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Sixth Edition
The World Economy GEOGRAPHY, BUSINESS, DEVELOPMENT
Frederick P. Stutz San Diego State University Barney Warf University of Kansas
Logo to come
Geography Editor: Christian Botting Marketing Manager: Maureen McLaughlin Editorial Project Managers: Anton Yakovlev, Crissy Dudonis Assistant Editor: Kristen Sanchez Editorial Assistant: Christina Ferraro Marketing Assistant: Nicola Houston Managing Editor, Geosciences and Chemistry: Gina M. Cheselka Senior Project Manager, Science: Beth Sweeten Compositor: Progressive Publishing Alternatives Senior Technical Art Specialist: Connie Long Art Studio: Spatial Graphics
Photo Manager: Billy Ray Photo Researcher: Tim Herzog Art Director: Jayne Conte Cover Designer: Karen Salzbach Senior Producer, Multimedia: Laura Tommasi Media Producer: Tim Hainley Associate Managing Editor, Media: Liz Winer Associate Media Project Manager: David Chavez Cover photos: Pudong skyline, Shanghai, China, by Steve Allen, Getty Images (front); Skyscrapers in Pudong, Shanghai, China, by Zheng Xianzhang, TAO Images Limited/Alamy (back)
Copyright © 2012, 2007, 2005 by Pearson Education, Inc., publishing as Prentice Hall, 1 Lake Street, Upper Saddle River, New Jersey, 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, 1900 E. Lake Ave., Glenview, IL 60025. Many of the designations used by manufacturers and sellers to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps. Library of Congress Cataloging-in-Publication Data Stutz, Frederick P. The world economy : geography, business, development / Frederick P. Stutz, Barney Warf.—6th ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-321-72250-8 (alk. paper) ISBN-10: 0-321-72250-7 (alk. paper) 1. Economic geography. 2. Economic history—1945- I. Warf, Barney, 1956- II. Title. HC59.S8635 2012 330.9—dc22 2010045460 Printed in the United States 10 9 8 7 6 5 4 3 2 1 ISBN-10: 0-321-72250-7 ISBN-13: 978-0-321-72250-8
CONTENTS Preface to the Sixth Edition ix Acknowledgments xi The Teaching and Learning Package xii Geography Videos Online xiii About the Authors xv About Our Sustainability Initiatives xvi Dedication
Chapter 1
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Economic Geography: An Introduction
1
Geographic Perspectives 1 Five Analytical Themes for Approaching Economic Geography 2 Modes of Theorizing in Economic Geography 4 Location Theory 4 Political Economy 5 Poststructuralist Economic Geography 6
Capitalism 6 Economic Geography of the World Economy 9 Globalization 12 Globalization of Culture and Consumption 13 Telecommunications 13 Globalization of the Economy 13 Transnational Corporations 13 Globalization of Investment 14 Locational Specialization 14 Globalization of Services 15 Globalization of Tourism 15 Information Technology and Globalization 15
Globalization versus Local Diversity 16 Problems in World Development 16 Environmental Constraints 16 Disparities in Wealth and Well-Being 17 Summary and Plan 18 • Key Terms 19 • Study Questions 19 • Suggested Readings 19 • Web Resources 19
Chapter 2 The Historical Development of Capitalism 20 Feudalism and the Birth of Capitalism 21 Characteristics of Feudalism 21 The End of Feudalism 23
The Emergence and Nature of Capitalism 25 Markets 26 Class Relations 28 Finance 29 Territorial and Geographic Changes 29 Long-Distance Trade 31 New Ideologies 31 The Nation-State 33
The Industrial Revolution 35 Inanimate Energy 35 Technological Innovation 36 Productivity Increases 37 The Geography of the Industrial Revolution 38 Cycles of Industrialization 40 Consequences of the Industrial Revolution 41 CREATION OF AN INDUSTRIAL WORKING CLASS 41 URBANIZATION 42 POPULATION EFFECTS 42 GROWTH OF GLOBAL MARKETS AND INTERNATIONAL TRADE 43 CASE STUDY: Railroads and Geography
44
Colonialism: Capitalism on a World Scale 45 The Unevenness of Colonialism 45 How Did the West Do It? 46 A Historiography of Conquest 47 LATIN AMERICA 47 NORTH AMERICA 48 AFRICA 48 THE ARAB WORLD 49 SOUTH ASIA 50 EAST ASIA 50 SOUTHEAST ASIA 53 OCEANIA 54
The Effects of Colonialism 54 ANNIHILATION OF INDIGENOUS PEOPLES RESTRUCTURING AROUND THE PRIMARY ECONOMIC SECTOR 54 FORMATION OF A DUAL SOCIETY 54
54
iii
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Contents POLARIZED GEOGRAPHIES 54 TRANSPLANTATION OF THE NATION-STATE CULTURAL WESTERNIZATION 56
Resources and Reserves 98 55
The End of Colonialism 56 Summary 56 • Key Terms 57 • Study Questions 57 • Suggested Readings 57 • Web Resources 57
Chapter 3
Population
Renewable and Nonrenewable Resources 98 Food Resources 99 Population Growth 101 Poverty 102 Maldistribution 102 Civil Unrest and War 102
