Industrialization

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Industrialization
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Defining Industrialization

• Definition
• The growth of manufacturing activity in an
  economy or a region
• Usually industrialization is accompanied by a
  decrease in the of subsistence farmers in a
  country or region as they leave the agricultural
  sector in favor of manufacturing jobs

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Major Economic Classifications

• The economy is the system of production,
  consumption, and distribution in a region
• Classifications
• Primary sector
• Part of the economy in which activities revolve
  around getting raw materials from the earth
• Ex Fishing, Farming
• Secondary sector
• Economic activities that deal with processing the
  raw materials into a finished product of greater
  value
• Ex Factories, Manufacturing

• Tertiary Sector
• Economic activities or services that move, sell,
  and trade the products made in the 1st two
  sectors
• Ex bank tellers, carpet salesman
• Quaternary Sector
• Economic activity that involves information
  creation and transfer
• Ex University researcher
• Quinary Sector
• Economic activities that involve the highest
  level of decision making
• Ex Legislatures, CEOs

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Diffusion of Industrialization

• Prior to the Industrial Revolution
• People made household tools and agricultural
  equipment in their own home or obtained them in a
  local valley
• Called cottage industries
• Definition of Industrial Revolution
• A series of improvements in industrial technology
  that transformed the process of manufacturing
  goods
• History of the Industrial Revolution
• Began in England in the 1760s
• Period of rapid socio-economic change

• Characteristics
• Machines replaced human labor
• Root of IR was technology
• Several inventions that transformed the way goods
  were manufactured
• Result in unprecedented expansion in productivity
• Industries impacted
• Iron, Coal, Transportation, Textiles, Chemicals,
  Food Processing
• New sources of energy found
• Coal leading source
• Major cities rose up near coal fields
• Beginnings of assembly- line production
• Small-scale, mechanized factories
• Transportation improved
• Farming became mechanized
• Results
• Higher standards of living, stage 2 DTM

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Diffusion of Industrialization

• Commodification of labor
• One result industrialization
• Factory owners began looking at their human labor
  as commodities (objects for trade) with price
  tags per hour, rather than seeing workers as
  people
• Spread of the Revolution
• By 1825, the technology of industrialization had
  spread to North America and Western European
  countries
• Thrived in areas with rich coal deposits

• By the 1920s the production process in the U.S.
  automobile factories had broken down into
  differentiated tasks to complete the product
• Process known as the Ford (Fordist) production
  method
• Built factories out rather than up so they
  factories were only one story and the product
  could be transported through the assembly line
  with no problems
• Based on division of labor
• where different parts of the assembly process
  were divided up among different workers and areas
  of the factory

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Diffusion of Industrialization
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Industrial Regions

• Concentrated in three regions
• Europe, North America, East Asia
• Outside the region include Brazil and India
• Europe
• UK used to be steel/ coal, now high-tech
• Rhine-Ruhr Valley- Iron/Steel
• Mid-Rhine- 2nd most imp. Industrial area
• Po Basin- oldest, most imp. Industrial area
• NE Spain- fastest growing, textile, autos
• Moscow- fabrics, and product w/ skilled labor
• St. Petersburg- shipbuilding, Navy industries
• Volga- petroleum and natural gas
• Urals- more than 1,000 minerals
• Kuznetsk- Russias most imp. manufacturing
• Donestk- iron/steel (largest in E. Europe)
• Silesia- Poland and Czech Rep, steel

• United States
• New England- oldest in U.S., textiles
• Middle Atlantic- Largest U.S. market
• Mohawk Valley- steel, food process
• Pitts- Lake Erie- steel 19th century
• Western Great Lakes- transpo, steel
• Southern Cal- 1940s- aircraft
• SE Ontario- Canadas most imp., steel
• East Asia
• Japan
• Industrial power in 1950s, 1960s
• Became world leader in autos, ships, cameras,
  stereos, TVs
• China
• Worlds largest supply of low-cost labor, largest
  consumer market.

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Explaining and Predicting Where Industries locate

• Alfred Webers Least Cost Theory of Industrial
  Location
• Set out to predict where factories would choose
  to locate and grow
• Similar to Von Thunen, studied the locations of
  industrial activities and set up a hypothetical
  state with several assumptions
• Called the Least Cost Theory because it predicted
  where industries would locate based on the places
  that would be the lowest cost to them
• Industries wanting to locate where transportation
  costs are minimized must consider two issues
• The distance of transportation to market
• Weight of goods being transported

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Webers Model

• Assumptions
• Transportation cost determined by the weight of
  the goods being shipped and the distance they are
  being shipped
• The heavier the good and/or the farther the
  distance the most expensive to ship
• Industries are competitive and aim to minimize
  their costs and maximize their profits
• Markets are in fixed locations
• Labor exists only in certain places and is not
  mobile
• Physical geography and political-cultural
  landscape are assumed to be uniform across the
  models space

• With these assumptions, the location of industry
  is driven by four factors
• Transportation
• Labor
• Agglomeration
• Deglomeration
• Critics
• Theory does not identify the fact that markets
  and labor are often mobile and that the labor
  force varies in age, skill sets, gender,
  language, etc.
• Some transportation costs are not directly
  proportional to distance

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Concepts related to Webers Model

• Weight-Gaining versus Weight-Losing Industries
• Early factories also had to consider their
  proximity to the raw materials they needed
• These early factors had spatially-variable costs
• costs that changed depending on the factorys
  location
• A factory using heavy or perishable raw materials
  in its production might be built as close as
  possible to its source of raw materials to
  minimize the cost of transporting the materials
  into the factory

