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Topic:
Key Questions that you need to be able to answer in this topic:
1. How can economic activity be classified?
2. How can economic activity classification be graphically represented?
3. What factors affect the location of industry?
4. How does the type of economic activity vary between places and over time?
(Comparative study between sectoral shifts within one HIC and one LIC)
5. What is informal employment and why does it happen?
6. What affects the location of tertiary and quaternary activities? (Case study of the
development and location of one high tech industry)
7. What affects changes in the location of manufacturing? (case study of recent
employment changes within an area of an HIC)
8. Why is there a demand for more energy and why is there an energy gap?
9. What is the concept of precious energy and how does this help us think about
energy efficiency?
10. What are the relative merits of renewable wind, solar and nuclear) v nonrenewable fossil fuels?
11. What are the sources of energy in your country? What do people think about
renewable and non-renewable energy?
these industries often linked to raw materials, e.g. old steel industry located near iron
ore, coal and limestone deposits, more modern steel plants locate near coast to have
these delivered.
Light: newer more modern goods, often hi-tech, that are made using small raw
materials and are a smaller and more easily transportable. Examples are mobile
phones, white goods (washing machine, fridge etc), TVs etc. they do no rely so
heavily on being near raw material sources, but transport links are key to them to get
the materials in and finished goods out. Often goods are made in multiple countries
around the world, each country making/adding one section of the machine.
Task: list some example companies that produce in the heavy and light
manufacturing sectors:
Heavy
Company
Light
Products
Company
Products
Companies that cross over the boundaries for the different types of
industry:
Complete the table for the companies below and say how they have different parts of
their company in the 4 industrial sectors.
Company
Nike
BP
Nokia
McDonalds
Primary
Secondary
Tertiary
Quaternary
Pie Chart:
Task: Define each factor and give an example of how it has affected the location of
industry (using a specific company example)
Factor
Definition
Capital
Government
Raw
Materials
Transport
Energy
Site Needs
Labour
Market
Communicat
ion
Task: for the following businesses pick the 3 most important factors and explain why
they are so important to those businesses:
Coal Mine
Department Store:
secondary sector rises and then falls and the number of people working in the
tertiary sector rises. Often if the country becomes a very high level HIC the
quaternary sector starts to employ people, especially high quality graduates. The
Clark-Fisher models shows what happens to a country as it develops and goes
through these employment changes, although it is not a predictive model as it
charted what happened to the UK pre, during and post the industrial revolution, it can
be used as a good estimate of the changes in the employment structure of an
economy as the country develops.
Clark-Fisher Model
Info: employment is split into two sectors the informal and formal sectors, each has
its place in the working environment and have many similarities. However there are
major differences between the two sectors, this links in with urban environments in
LICs (esp. Shanty Towns).
Task: Define and give examples of the informal and formal sectors:
Formal:
Informal:
Task: complete the Venn diagram to look at the differences and similarities of the two
sectors:
Formal
Both
Informal
Task: list the reasons why the formal sector occurs and put the factors in order of
importance
New industrial regions in Britain have tended to grow up along main communication
routes. The best example of this is the "Sunrise Strip", which takes in the area
around motorways such as the M11, M23, M3 and, most importantly, the M4.
These industries are described as being footloose. They have generally grown up
over the last 25 years in "growth areas", along communications routes. Although they
do bring prosperity to regions, the new industries actually employ few people in
comparison to the older, declining, heavy industries. Traditional location factors have
been super-seeded by newer ones.
As access to raw materials is relatively unimportant nowadays, location, although
dominated by communications considerations, also can increasingly take into
account the social needs of its employees. Thus climatic, scenic, health and
entertainment factors have to be included. In turn the industries try to locate near to
places where a skilled workforce could be employed, such as around the university
towns of Oxford or Cambridge.
The Sunrise Strip has many locational advantages:
1. The motorway system, which allows easy access to all parts of the United
Kingdom.
2. Easy access, via the roads, to the Channel Tunnel and ports to allow export
abroad.
3. The close proximity of Heathrow, Bristol, Cardiff, Gatwick, Stanstead and
Luton airports, all of which could be used to export products.
4. The skilled workforce found in university towns of Oxford, Cambridge,
Reading, Cardiff and Bristol.
5. Close proximity and good access to London, where the major government
functions and financial trading occurs.
6. The concentration of other industries means that ideas and knowledge could
be shared, there will be a concentration of suitable skilled labour and
transport costs may be reduced between agglomerated industries (economies
of scale).
7. A very attractive natural environment, which would provide a very pleasant
place to live for the workers. Areas such as the Cotswolds and the Mendip Hills
are in easy reach of the Sunrise Strip.
