on existing facilities

• ii) access to domestic markets

• iii) little innovation or higher value added

production

• preempts indigenous development





• 2. Problems of scheduling the harvest

• sustained yield- where annual cut is less than

or equal to annual increment of growth over

five year average

• however, problems of estimating annual

growth



• until 1970s, neither private or public sector

responsible stewards according to Barnes and

Hayter, 1997.

• Recognition now that past estimates were notaccurate

• falldown: decline in timber harvests resulting

from overharvesting, and to lower volumesavailable through second growth stands



• Clapp: all resources (renewable and non-

renewable) pass through resource cycle

• three phases

• a) exploration and boom

• b) large-scale exploitation

• c) collapse



Overcut: measure of AAC (allowable annual cut)-



( )

LTHL (Long term harvesting level). A measure of how

much greater the cut is than the resource.





• 3. U.S. trade dispute

• stumpage rates on softwood seen as a subsidy

because too low

• claimed dumping

• U.S. levied import duties

• WTO, NAFTA rulings find anti-dumping levyand countervailing duties illegal







• adapting to new specifications

• boom and bust cycles in housing market in

Japan

• in pulp and paper- increasing competition from

Sweden, Norway, and tropical hardwoods

from S.E, U.S., S. America, S.E. Asia



• 5. Environmental Movement

• protests over old growth forests, boycotts and

lobbying

• more recently certification schemes to reassure

consumer

• 6. Native land claims

• cover large portions of province



Conclusion

• staples theory a theory adapted to Canadian

context

• B.C. a staples economy in classic sense

• unique geography, institutions, technology

• left the region vulnerable to cyclonic winds

• forests a contested space- subject to multiplecompeting claims





Documents

LEC1-Economic Geography Introduction