The American economic The American economic core area: USAcore area: USA

Economic GeographyEconomic GeographyI. International Business bachelor study programme (BA)I. International Business bachelor study programme (BA)Spring term 201Spring term 20144/201/20155..CUB Department of Economic Geography and Futures StudiesCUB Department of Economic Geography and Futures Studies

dr. Jeney Lászlódr. Jeney LászlóSenior lecturerSenior lecturer

jeney@caesar.elte.hujeney@caesar.elte.hu

Concept and divisions of Concept and divisions of AmericaAmerica

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Concept and discovery of America, its main features

Name:– Amerigo Vespucci (female version of the name: America)– New World

Discovery:– 30–40 thousand years ago: from Asia (ancestors of Red

Indians)– 10 thousand years ago: Patagonia was reached– Viking fishermen– 1492.: Columbus (did not know, it was America)– 1497.: John Cabot (North America)

Area: 42 mn km2 (28%) (WR2.) Population: 870 mn (14%) Physical Geography: joining of two continents Human Geography: division of one continent into

two parts after colonisation

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Divisions of America (1 or 2)

The The AmericasAmericas Physical Geography:Physical Geography:North and SouthNorth and South

Human Geography:Human Geography:North and LatinNorth and Latin

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Divisions of America (3 or 4)

Physical Geography:Physical Geography:North, Central, SouthNorth, Central, South

Human Geography:Human Geography:North, Middle, SouthNorth, Middle, South

Human Geography:Human Geography:N, Middle, S, CaribbeanN, Middle, S, Caribbean

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Division of America from the viewpoint of Regional Geography

North America (English America)

Latin America

Middle America

Mexico

Central America

The Caribbean

South America

Inner dividing borderlines:Inner dividing borderlines:– Human Geography: State Human Geography: State

border between USA and border between USA and Mexico (border of North and Mexico (border of North and Latin America)Latin America)

– Physical Geography: Isthmus Physical Geography: Isthmus of Tehuantepec (216 km) of Tehuantepec (216 km) (border of North and Central (border of North and Central America)America)

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Evolution of the North Evolution of the North American economic pole of American economic pole of

the Worldthe World

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Birth of the USA

For a short time: four centuries First British settlement (1607): Jamestown

(Virginia) Puritan spirit of the real founders of USA

– 1620: Mayflower (New England – Massachusetts)– But: lots of religious persecuted persons arrived too– Tenacious toughness, adventurous sprit, hard work– Tensions of native population– Not real melting pot (opposite to Sp., Fr. colonies)

Initially problems: sailing, frost, hunger, epidemic XVIII. century: prosperous 13 British colony:

integrated zone– Swedish, Dutch colonies disappeared

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Commercial Farming Base

Combination of:– Natural resources (climate, land, soils, water)– Economic factors

led to specialization– Midwest: grain-livestock area– Mississippi Delta: cotton area– Great Plains: feedlots– California (irrigated lands): grape (most

productive vineyards) orange– Drier, higher parts of the West: low productivity

grazing land

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Manufacturing becomes central

Early 1800s– East Coast: Southern New England, New Jersey, Eastern

Pennsylvania– Manufacturing developed from local crafts (pottery,

smithing)– Under family ownership– Based mainly on water mill power– Produced: metal, leather goods, textiles

Required new transportation facilities– Financed by federal investments– By 1860: railroad reached Chicago from East Coast construction basis of iron industry expansion– Coal, iron steel production (Pittsburgh)– Inland emerged from the East Coast (closely to the raw

materials + as US settled newer markets)

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Manufacturing from 1860 to the World War II

Value from manufactured goods > commercial farm products– Agriculture become industrialized

Till 1950s: manufacturing: primary engine fuelling the expansion of the US economy– Consumer goods, transportation vehicles (cars,

trucks, airplanes) Traditional developed Manufacturing Belt:

New York, Chicago, Detroit

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Key economic industries after World War II

