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Chapter 1 Economic Geography:An Introduction
• Geographic Perspectives
• Economic Geography of the World Economy
• Globalization
• World Development Problems
• Four Major Questions of the World Economy
• Political Economies
• Geographical Information Systems
Geographic Perspectives
• Barney Warf’s Style: anything goes
• The geographic perspective
• Key Point: Why are activities located where they are? Space and time are interdependent
• Geographic Perspectives: Fig 1.1, Fig 1.2
Economic space is highly unequal
Economic Geography as a field
Geographic Perspectives – Economic Geography
• Different paradigms abound in economic geography– Logical positivism, use of scientific method
(development of hypotheses, data collection, and development of predictive models
– Predominant approach to location theory and models of spatial interaction, representation of spatial structures, based on “homo economicus” –
– Other approaches: behavioral, humanist, structuralist, post-structuralist & the “cultural turn”
Economic Geography of the World Economy
• The global perspective – an interdependent network of people and industries linked in a dynamic system of resource distribution, wealth creation, and power structures
• Shifting technologies, geopolitical forces, transportation and IT, culture, environment
• Transport & communication cost reductions• Fall of centrally planned economies• Rise of global capital markets• Rise of institutions such as World Bank, IMF,
WTO, OPEC, OECD….
Variations in Economic Structure Gross National Income
Source: World Bank (2010) World Development Indicators
Country GroupPopulation 2008
MillionsGNI/Capi
ta
GDI Growth
Rate per Capita
2007-2008
GNI/Capita at Purchasing
Power ParityLow Income 973 $564 4.1% $1,407Middle Income 4651 $3,260 5.0% $6,154High Income 1069 $39,345 zero $37,141World 6692 $8,613 0.8% $10,357
Global Shares of Population and Gross National Income (2008)
16%
70%
15%
73%
26%
1%
0% 10% 20% 30% 40% 50% 60% 70% 80%
High Income
Middle Income
Low Income
GNI
Population
Structure of Production (% of GDP)
Growing Inequality
Hollowing ofIndustry Decrease in
Agriculture, Services Growth
Share of Global GDP/GNI Agriculture Agriculture Industry Industry Services Services
1965 2008 1965 2008 1965 2008 2003 2008Low 9% 3% 44% 25% 28% 29% 28% 46%Middle 12% 28% 19% 10% 34% 37% 45% 53%High 79% 69% 5% 1% 43% 26% 54% 73%World $1,759 $60,587 10% 3% 40% 28% 51% 69%
The Clark-Fisher Model of Structural Change
Time
Share
of
Ou
tpu
t
Agriculture
Manufacturing
Services
Is This Model Inevitable?
Distribution of Gross Domestic Product (%)
Why so high &why the decline?
GDP = Final Sales to Government, Consumers & Investment
GlobalIncrease in Trade
Note: 2006 Exports includes services
Consumption Investment Government Exports1965 2008 1965 2008 1965 2008 1965 2008
Low 70% 75% 19% 27% 11% 9% 7% 29%Middle 67% 56% 22% 30% 11% 14% 17% 29%High 61% 62% 17% 21% 22% 18% 13% 26%Japan 59% 57% 28% 24% 12% 18% 11% 14%U.S. 63% 70% 12% 19% 25% 16% 6% 11%World 63% 61% 18% 22% 19% 17% 12% 27%
Imports/Exports 2006 ($ billions)
High Income havemuch stronger tradein services than Low and Middle Income
The U.S. Share ofServices Trade isvery high
Total Merchandise ServicesExports Imports Exports Imports Exports Imports
Low 434 512 323 389 111 123Middle 3771 3456 3312 2958 459 498High 10651 10955 8451 8985 2200 1970Japan 765 714 650 580 115 134U.S. 1436 2227 1038 1919 398 308World 14852 14908 12085 12327 2767 2581
Structure of Merchandise Exports (%)
Fuels,Minerals,Metals
OtherPrimary
Commodities
Machinery&
TransportEquipment
Other Mfg. Textiles &Clothing
1965 1992 1965 1992 1965 1992 1965 1992 1965 1992LowIncome
16 21 60 17 1 9 23 53 12 26
MiddleIncome
27 32 46 19 14 18 13 31 3 10
OilExporters
80 92 16 2 0 1 3 5 0.1 1
HighIncome
9 7 21 11 31 43 39 39 7 5
U.S. 8 6 27 14 37 48 28 32 3 2J apan 2 1 7 1 31 66 60 31 17 2World 15 13 26 13 25 37 34 38 7 6
Food FuelsOtherPrimaryCommodities
Machinery&TransportEquipment
Other Mfg.
1965 1992 1965 1992 1965 1992 1965 1992 1965 1992LowIncome
20 9 5 9 8 9 31 34 34 40
MiddleIncome
15 11 8 10 11 6 30 38 34 35
OilExporters
22 15 2 2 5 5 32 40 40 39
HighIncome
19 10 11 9 20 6 19 35 31 41
U.S. 19 6 10 11 20 4 14 41 36 38
Structure of Merchandise Imports (%)
IndustrialMarket
Economies
NonreportingNonmember
High Income OilExport
DevelopingCountries
(From/To) 1965 1985 1965 1985 1965 1985 1965 1985All Trade:Developing 67 63 8 7 1 2 25 30High Income OilEx.
70 59 (.) (.) 3 1 27 40
IndustrialMarket
70 71 2 2 1 3 27 24
ManufacturesDeveloping 47 56 19 8 2 4 32 32High Income OilEx.
30 47 0 0 21 16 49 36
IndustrialMarket
66 70 2 2 1 3 31 25
Origin and Destination of Merchandise Exports (%)
Globalization
• P.9 “processes that make the world, its economic system, and its society more uniform, more integrated, and more interdependent.” Some dispute uniform
• Elements: culture, consumption, telecommunications, economy, transnational corporations, investment, labor, services, tourism. Role of IT.
• Globalization & Local Diversity
World Development Problems
• Environmental constraints
• The cycle of poverty (Fig 1.9)Low Real
IncomeUnemploymentUnderemployment
LowOutput /Productivity
RapidPopulationGrowth
Low LevelOf Saving
Low LevelOf Demand
Low levels ofInvestment inCapital deficiency
Four Major Questions of the World Economy
• What should be produced, at what scale of output, and with what mix of inputs?
• How should factors be combined? Labor, capital, resource factors, etc.
• Where should production occur?
• Who should get output? How should it be divided?
Economics – Key Topics• Allocation of Scarce Resources• Markets for Production, Distribution, and
Consumption• The Division of Labor• Solving What, How, What Price, What
Quantity, and Where Production Takes Place
• Types of Economic Systems• Neoclassical versus Behavioral and
Structural Approaches
Political Economies
• Alternative Systems: capitalism, command, and traditional – with systems of power & class that shape output
• Capitalist System (Fig 1.11)• Command Economies• Traditional economies• The general demise of command and
traditional economies in the face of globalization
The Circular Flow in the Capitalist System (set in space and time)
(sales)ResourceMarket(prices)
(consumption - resources)Businesses & Government(production)
(sales)ProductMarket(prices)
(production - labor)Households(consumption)
Goods &Services
$ to pay for consumption$ from product market
Goods &Services
Goods& Services Labor
Income from work
Savings &Investment:Capital Markets
Public Goods: Taxation & Provision
Geographical Information SystemsManifold applicationsdisplaying attributes-Examples in this figure-Many other layers possible-Display current patterns and changes-Integrated with data from remote sensed sources with human system data bases including geocoded economic information