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Environmental Decline 103
Global Population Distribution 59
Government Policy and Debt 103
Population Density 60
Increasing Food Production 104
Factors Influencing Population Distribution 62 Population Growth over Time and Space 63 Population Change 63
Expanding Cultivated Areas 104 Raising the Productivity of Existing Cropland 104 Creating New Food Sources 105
Fertility and Mortality 64
Cultivating the Oceans 106
Malthusian Theory 64
High-Protein Cereals 107
CASE STUDY: Population and Land Degradation 68
More Efficient Use of Foods 107 A Solution to the World Food Supply Situation 107
Demographic Transition Theory 69 Stage 1: Preindustrial Society 69
Nonrenewable Mineral Resources 107
Stage 2: Early Industrial Society 73
Location and Projected Reserves of Key Minerals 108
Stage 3: Late Industrial Society 75 Stage 4: Postindustrial Society 76 Contrasting the Demographic Transition and Malthusianism 79 Criticisms of Demographic Transition Theory 79
Environmental Impacts of Mineral Extraction 109
Energy 109
Population Structure 80 The Baby Boom, an Aging Population, and Its Impacts 82 Migration 84 Causes of Migration 84
Energy Production and Consumption 111 Oil Dependency 111 Production of Fossil Fuels 112 Adequacy of Fossil Fuels 112 Oil: Black Gold 113
The Economics of Migration 84
Natural Gas 113
Barriers to Migration 86
Coal 114
Characteristics of Migrants 86
Energy Options 115
Consequences of Migration 86
Conservation 115
Patterns of Migration 87 Internally Displaced Persons (IDPs)
Solutions to the Mineral Supply Problem 108
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CASE STUDY: The Great Depression (Baby Bust) Ahead 92 Summary 93 • Key Terms 94 • Study Questions 94 • Suggested Readings 95 • Web Resources 95
Nuclear Energy 117 Geothermal Power 119 Hydropower 119 Solar Energy 120 CASE STUDY: Resources: Wind Energy 121
Wind Power 122 Biomass 122
Chapter 4
Resources and Environment
96
Resources and Population 97 Carrying Capacity and Overpopulation 98
Types of Resources and Their Limits 98
Environmental Degradation 122 Pollution 122 Air Pollution 122 Water Pollution 123
Contents
Wildlife and Habitat Preservation 123
Chapter 6
Regional Dimensions of Environmental Problems 124
The Industrialization of Agriculture 159 CASE STUDY: Agro-Foods 159
From a Growth-Oriented to a BalanceOriented Lifestyle 127 Summary 127 • Key Terms 127 • Study Questions 128 • Suggested Readings 128 • Web Resources 129
Theoretical Considerations
Agriculture 156 The Formation of a Global Agricultural System 158
Environmental Equity and Sustainable Development 126
Chapter 5
Human Impacts on the Land 160
Factors Affecting Rural Land Use 161 Climatic Limitations 161 Cultural Preferences and Perceptions 161
Systems of Agricultural Production 162 Preindustrial Agriculture 163
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PEASANT MODE OF PRODUCTION 164 SHIFTING CULTIVATION 164 PASTORAL NOMADISM 165 INTENSIVE SUBSISTENCE AGRICULTURE 166
Factors of Location 131 Labor 132 Land 133
Problems of Subsistence Agriculturalists 167
Capital 134 Managerial and Technical Skills 135
Commercial Agriculture 168
The Weberian Model 137
U.S. Commercial Agriculture: Crops and Regions 169
Weber in Today’s World 138
Technique and Scale Considerations 140
Commercial Agriculture and the Number of Farmers 169
Scale Considerations 140 Principles of Scale Economies 140
Machinery and Other Resources in Farming 170
Vertical and Horizontal Integration and Diversification 141
Types of Commercial Agriculture 170 MIXED CROP AND LIVESTOCK FARMING 170 DAIRY FARMING 171 GRAIN FARMING 171 CATTLE RANCHING 175 MEDITERRANEAN CROPPING 176 HORTICULTURE AND FRUIT FARMING 176
Interfirm Scale Economies: Agglomeration 141 Evaluation of Industrial Location Theory 142
How and Why Firms Grow 143 Geographic Organization of Corporations 144
U.S. Agricultural Policy 177
Organizational Structure 144
The Farm Problem in North America 177
Administrative Hierarchies 146
The U.S. Farm Subsidy Program 178
Sustainable Agriculture 180 The Von Thünen Model 181
Economic Geography and Social Relations 146
Summary 182 • Key Terms 183 • Study Questions 183 • Suggested Readings 183 • Web Resources 183
Relations among Owners 146 Relations between Capital and Labor 146 Competition and Survival in Space 146
The Product Cycle 147 Business Cycles and Regional Landscapes 148 Information Technology: The Fifth Wave? 149 Business Cycles and the Spatial Division of Labor 149
The State and Economic Geography 150 Summary 153 • Key Terms 154 • Study Questions 154 • Suggested Readings 154 • Web Resources 155
v
Chapter 7
Manufacturing
184