• Weight-losing processes
• Manufacturing processes that take the raw
  materials and convert them into a product that is
  lighter than the raw materials that went into
  making it
• Also called material orientation or
  bulk-reducing
• Ex paper production, copper, steel
• Weight-gaining processes
• Take raw materials and create a heavier final
  product
• When weight-gaining industries locate near the
  place where the heavier product will be sold
  called market oreintation or bulk-gaining
• Ex Beverage bottling industry, fabricated metals

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U.S. Steel Industry

• Two principal inputs (resources) of steel are
  iron ore and coal
• Steel-making is an example of bulk-reducing
  industry
• Needs to be located next inputs to minimize
  transportation costs
• Map of Rust belt

• Centers of Steel Production
• Mid-19th century
• Concentrated near Pittsburgh, P.A.
• Today center for research
• Late 19th century
• Built around Lake Erie and OH cities
• Influenced by new discovery of iron ore in Mesabi
  Range in Minn.
• Early 20th century
• Located near Lake Michagan
• Closer to Mesabi range
• Mid-20th century
• Closter to ocean on both coasts
• Reflective of Iron ore from other countries
• Today
• Most in U.S. are closed

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Concepts related to Webers Model

• Footloose Industries
• Are not restricted in where they can locate
  because of transportation costs
• Some maintain the same cost of transportation and
  production regardless of where they choose to
  locate
• They industries have spatially fixed costs
• costs that remain in same no matter where they
  choose to locate
• Often produce lightweight products of extremely
  high value
• Computer chips

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Transportation

• Inputs and products transported one of four ways
• Trucks
• Short-distance delivery
• Loaded/unloaded quickly
• Advantage if driver can reach location in one day
• Trains
• Often used to ship to destinations that take
  longer than one day
• Take longer to load
• Air
• Most expensive
• Reserved for speedy delievry of small-bulk,
  high-value packages
• Ships
• Attractive for very long distances
• Slower than land-based transpo
• Used for international

• Lots of companies mix the modes of delivery
• Thanks for containerization
• Regardless of mode, cost increases each time you
  change modes of transporation
• Many companies that use multiple transport mode
  locate at break-of-bulk points
• Location where transfer among modes is possible
• Often seaports, airports

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Concepts related to Webers Model

• Labor costs and the Substitution principle
• The Weber model assumes that the cost of labor is
  a key factor influencing where industries choose
  to locate
• Included in labor considerations is the
  availability of industrial capital
• Consists of machinery and the money to purchase
  the tools and workers the factory needs

• The substitution principle applies when an
  industry will move to a place to access lower
  labor costs, even though transportation costs
  might increase as a result
• In the long run, these companies will save more
  because of the cheaper labor

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Labor-Intensive Industries

• Definition
• One in which the wages and other compensation
  paid to employees constitute a high percentage of
  expenses
• Labor constitutes an average of 11 of overall
  manufacturing costs in the U.S.
• Labor-intensive industries in the U.S. would have
  a higher percentage
• Average wage paid exceeds 20 an hour in MDCs
  with benefits
• LDCs less than 5 an hour with limited to no
  benefits

• Different that high-wage industry
• Labor-intensive measured in percentages
• High-wage measured in currency
• Examples
• Textile and apparel industry
• Spinning of fibers and prep work
• Weaving or knitting of yarn into fabric
• Cutting and sewing of fabric for assembling
  clothing and other products

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Concepts related to Webers Model

• Agglomeration
• Occurs when industries clump together in the same
  geographic space
• Alfred Marshall first identified the benefits of
  agglomeration in industrializing England in the
  late 19th century
• Factories that are in the same area can share
  costs associated with resources such as
  electrical lines, roads, pollution control, etc.

• Agglomeration economies occur when the positive
  effects of agglomeration result in lower prices
  for consumers
• Categories of agglomeration economies
• Localization economies occur when many firms in
  the same industry benefit from clustering close
  together
• Urbanization economies occur when large
  populations in urban areas benefit from
  clustering together because they get to share
  infrastructural elements
• Ex power lines and transport system

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Concepts related to Webers Model

• High-Tech Corridor and Technopoles
• A high-tech corridor is a place where technology
  and computer industries agglomerate
• A technopole is another name for a region of
  high-tech agglomeration, formed by similar
  high-tech industries seeking to locate in a
  shared area so that they can benefit from shared
  resources
• Like sharing a highly-trained workforce, and
  utilizing similar support businesses
• Ex computer repair shops, electrical wiring
  services

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Concepts related to Webers Model

• Backwash Effects
• Negative consequences of agglomeration that can
  occur when other areas suffer out-migration
  (brain-drain) of talented people who are moving
  to a technopole or other hot spot of industry
  agglomeration
• Locational Interdependence
• The theory that industries choose their locations
  based on where their competitors are located
• Industries want to maximize their dominance of
  the market, so they are influenced by the
  competition.
• Ex Gas stations
• Multiple gas stations at highway exit because one
  would not be enough to service needs

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Concepts related to Webers Theory

• Deglomeration
• unclumping of factories because of the negative
  effects and higher costs associated with
  industrial overcrowding
• Often occurs when a agglomerated region becomes
  too clustered, too crowded
• Or when such agglomeration negatively affects the
  industries such as pollution, traffic congestion,
  or strained resources and labor