Two other good examples of similar new industrial areas are:
1. Silicon Glen in Central Scotland.
2. Silicon Valley in California, USA.
Specific Case Study of Company in M4 Corridor: LG (Lucky Goldstar):
Newport, South Wales
Background
LG is a South Korean multinational (MNC), or transnational corporation
(TNC). Transnational corporations are companies that have operations in several
countries and they dominate the hi-tech industry.
Why did LG choose this particular location?
In a highly competitive global economy transnational corporations are looking for
new locations for their assembly factories that are near to their markets, where they
can sell their goods easily. They are also attracted to places where wage costs are
lower and motorways are close by. Newport is located on the M4, plus it has rail links
and is close to a busy port making it easy to transport goods. Available labour force
after the unemployment brought about by the closure of many traditional industries
in the area.
How did the area attract LG?
Keen to win the business, the government offers financial incentives to attract foreign
companies to Britain. The Welsh Development Agency (WDA) has an important role to
play in attracting new investment to areas in South Wales were traditional
industries have declined. LG has been given 180 million in subsidies from the
government which is the equivalent to 30 000 per job created. Plus it has ended up
with a factory inside the EU safe from tariff barriers and close to its European
customers. They are able to pay workers in Wales less than workers in Korea; the low
costs allow high productivity for LG.
In its 20-year history, the Welsh Development Agency has helped more than 1,000
companies establish operations in Wales -- more than 150 of them from North
America. The Agency is credited with making Wales one of the most attractive
regions in the UK to international businesses. Though Wales, about the size of New
iron and steel production. The steep valleys, with their fast flowing rivers, provided
power and transport. The hills were rich with raw materials, such as coal, iron ore and
limestone, and the area was close to the ports of Cardiff and Swansea.
In 1860 there were over 30 iron works in the valleys of South Wales. They provided
vital employment for the local villages, which became almost solely dependent on
the new industries. During the next 40 years improvements in the smelting process,
meant that the production of iron was replaced by steel manufacture, which was
more profitable. The natural resources needed were the same.
By the 1990's only two steelworks were left in South Wales, and both of them were on
the coast. The resources had run out, only one coal-mine remained working and the
many small works in the valleys had closed down, causing huge social problems.
The new works were integrated steel works, which imported their raw materials from
abroad. These aimed to make the industry more efficient and competitive in a
growing world market. Not only is there competition from other countries but also
from other materials that are increasingly being used instead of steel. Materials, such
as aluminium and plastics.
An example of one is the integrated steel works at Port Talbot. Opened in 1954, it is
an integrated steelworks, which is one in which all processes of the steel making
industry occur under one roof.
The coal and iron ore deposits of South Wales have long since run out or become too
costly to get at, so both of these raw materials are imported from places such as
Africa and South America.
Port Talbot has many locational advantages. There is a large area of flat land, near
to the sea for importing and exporting purposes. Nearby is a large workforce and
access to the entire British market through the excellent motorway links. It has
created employment opportunities in the area, and has encouraged further
investment and growth.
South Wales is experiencing something of a recovery again, thanks to being at one
end of the M4 Corridor. Industrial Parks have been established outside of the main
cities, to benefit from the large workforce, good transport links and available land.
There have also been government grants and loans made available to encourage
industrial location in the area. Companies such as Sony, Bosch and Toyota have all relocated to South Wales.
The bullet points below show the main points needed to answer a question similar to
that shown. The example of the South Wales Iron and Steel Industry has been used.
Task: Answer the following 9 mark question
"Industries locate for many different reasons. Choose a secondary manufacturing
industry that you have studied. Explain how different factors have affected their
choice as to where to locate the industry and how these factors have changed over
time."
Notes:
Factors affecting choice:
Need to be near resources - coal / iron ore / limestone (these were found in
the large valleys of South Wales)
The factories need open flat land
Local water sources for cooling / powering machinery.
Flat land also needed for transportation by rail
Wave 2: 1990s
Malaysia, Philippines,
Thailand, Indonesia
(There are others that industrialized at the same time but these ones are some of the
more well known ones)
Why do TNCs want to locate in NICs?
To a TNC and to any business the idea is to sell as many goods as possible, make as
much profit as possible and please as many shareholders as possible (possible crush
as many competitors as possible too!!!!!). To do this there are many different ways,
e.g.
Lower production costs (sell good at same price = increase profit)
Lower production costs (sell good at lower price = kill off competition)
Increase world market share (sell to more countries = make more money)
And so on .