Major Concentrations of World Manufacturing 185 North America 185 Europe and Russia 189 East Asia 192
Deindustrialization 193 The Dynamics of Major Manufacturing Sectors 195 Textiles and Garments 195
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Contents
Steel 196
International Trade in Services 233
Automobiles 200
Electronic Funds Transfer Systems 234
Electronics 201
Offshore Banking 236
CASE STUDY: Export Processing Zones 205
Back-Office Relocations 236
Consumer Services 239
Biotechnology 206
Tourism 239
Flexible Manufacturing 207
CASE STUDY: Medical Tourism 240 Summary 241 • Key Terms 242 • Study Questions 242 • Suggested Readings 243 • Web Resources 243
Fordism 207 Post-Fordism/Flexible Production 208 Summary 210 • Key Terms 210 • Study Questions 210 • Suggested Readings 211 • Web Resources 211
Chapter 8
Services 212 Defining Services 213 Forces Driving the Growth of Services 216 Rising Incomes 216 Demand for Health Care and Education 217
Chapter 9
Transportation and Communications
Carrier Competition 252
An Increasingly Complex Division of Labor 219
Freight Rate Variations and Traffic Characteristics 252
The Public Sector: Growth and Complexity 220
Regimes for International Transportation 252
Service Exports 220 The Externalization Debate 221
Labor Markets in the Service Economy 222 Characteristics of Services Labor Markets 222 LABOR INTENSITY 222 INCOME DISTRIBUTION 223 GENDER COMPOSITION 224 LOW DEGREE OF UNIONIZATION 225 EDUCATIONAL INPUTS 226
Financial Services 227 COMMERCIAL BANKING 227 INVESTMENT BANKING 227 SAVINGS AND LOANS 227 INSURANCE 227
The Regulation of Finance 228 The Deregulation of Finance 229 The Financial Crisis of 2007–2009 230
Studies of Major Producer Services by Sector 231
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Transportation Networks in Historical Perspective 245 Time-Space Convergence or Compression 249 Transportation Infrastructure 250 General Properties of Transport Costs 251
Transportation, Deregulation and Privatization 253 Hub-and-Spoke Networks 254
Personal Mobility in the United States 254 Automobiles 254 High-Speed Trains and Magnetic Levitation 256
Telecommunications 256 Fiber-optic Satellite Systems 258 Telecommunications and Geography 259
Geographies of the Internet 261 Origins and Growth of the Internet 262 Social and Spatial Discrepancies in Internet Access 263 CASE STUDY: Chinese Internet Censorship 265
Social Implications of the Internet 265 E-Commerce 266
Accounting 231
E-Government 267
Design and Innovation 231
E-Business 267
Legal Services 232
Health Care 268 Summary 268 • Key Terms 268 • Study Questions 269 • Suggested Readings 269 • Web Resources 269
The Location of Producer Services 233 Interregional Trade in Producer Services 233
Contents
Chapter 10 Cities and Urban Economies
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Inadequacies of Trade Theories 317
270
The Rise of the Modern City 271 Urban Economic Base Analysis 272 The Urban Division of Labor 277 Urban Residential Space 278 The Residential Location Decision 278
Fairness of Free Trade 317 Worsening Terms of Trade 317
Competitive Advantage 319 International Money and Capital Markets 321
The Filtering Model of Housing 278
International Banking 321
Housing Demand and Supply 278
Euromarkets 321
The Sprawling Metropolis: Patterns and Problems 279
Exchange Rates and International Trade 321 Why Exchange Rates Fluctuate 322
U.S. Trade Deficits 323
Out to the Exurbs 281
Results of the U.S. Trade Deficit 324
Suburbanization and Inner-City Decline 282
Capital Flows and Foreign Direct Investment 324
Gentrification 282
World Investment by Transnational Corporations 324
Problems of the U.S. City 283 Urban Decay 285 The Crisis of the Inner-City Ghetto 285 Employment Mismatch 289
Investment by Foreign Multinationals in the United States 325 Effects of Foreign Direct Investment 327
Global Cities 289 Urban Sustainability 292 CASE STUDY: Environmental Impacts of Cities 293 Summary 295 • Key Terms 295 • Study Questions 296 • Suggested Readings 296 • Web Resources 297
Barriers to International Trade and Investment 330 Management Barriers 330 Government Barriers to Trade 331 Tariffs, Quotas, and Nontariff Barriers 332 Effects of Tariffs and Quotas 332 Government Stimulants to Trade 333
Chapter 11 Consumption
298
Reductions of Trade Barriers 333
The Historical Context of Consumption 299 Theoretical Perspectives on Consumption 302
General Agreement on Tariffs and Trade 333 World Trade Organization 334 Government Barriers to Flows of Production Factors 335
Sociological Views of Consumption 302 Neoclassical Economic Views 304
Multinational Economic Organizations 335
Marxist Views of Consumption 305
International Financial Institutions 336
