Industrialization
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
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
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
• Characteristics
– Machines replaced human labor
• Root of IR was technology
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• Definition of Industrial Revolution
– A series of improvements in industrial
technology that transformed the process
of manufacturing goods
– New sources of energy found
• Coal leading source
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• History of the Industrial Revolution
– Began in England in the 1760s
• Period of rapid socio-economic
change
Several inventions that transformed the
way goods were manufactured
Result in unprecedented expansion in
productivity
Industries impacted
» Iron, Coal, Transportation, Textiles,
Chemicals, Food Processing
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
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
Diffusion of Industrialization
Industrial Regions
• Concentrated in three regions
– Europe, North America, East Asia
– Outside the region include Brazil and
India
• Europe
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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- Russia’s most imp. manufacturing
Donestk- iron/steel (largest in E. Europe)
Silesia- Poland and Czech Rep, steel
• United States
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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- Canada’s most imp., steel
• East Asia
– Japan
• Industrial power in 1950s, 1960s
• Became world leader in autos,
ships, cameras, stereos, TVs
– China
• World’s largest supply of lowcost labor, largest consumer
market.
Explaining and Predicting Where Industries locate
• Alfred Weber’s 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
Weber’s 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 politicalcultural landscape are assumed to be
uniform across the model’s space
• With these assumptions, the location
of industry is driven by four factors
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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
Concepts related to Weber’s Model
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Weight-Gaining versus Weight-Losing
Industries
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– 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
– Early factories also had to consider their
proximity to the raw materials they
needed
• Also called “material orientation” or “bulkreducing”
• These early factors had spatially-variable
costs
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costs that changed depending on the
factory’s 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
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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”
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Ex: Beverage bottling industry, fabricated
metals
U.S. Steel Industry
• Two principal inputs (resources) of
steel are iron ore and coal
• Steel-making is an example of bulkreducing 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
Concepts related to Weber’s 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
Transportation
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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
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The farther something is transported
the cheaper the cost
Lots of companies mix the modes of
delivery
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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
Concepts related to Weber’s 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
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
Concepts related to Weber’s 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.
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Agglomeration economies occur when
the positive effects of agglomeration
result in lower prices for consumers
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Categories of agglomeration
economies
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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
Concepts related to Weber’s 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
Concept’s related to Weber’s 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
Concepts related to Weber’s 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