Economic Development
and Industry
MDC vs. LDC
How do we measure development?
MDC – high urbanization, industrialization, high std of living
LDC – agriculture!!!, lower std of living, challenges????
GNP – total value of all goods/services produced within a year
Social indicators
Core vs. Periphery
Development theories
Wallerstein’s World Systems Theory:
World economy has one market and a global division of labor
Multiple states in the world, but almost everything takes place in context of WORLD economy
World economy has three tier structure: core, periphery, semi-periphery
Structuralist (Dependency model)
Growth of core is only possible b/c of underdevelopment of periphery
Wallerstein
Liberalist (Modernization model)
All countries are on the same path, passing through developmental stages
Rostow
Rostow’s Model of Economic
Development
1. Traditional
2. Preconditions to takeoff
3. Take off
4. Drive to maturity
5. High mass consumption
Weaknesses: exhaustion of resources, dependence on MDC markets, population
growth/lack of, market stagnation, high mass consumption for everyone????
Developmentalism vs. Sustainable development
Human Development Index
Economic – GDP/capita
Social – Literacy rate/amount of education
Demographic – Life expectancy
International Organization that promote economic development:
UN, World Bank, IMF, NGOs
Types of Industry
Primary – extraction/agriculture/mining/fishing
Secondary – manufacturing
Tertiary – service, distribution of goods/service/information
Quaternary – service, information processing and finance
Quinary – service, decision-making, research/development, higher education
Economic geography
Specialization of places
Comparative advantage
Transportation
Agglomeration: concentration of enterprises/cluster of activities
Deglomeration: breaking up b/c not cost-effective anymore (downtowns)
Gravity model
Larger places attract more people, commodities, and ideas than smaller places.
Places closer together also have greater attraction.
Direct relationship between population, inverse relationship of the distance
(Pa X Pb)/distance between
Location theory
Spatial positioning of industries with potential for success/failure
Location of resources is primary factor!
Other factors: cultural, political, human behavior, decision making
Examples: Weber, Hotelling, Lösch
MAXIMIZE PROFIT – MINIMIZE COST
Friction of distance: increase in time/cost comes with increase in distance
Distance decay: the greater the distance, the less it matters (less concern with
faraway markets)
Weber’s Location Theory
AKA: Weber’s Least Cost Theory
1) Transportation
2) Labor
3) Agglomeration
Substitution principle
Hotelling’s Locational Interdependence
Cannot ignore locations of other similar industries…
Lösch’s Model
Factors of Industrial Location
1) Raw materials
Site Factors
2) Labor
Labor
3) Transportation
Land
4) Infrastructure
Capital
5) Energy
*Political stability
*Environment/climate
Miscellaneous
Fordist
Just-in-time delivery
Bulk-gaining vs. bulk-reducing
Break-of-bulk points
Maquiladores
Deindustrialization
Footloose industries
Industrial regions of the world and US