Geographies of Consumption 305 CASE STUDY: Commodity Chains
Regional Economic Integration 337 307
Environmental Dimensions of Consumption 308
International Trade 313
339
THE EU’S SINGLE CURRENCY
North American Free Trade Agreement 339
Summary 310 • Key Terms 311 • Study Questions 311 • Suggested Readings 311 • Web Resources 311
Chapter 12 International Trade and Investment
The European Union 338
312
CASE STUDY: North American Free Trade Agreement (NAFTA) 342
OPEC 343 Summary 344 • Key Terms 345 • Study Questions 345 • Suggested Readings 345 • Web Resources 345
Trade by Barter and Money 314
Comparative Advantage 315 Transport Costs and Comparative Advantage 316 Heckscher-Ohlin Trade Theory 316
Chapter 13 International Trade Patterns
346
World Patterns of Trade 347 The United States 348 U.S. MERCHANDISE TRADE
349
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Contents U.S. SERVICES TRADE 351
Canada 352 The European Union 352 Latin America 353 MEXICO 353 SOUTH AMERICA 354
Middle East and North Africa 383 Sub-Saharan Africa 384
Characteristic Problems of Less Developed Countries 384 Rapid Population Growth 384
East Asia 354
Unemployment and Underemployment 385
Japan 355
Low Labor Productivity 385
China 357
Lack of Capital and Investment 386
Taiwan 358 South Korea 358
Inadequate and Insufficient Technology 386
Australia 358
Unequal Land Distribution 387
India 359
Poor Terms of Trade 387
South Africa 360
Foreign Debt 388
Russia 360
Restrictive Gender Roles 390
The Middle East 360
Corrupt and Inefficient Governments 390
Major Global Trade Flows 361 Microelectronics 361 Automobiles 361 Steel 362 Textiles and Clothing 363 Grains and Feed 363 Nonoil Commodities 363 Summary 364 • Key Terms 364 • Study Questions 364 • Suggested Readings 364 • Web Resources 365
Chapter 14 Development and Underdevelopment in the Developing World 366 What’s in a Word? “Developing” 367 How Economic Development Is Measured 368 GDP PER CAPITA 368 ECONOMIC STRUCTURE OF THE LABOR FORCE 369 EDUCATION AND LITERACY OF A POPULATION 369 HEALTH OF A POPULATION 372 CONSUMER GOODS PRODUCED 375 URBANIZATION IN DEVELOPING COUNTRIES 376 CASE STUDY: Remittances 379
Geographies of Underdevelopment 380
Trends and Solutions 392
Major Theoretical Perspectives on Global Patterns of Development 392 Modernization Theory 392 Dependency Theory 395 World-Systems Theory 396
Regional Disparities within Developing Countries 397 Development Strategies 397 Expansion of Trade with Less Developed Countries 398 Private Capital Flows to Less Developed Countries 398 Foreign Aid from Economically Developed Countries 399
Industrialization in the Developing World 399 Import-Substitution Industrialization 400 Export-Led Industrialization 400 Sweatshops 401 The East Asian Economic Miracle 401
Sustainable Development 404 Summary 406 • Key Terms 407 • Study Questions 407 • Suggested Readings 407 • Web Resources 408
Latin America 381
Glossary 411
Southeast Asia 382
References 421
East Asia (Excluding Japan) 383
Credits 423
South Asia 383
Index 425
PREFACE TO THE SIXTH EDITION The World Economy: Geography, Business, Development, Sixth Edition, offers a comprehensive overview of the discipline of economic geography and how it sheds light on issues of development and underdevelopment, international trade and finance, and the global economy. In an age of intense globalization, an understanding of these issues is central to both liberal arts and professional educations, including the concerned voter, the informed consumer, and the alert business practitioner. In keeping with the discipline’s growing concern for political and cultural issues, which recognizes that the economy cannot be treated separately from other domains of social activity, The World Economy focuses on the political economy of capitalism, including class, gender, and ethnic relations. Throughout, it synthesizes diverse perspectives—ranging from mainstream location theory to poststructuralism—to reveal capitalism as a profoundly complex, important, and fascinating set of spatial and social relations. It explores conceptual issues ranging from the locational determinants of firms to the role of the state in shaping market economies. It approaches international development in an intellectually critical manner, emphasizing multiple theoretical views concerned with the origins and operations of the global economy. Anyone concerned about population growth and its consequences, environmental degradation, energy use and alternatives to fossil fuels, technological change, international competitiveness, public policy, urban growth and decline, and economic development in the underdeveloped world, requires a basic understanding of economic geography.