Benefit
In order to attract companies,
incentives are offered to the
companies
NICs are often close to many
rich
countries
who
need
products to buy and sell
Governments in NICs have
improved road networks and
other transport networks
Low laws mean worker safety is
less important than in HICs
Task: complete the table to show how the factors that cause the TNCs to locate in
the NICs helps the TNC
Task: Add in what factor of production they are.
Task: what are the 2 most important factors that cause TNCs to locate in NICs?
Explain why
NIC Case Study: South Korea
South Korea lacks natural resources, however it has a plentiful, cheap and flexible
workforce, and this has led to it becoming an NIC (Newly Industrialized Country), with
rapid industrialization occurring over the last 50 years. You need to know what the
CAUSES and CONSEQUENCES of this rapid industrial growth have been.
What were the CAUSES of South Korea's rapid economic growth?
- the government realized that agricultural production was not the route to economic
growth and as a result encouraged foreign investment e.g. from the USA and
themselves invested in large companies such as the state-owned Steel Works
(Pohang Iron and Steel corporation)
- South Korean firms (such as Hyundai, Samsung and Daewoo) were also protected by
high import taxes - this ensured that there was a sufficient market for goods, further
stimulating production.
- the government also developed its own research and development of hi-tech goods
- large TNCs (e.g. Sony from Japan) were attracted by low wages, low taxes and they
also bought know-how to South Korea
- a dedicated and substantial workforce was available, willing to work long hours
- firms were also attracted by a large consumer market of SE Asia (e.g. China)
SOCIAL PROBLEMS
- unequal pay (women and immigrants paid only 50-75% the wages paid to men),
sweat shop working conditions for some and an increase in child labour
- working very long hours (an average of 52 hours a week)
- increased rural-urban migration (the most innovative began moving away from the
countryside into the nearby cities for work)
ENVIRONMENTAL PROBLEMS
- noise, air and water pollution increased due to the rapid industrialization
- the increase in factories led to smog over cities
- increased traffic volumes led to taxes on road use in the capital, Seoul
- in some areas which experienced an increase in population, services such as
sewage treatment were not able to cope
- rapid growth resulted in some instances in poor workmanship and there were
instances of deaths from collapsing buildings (e.g. the Sampoong Department Store
in 1995 (507 deaths))
Task: List the reasons for the changes in location of manufacturing in HICs
HIC factors
Influence of NICs
Task: which of the sections do you think is more important to the decline of
manufacturing in HICs? Give reasons for your answer
Task: what are the positives and negatives of what the graph shows:
Coal: According to BP, the proven recoverable world coal resources were estimated
to be 909 billion tons at the end of 2004 with a reserve to production ratio of 164
years.
Consumer
Less/Limit
Supply
Increase
Efficiency
(Domestic
and
industrial)
Increase
the levels
of supply
(find more)
Both
Non-renewable
Task: complete the tables to show the arguments for and against the different types
of energy
Non-Renewable:
Argument For this type of
Example of specific type and how this works
energy
Renewable:
Example of specific type and how this works
The Bahamas depends on imported energy supplies for 99% of its consumer
demand
Demand for electricity is increasing due to tourism and industry growth
Heavy fuel oil generates 40% of our power a very dirty fuel in its release of
Sulpher and carbon dioxide, also inefficient
Very high fuel bills due to inefficiency of power generation and costs of
importing oil
Beginning to see a move towards renewable energy
Exuma - $6 million investment in Renewable Energy at two-square mile
island, north of Staniel Cay
One of the things we did was lower the duty rates on renewable energy and
equipment, so that was an investment there and encouraged the project from a
financial standpoint,
We looked at the cost of production in regards to the transfer of the equipment, the
cost to continuously supply diesel, and in fact when it was looked at in regards to the
project as a whole, the cost of renewable energy would have paid for itself in five to
six years, so this was a more feasible project. It is now coming to completion.
There are three permanent magnet wind turbines, producing sufficient electricity to
take care of all of the islands power needs.
People against:
Why:
Glossary:
Accessibility The ease with which people can get to a particular place.
Economic sector A major division of an economy. Most commonly four sectors are recognized: primary
(agriculture, fishing, mining), secondary (manufacturing), tertiary (services) and quaternary (R&D,
information processing).
Energy (resources): the means of providing motive force, heat or light. They include electricity, gas,
steam and nuclear power, together with fuels such as coal, oil and wood.
Fossil fuel Combustible materials made from the fossilized remains of plants and animals, for example
peat, coal, oil and natural gas.
High-tech industry Manufacturing involving advanced technology, such as making or using microchips
and computers. It also includes genetic engineering, communications and information technology.
Informal sector This is largely made up of jobs over which there is little or no official control. It includes