Manufacturing & Industrial Location
Theory – Chapter 10
 Questions –Directions for Future Research?
 4 lectures left!
 Location Theory

Space-cost curve
 Tariff and NAFTA
 High Technology
 Cycle Theory
 Fordism-Flexible Specialization
Alfred Weber, 1909
Labour costs - Isodapanes
 Isodapane
 Line of total transport costs
 Determined by summing the value of all isotims at a point
 And joining all points of equal total transport costs
Caution: As some hawk-eyed
students have pointed out, there
are a number of errors in this
diagram!
As you can see for yourself, the
$8 isodapane is really the $9
isodapane. The isodapanes are
wrongly interpolated to the left of
M and to the right of S
Derivation of Space Cost Curve
Spatial Margins to
Profitability
 Contemporary




interpretation
Slopes of curves could
be very gradual
Noneconomic factors
may prompt
nonoptimum location
within margins
Firms may not have
data to determine the
optimum and are
content with any
location within margins
of profitability
Satisficing behaviour
Manufacturing: Regional Patterns
and Issues – Chapter 11

Tariff on manufactured imports
– Import substitution
– Protect infant industries
– Foster industrialization and create industrial
jobs
– Linkages with other Canadian manufacturers
– 3rd Plank of the National Policy of 1869
Implications of the Tariff
for Canadian Manufacturing
Industrialization benefits for southern Ontario and
Quebec, rapid urban –industrial growth
 Deindustrialization of Maritimes 1870s and 1880s
 Higher costs due to tariff and low Canadian
productivity were a small price to pay for Ontario &
Quebec
 The seeds of

– Western alienation
– Sir John A. &
– Conservatives!
Implications of the Tariff
for Canadian Manufacturing
Foreign ownership
 Tariff factories
 Branch plant economy

– Technological dependency
– High costs, low productivity
– Not competitive on world markets
 No mandate to export
– Main links to U.S. not Canada!

By 1980s, NTBs more significant
‘Free Trade’ Agreements
CUSFTA – 1 Jan 1989
 NAFTA – 1 Jan 1994
 Foreign location no longer a condition of
market entry
 Rationalization/specialization
 Canada maintains positive balance of
trade
 Dispute resolution mechanism

It’s Not Really ‘Free Trade’
U.S. government procurement
 Canada’s cultural industries
 Dispute resolution: softwood lumber,
durum wheat, beef are conspicuous
failings
 Loss of sovereignty ?

Canada’s International Trade Balance,
2001
($ 000,000)
Commodity Classification
Section I Live animals
Section II Food, feed, bev. & tobacco
Section III Crude materials, inedible
Section IV Fabricated materials, inedible
Section V End products, inedible
Special transactions, trade, exports
Other balance of payments adjustments
United States
United Kingdom
Other EEC
Japan
Other OECD
All other countries
Exports
2,394
25,723
54,558
109,058
208,566
8,119
6,221
350,908
6,574
15,727
9,482
10,925
21,023
Imports Balance
398
1,996
18,674
7,050
20,939 33,619
69,444 39,614
227,895 (19,329)
6,843
1,275
6,430
(209)
255,028 95,880
11,863
(5,290)
23,225
(7,498)
10,585
(1,104)
18,626
(7,701)
31,295 (10,272)
Source: Statistics Canada 2003, Cansim II Table 228
Costs and Benefits of ‘Free Trade’
“Giant sucking sound" of jobs and
investment heading south – irony!
 Growth in trade and investment, inbound
and outbound. See DFAIT
 Growth in dependence
 Canada’s low dollar has been vital to
strong trade performance under NAFTA
 Impact is regionalized