NEW TO THE SIXTH EDITION The sixth edition has been thoroughly updated to reflect the current dynamic nature of the world economy. Updates include: • Twelve new case studies provide relevant applications to add additional context and exploration of the chapter concepts, set aside so as not to interrupt the main flow of the chapter narrative: Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter Chapter
2: 3: 3: 4: 6: 7: 8: 9: 10: 11: 12: 14:
Railroads and Geography Population and Land Degradation The Great Depression (Baby Bust) Ahead Resources: Wind Energy Agro-Foods Export Processing Zones Medical Tourism Chinese Internet Censorship Environmental Impacts of Cities Commodity Chains North American Free Trade Agreement (NAFTA) Remittances
• Revised discussion of manufacturing streamlines coverage of U.S. manufacturing substantially and enhances coverage of the causes of deindustrialization. Discussion of the global shift of manufacturing to the developing world is included. • Updated coverage of services adds a short section on the financial crisis and recession that began in 2008, and enhances discussion of tourism. • Streamlined coverage of transportation and communications shortens the discussion of the technicalities of transportation costs and aspects of communications technologies. Data on the use of the Internet have been updated throughout. • Revised coverage of cities and urban economies adds a section on the urban division of labor. Discussion of residential choice has been streamlined. Given the rising significance of environmental issues, discussions of related topics such as urban sustainability have been integrated. • Updated material on international trade and investment expands arguments in favor of protectionism. • Reduced emphasis on the United States allows for greater exploration of other regions, such as the European community and the developing world. • Population data are updated throughout. Discussion of Malthusianism is enhanced, and coverage of the baby boom is included, showing the perilous tension between the reduction of consumption (which drives the economy) and the increase in the cost of aging through entitlement and health care costs. • Discussion of the Weber model is streamlined in the book’s theoretical coverage. ix
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Preface to the Sixth Edition
• Revised agriculture coverage reorganizes material on preindustrial agriculture. • End-of-chapter material throughout has been revised and updated, including recommended readings and Websites, key terms, and study questions. • Tables and data throughout the text are updated—by far the most comprehensive of any textbook on the world economy and economic geography. • A new Premium Website at www.mygeoscienceplace.com. The new edition is supported by a Premium Website, accommodating instructors’ need for a variety of teaching resources to match this dynamic discipline. Modules include: • New geography videos (from TVE’s Earth Report and Life series) • In the News RSS feeds of current news related to chapter topics • Web links and references • Quizzes • PowerPoint® presentations of lecture material and JPEG and PDF files of all tables and most figures The World Economy offers a comprehensive introduction to the ways in which economic activity is stretched over the space of the earth’s surface. Economists all too rarely take the spatial dimension seriously, a perspective that implies all economic activity occurs on the head of a pin. In the real world, space matters at scales ranging from everyday life to the unfolding of the capitalist world system. Geographers are interested in the manner in which social relations and activities occur unevenly over space, the ways in which local places and the global economy are intertwined, and the difference that location makes to how economic activity is organized and changes over time. No social process occurs in exactly the same way in different places; thus, where and when economic activity occurs has a profound influence on how it occurs. As globalization has made small differences among places around the world increasingly important, space and location have become more, not less, significant. Some students wrongly assume that economic geography is dominated by dry, dusty collections of facts and maps devoid of interpretation. This volume aims to show them otherwise: Economic Geography has become profoundly theoretical, while retaining its traditional capacity for rich empirical work. Others are intimidated by the mathematics of neoclassical economics, believing that economic analysis can only be done by those with advanced degrees. This volume does not presume that the student has a background in economics. It makes use of both traditional economic analysis as well as political economy to raise the reader’s understanding to a level above that of the lay public but not to the degree of sophistication expected of an expert. In doing so, this book hopes to show that economic geography offers insights that make the world more meaningful and interesting. It is simultaneously an academic exercise, in the sense that it sheds light on how and why the world is structured in some ways and not others, and a very practical one, that is, as a useful narrative for those studying business, trade, finance, marketing, planning, and other applied fields. Each chapter includes a summary, key terms, study questions, suggested readings, and useful Websites for those curious enough, brave enough, and energetic enough to explore further. Following the introduction (Chapter 1), Chapter 2 puts today’s economic issues in a historical context by providing an overview of the rise of capitalism and its global triumph over the last half-millennium. The volume then lays out the basics of population distribution and growth (Chapter 3) as well as the production and use of resources (Chapter 4), two major dimensions that underpin the economic health (or lack thereof) of different societies. Chapter 5 summarizes major theoretical issues that run throughout the subsequent explications of agriculture, manufacturing, and services (Chapters 6–8). Chapter 9 focuses on the movement of people, goods, and information, reflecting geography’s mounting concern for flows rather than simply places, while Chapter 10 delves into the economic geography of cities. Consumption, a topic too often ignored in this field, is taken up in Chapter 11. Chapters 12 and 13 describe global patterns of international finance, investment, and trade, that is, the networks of money, inputs, and outputs that increasingly suture together different parts of the world. Finally, Chapter 14 focuses on the three-quarters of humanity who live in the developing world, including issues of the uneven geography of capitalist development, poverty, and the possibilities of growth in a highly globalized world system.