Wider geographic diffusion of manufacturing industries: West Coast, Southern US too– Distributing electricity to rural areas– Interstate highways– Airline routes

Later: goal to satisfy more market needs (Latin America and Asia)

Products became more technologically sophisticated– High-tech goods: Silicon Valley of California, Boston,

Washington US companies become multinational Service industries: financial, computer services, publishing Tourism: 54 mn visitors to USA, 64 mn American abroad World’s most developed country economic prosperity,

political influence Largest GNI (ppp): WR1 (however: fluctuating growth)

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Regional policies

After Civil War: poverty in South Southern Appalachia: hill farms on small plots of

eroded lands extremely poor World crisis 1933: Tennessee Valley Authority (TVA)

– To stimulate economic growth in lagging regions– However dominant US policies: against government-funded

regional aid– Economic and population growth, but environmental

degradation 1960s: Appalachian region: poorest

– 1965: Appalachian Regional Commission (ARC): financial aid packages

– 1980s: Ronald Reagan reduced ARC’s funding and effectiveness

Rural problems Metropolises: increasing dominance in economic and

social life

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Canada

Natural resources: diamond, irons, timber and other minerals

Follows US, but with a time lag Industrialization from the World War II

– Import substitution industries: aluminium, vehicles, consumer goods production

– Hamilton: steelmaking center– Montréal, Toronto, Vancouver: financial

services, commercial enterprises GNI ≈ EU members, but not equals with US NAFTA: increased US investment

The North American The North American economic integration: economic integration:

NAFTANAFTA

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Canada and USA: significant and multifaceted economic systems USA

– $47,200 per capita GDP (ppp) (2011) largest economy in North America, and in the world

– most technologically developed economy in North America

– GDP: services 76.7%, industry 22.2% and agriculture 1.2%

Canada– Economic trends ≈ to that of USA– Significant growth in services, mining and manufacturing

sectors– $39,400 per capita GDP– GDP: services 78%, industry 20% and agriculture 2%

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NAFTA

The North American economy could be defined in the economic areas of the North American Free Trade Agreement (NAFTA): Canada, USA and Mexico

One of the four largest trade blocs in the world Its implementation: 1994

– Allowed for strong economic cooperation– Hopes of eliminating barriers of trade and foreign investment

between the three member countries Earlier: Canada and USA already conducted the

largest bilateral trade relationship in the world before– Canada–USA trade relations already allowed trade without

taxes and tariffs– NAFTA allowed Mexico to experience a similar duty free trade

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NAFTA

Trade volume steadily increased annually– Trade between the three NAFTA states reached an all-

time historical increase of 24.3% or USD $791 billion The NAFTA trade bloc GDP (PPP): $17.617 USD

trillions (WR1) – This is in part attributed to the fact: GDP of USA $14.7

trillion (WR1) The countries of NAFTA: also some of each other's

largest trade partners– USA: largest trade partner of Canada and Mexico– Canada and Mexico: each other's third largest trade

partners

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North American economy

USA also take part in inter-continental trade blocs– Trade agreements under the Transatlantic Free

Trade Area with EU– US-Middle East Free Trade Area: with numerous

Middle Eastern nations and itself– Trans-Pacific Strategic Economic Partnership:

with Southeast Asian nations, Australia, and New Zealand

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Advantages and disadvantages of NAFTA

Supporters of NAFTA Critics of NAFTAnew markets for the 3 countries new markets primarily for Mex and

CanMexican cheaper goods force down the prices of USA and Can goods consumers win

Low labour costs USA and Can companies move to Mex higher unemployment

Stronger global economic weight in competition with the EU and others

More significant economic disparity between USA, Can and Mex

Democracy and political stability in Mex greater stability in N America

Higher economic disparity within Mex political instability in Mex

Jobs in (mainly North) Mex higher living standards, employment rates

USA culture overpowers in Can and Mex. SW USA: increased use of Spanish language tensions

Environmental agreements healthier environment in Mex

USA factories relocate to Mex polluted areas in Mex

Equal treatment of corporations Too powerful corporations