CAREERS INVOLVING ECONOMIC GEOGRAPHY Aside from the appreciation of how economic landscapes are produced, how they change, and their implications for citizens, tourists, consumers, and voters, Economic Geography is increasingly important to the professional world. Given how significant globalization has become in the contemporary world, there is almost no career that does not involve some understanding of the dynamics of the world economy. Businesses and corporations increasingly operate on a worldwide scale, in several national markets simultaneously, and must cope with foreign competitors, imports, and currencies. National, and increasingly local, public policy is shaped in part by international events and processes. A key goal of this volume, therefore, is to encourage students to “think globally,” to appreciate their lives and worlds as moments within broader configurations of economic, cultural, and political relations. For example, people with an appreciation of
Preface to the Sixth Edition
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Economic Geography never view the grocery store in the same light: What once appeared ordinary and mundane suddenly becomes a constellation of worldwide processes of production, transportation, and consumption. Economic Geography is useful professionally in several respects. It allows those who study it to understand corporate behavior in spatial terms, including investment, employment, and marketing strategies. It facilitates the complex and important decisions made by managers and executives. Consulting firms often use Economic Geography principles in assisting firms in deciding where to invest and locate production. The analysis of global processes is vital to those involved in public policymaking and the rapidly growing world of nongovernmental organizations. An understanding of trade regimes, such as the North American Free Trade Agreement (NAFTA) or the European Union, for example, is critical to appreciating trade disputes and currency fluctuations. Anyone involved in business, marketing, advertising, finance, transportation, or communications will benefit from a grounding in Economic Geography. As corporations increasingly become global in orientation, knowing about the world’s uneven patterns of wealth and poverty, changing development prospects, energy usage, and the mosaic of government policies around the world is essential. Many jobs that involve Economic Geography are not labeled “geographer” per se, but fall under different titles. A useful introduction to careers in this field may be found at the Website of the Association of American Geographers (http://www.aag.org/), which has a section on jobs and careers.
ACKNOWLEDGMENTS We are grateful to many people who helped us in this endeavor. Numerous colleagues in the discipline of geography, within our departments and throughout North America and Europe, have inspired us in many ways, often without knowing it! Christian Botting of Pearson has been helpful in guiding the revision. Sylvia Rebert meticulously reviewed and managed the copyediting and page proof process for every chapter, clarifying points and polishing the writing. James Rubenstein, author of The Cultural Landscape: An Introduction to Cultural Geography, graciously allowed us to use several of his figures. Matthew Engel (Northwest Missouri State University) has written the Test Bank for the book, Melvin Johnson (Northwest Missouri State University) has authored the PowerPoint® slides, and Luke Ward (Michigan State University) has written the chapter quizzes. Kevin Lear and Spatial Graphics have developed the new maps and figures in this volume. The following people have reviewed the previous edition of the book and played a key role in the revision plan for the new edition: Steven W. Collins (University of Washington), Melanie Rapino (University of Memphis), Jeffrey Osleeb (University of Connecticut), Hongbo Yu (Oklahoma State University), Lee Liu (University of Central Missouri), Gabriel Popescu (University of Indiana—South Bend), Paul A. Rollinson (Missouri State University—Springfield), and Joseph Koroma (Olympic College). The following people have reviewed the chapters and the online material for accuracy: Lee Liu, Gabriel Popescu, and Michael Ewers (Texas A&M University). We would like to thank the members of the Pearson team, including Project Manager Beth Sweeten, Editorial Project Manager Anton Yakovlev, Marketing Manager Maureen McLaughlin, Senior Technical Art Specialist Connie Long, Assistant Editor Kristen Sanchez, Associate Media Producer Tim Hainley, and Editorial Assistant Christina Ferraro. Finally, we thank our friends and families. Frederick P. Stutz Department of Geography San Diego State University San Diego, California http://www.frederickstutz.com Barney Warf Department of Geography University of Kansas Lawrence, Kansas http://www2.ku.edu/~geography/peoplepages/Warf_B.shtml
THE TEACHING AND LEARNING PACKAGE In addition to the text itself, the authors and publisher have worked with a number of talented people to produce an excellent instructional package.
PREMIUM WEBSITE FOR THE WORLD ECONOMY: GEOGRAPHY, BUSINESS, DEVELOPMENT The World Economy, Sixth Edition, is supported by a Premium Website at www.mygeoscienceplace.com, accommodating instructors’ need for dynamic teaching resources to match this dynamic discipline. Modules include: • • • • •
New geography videos (from Television for the Environment’s Earth Report and Life series) RSS feeds of current news related to chapter topics Web links and references Quizzes Lecture PowerPoints®
Television for the Environment’s Earth Report Geography Videos on DVD (0321662989) This three-DVD set is designed to help students visualize how human decisions and behavior have affected the environment and how individuals are taking steps toward recovery. With topics ranging from the poor land management promoting the devastation of river systems in Central America to the struggles for electricity in China and Africa, these 13 videos from Television for the Environment’s global Earth Report series recognize the efforts of individuals around the world to unite and protect the planet.
Television for the Environment’s Life World Regional Geography Videos on DVD (013159348X) This two-DVD set from Television for the Environment’s global Life series brings globalization and the developing world to the attention of any geography course. These 10 full-length video programs highlight matters such as the growing number of homeless children in Russia, the lives of immigrants living in the United States trying to aid family still living in their native countries, and the European conflict between commercial interests and environmental concerns.
Television for the Environment’s Life Human Geography Videos on DVD (0132416565) This three-DVD set is designed to enhance any geography course. These DVDs include 14 full-length video programs from Television for the Environment’s global Life series, covering a wide array of issues affecting people and places in the contemporary world, including the serious health risks of pregnant women in Bangladesh, the social inequalities of the “untouchables” in the Hindu caste system, and Ghana’s struggle to compete in a global market.
Goode’s World Atlas, 22nd Edition (0321652002) Goode’s World Atlas has been the world’s premiere educational atlas since 1923, and for good reason. It features over 250 pages of maps, from definitive physical and political maps to important thematic maps that illustrate the spatial aspects of many important topics. The 22nd Edition includes 160 pages of new, digitally produced reference maps, as well as new thematic maps on global climate change, sea level rise, carbon dioxide emissions, polar ice fluctuations, deforestation, extreme weather events, infectious diseases, water resources, and energy production.
TestGen® Computerized Test Bank for The World Economy: Resources, Location, Trade, and Development (download only) TestGen® is a computerized test generator that lets instructors view and edit Test Bank questions, transfer questions to tests, and print the test in a variety of customized formats. This test bank includes approximately 1000 multiple-choice, true/false, and short-answer/essay questions mapped against the chapters of The World Economy, Sixth Edition. Questions map to the U.S. National Geography Standards and Bloom’s Taxonomy to help instructors better structure assessments against both broad and specific teaching and learning objectives. The Test Bank is also available in Microsoft Word® and is importable into Blackboard and WebCT.
Instructor Resource Center (download only) The Pearson Prentice Hall Instructor Resource Center (www.pearsonhighered.com/irc) helps make instructors more effective by saving them time and effort. This Instructor Resource Center contains all of the textbook images in JPEG and PowerPoint formats, and the TestGen Test Bank. xii
GEOGRAPHY VIDEOS ONLINE The videos listed here, available on the book’s Premium Website with quizzes, are real-world examples of the effects of globalization on the world economy, on local communities, and on individuals in the contemporary world. These videos are taken from Television for the Environment’s Life and Earth Report series.
Chapter 1: Cash Flow Fever There have always been economic migrants—people who swap regions, countries, even continents—to find better wages to pay for a better life. Immigrants living in the United States send millions of dollars back to countries of origin each year. This video examines their lives in America and how their remittances (money sent home) impact their villages and families.
Chapter 2: The Trade Trap Many barriers to international trade have fallen, but now the developing world faces new challenges. This video examines Ghana’s attempt to compete in a global market with maize, poultry, bananas, pineapples, and smoked fish.
Chapter 2: The Outsiders Population issues, cultural westernization, and drugs flowing into Ukraine within the vacuum of Communist politics have threatened the new capitalist economy. Under the Soviet rule in Eastern Europe, young peoples’ lives were defined by rigid structures. This video explores how newly found freedom and capitalism has brought opportunity, uncertainty, and, to some, a loss of the sense of belonging.
Chapter 3: Staying Alive In the developing world, women are still at serious risk of death during pregnancy and childbirth. Fertility and infant mortality rates are high. This video examines the plans to reduce maternal mortality in Bangladesh.
Chapter 4: Blue Danube? This video tracks the Danube River through Eastern Europe examining both the Communist legacy of neglect and the current conflict between commercial interests and environmental concerns. Water pollution, wildlife habitat preservation, and regional dimensions of environmental problems are discussed.
Chapter 4: Payback Time This video explores how the reduction of carbon emissions and the need for rapid introduction of renewable energy has become a race to save the planet. Britain is currently behind many countries in the switch to renewable energy such as solar and wind power. Installing solar in the UK is so expensive it takes an individual 40 to 50 years to get the money back. In Germany, it takes just 12 years and they end up making money because people can sell electricity back to the grid at a price guaranteed for 20 years.
Chapter 4: Warming Up in Mongolia This video shows how Mongolia is faced with the challenge of erasing the lax Communist environmental past and moving into a modern society with a free-market economy. Mongol herders are depicted on horseback, yet the major cities produce high levels of pollution and the whole region is faced with climate change, which threatens a way of life.
Chapter 5: Slum Futures This video provides a vivid picture of the slums of Mumbai (Bombay), India, and looks at the relationships among capital, owners, and survival in space. The video concludes with the possibility of improving this dire urban slum situation and the economic geography of social relations, in situ.
Chapter 6: Coffee-Go-Round Coffee demand is growing worldwide but coffee growers are in a crisis. This video visits Ethiopia, the cradle of coffee growing, and speaks to players in the international coffee trade to find out how individual coffee growers can survive the boom and bust of the global coffee market.
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Geography Videos Online
Chapter 7: Geraldo’s Brazil This video investigates the effects of globalization on South American manufacturing through the story of Geraldo De Souza. De Souza is an autoworker in South America’s largest city, Sao Paulo, Brazil.
Chapter 8: Kill or Cure? This video shows how, for over a decade, India has been the powerhouse behind low-cost drugs for the developing world, especially Africa and Asia. India’s $4.5 billion pharmaceutical industry is now at a crossroads following a law introduced in January 2005. It’s opened a highly charged debate, with opinion split right down the middle.
Chapters 9 and 10: Tale of Two Cities “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness. . . .” This video draws on Charles Dickens’s opening of A Tale of Two Cities to compare London and Beijing. Both cities have hosted or will host the Olympics partly on green promises of future sustainability. But do they measure up?
Chapter 10: The Barcelona Blueprint Once the industrial heart of the region of Catalonia in Spain, Barcelona could have become just another burnt-out, Rust Belt European city that had failed to find a role in the modern, globalized world. But what set Barcelona apart from other European cities was a visionary local government that decided on radical redevelopment of the city in the run-up to the 1992 Olympics—a redevelopment that involved all the city’s population. This video examines the result—Barcelona today is a model twenty-first century city, combining historic buildings with modern architecture in a fusion that has helped make it one of the most popular tourist destinations in Europe.
Chapter 13: Smokeless in China China is one of the world’s fastest-growing industrial powerhouses. As the demand for energy increases, the government invests in large-scale energy projects like the Three Gorges Dam. While large-scale projects provide short-term solutions for cities, the need of over 600 million people for energy in rural areas is disregarded. But in one rural area, new efforts are underway to provide people with alternative, low-impact forms of energy. This video travels to the remote province of Yunnan to investigate how it is beginning to use alternative sources of energy to fuel its rural communities.
Chapter 14: Untouchable Development and underdevelopment in the developing world is demonstrated in this video by the life of a clothes washer in a low-caste Indian village. Although discrimination by caste is illegal in India, social inequity persists with accompanying underemployment and low labor productivity.
Chapter 14: Power Struggle In Uganda, 97% of the population is without access to electricity. One of the greatest challenges in Uganda is obtaining energy for businesses. It is one of the reasons that the country is among the poorest in the world. There isn’t a single prosperous country that does not have a secure nationwide power supply. Biomass-dependent countries such as Uganda will fall ever further behind and become ever more environmentally impoverished until affordable power is available. This video looks at the African power struggle for light and electricity.
ABOUT THE AUTHORS
Frederick P. Stutz, Professor of Geography, San Diego State University, Emeritus, and Mesa College, San Diego, received his PhD at Michigan State University, his MA at Northwestern University, and BA at Valparaiso University. His current research interest is the economics of urban traveler energy sustainability: “Space-Time Utility Measures for Urban Travel Purposes.” He has authored five books and 60 refereed journal articles and has been principal investigator under seven U.S. government contracts with the Environmental Protection Agency, Department of Transportation, Urban Mass Transportation Administration, and the U.S. Department of State. He has led group study expeditions to every continent. In San Diego, tennis is his racket.
Barney Warf is Professor of Geography at the University of Kansas. He received his PhD at the University of Washington in 1985. His current areas of research are political economy, social theory, producer services, financial markets, telecommunications, the geography of cyberspace, military spending, and international trade. He has authored or edited six books, two encyclopedias, and 100 journal articles.
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ABOUT OUR SUSTAINABILITY INITIATIVES This book is carefully crafted to minimize environmental impact. The materials used to manufacture this book originated from sources committed to responsible forestry practices. The paper is Forest Stewardship CouncilTM (FSC®) certified. The printing, binding, cover, and paper come from facilities that minimize waste, energy consumption, and the use of harmful chemicals. Pearson closes the loop by recycling every out-of-date text returned to our warehouse. We pulp the books, and the pulp is used to produce items such as paper coffee cups and shopping bags. In addition, Pearson aims to become the first climate neutral educational publishing company. The future holds great promise for reducing our impact on Earth’s environment, and Pearson is proud to be leading the way. We strive to publish the best books with the most up-to-date and accurate content, and to do so in ways that minimize our impact on Earth.
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Dedication
For Cathie —Frederick P. Stutz For Santa Arias —Barney Warf
OBJECTIVES 쑺 To acquaint you with the discipline of geography and the subfield of economic geography 쑺 To discuss five major analytical themes useful in comprehending social and spatial issues 쑺 To summarize the major paradigms for approaching economic geography
Capitalist development, often expressed most intensely in the built environment of the city, reflects the constellations of forces that produce landscapes in different places and times. In Manhattan, flows of capital, labor, energy, raw materials, and information interact with the local physical environment to generate a unique combination that is both global and local simultaneously.
쑺 To introduce capitalism as a system that forms the major focus of this volume 쑺 To note the various dimensions of globalization 쑺 To situate economic geography within the context of world development problems
