INDUSTRY AT GLOBAL LEVEL

The global map of manufacturing production and growth

North America 34.1% of world GDP, 15.9% of world total exports Europe 31.6% of world GDP and 45.7% of world total exports East and South East Asia 20.2% of world GDP and 23.9% of world total exports

Source: World Bank, 2005

The worlds leading manufacturing producers

Source: World Bank, 2005

Migration of manufacturing main causes

Firstly, the structural difficulties of developed countries in early 1970s determined the search of more favorable economic contexts; Secondly, the comparative advantages of developing countries, represented by the cheap labor and less protectionist social policies were strong attraction factors for international investments;

Thirdly, the multinational companies consolidated their economic power in the world economy and their location strategies included the developing countries among the preferred destinations;
Fourthly, the de-territorialization process of international finance became more and more intense, stimulating the movement of capital across the globe through the elimination of most commercial barriers.

A comparison of nation states (GNP) and transnational corporations (sales).

Figures indicate corporate rank-order (by sales) and number of employees, and for nations total population.

Industrial regions of the world

Industrial districts are not as continuous or solid as the map suggests. Manufacturing is a relatively minor user of land even in areas of greatest concentration. There is a loose spatial association of major industrial districts in an industrial belt extending from Western Europe eastward to the Ural Mountains and, Through outliers in Siberia, to Far East. The belt picks up again on the west coast of North America, though its major Anglo American concentration lies east of the Mississippi River. The former overwhelming production dominance of that belt is being steadily and increasingly eroded by the expanding industrialization of countries throughout the developing world.

Industrial changes in developed economies

As a rule, beginning with the early 1970s the developed countries have experienced fundamental changes in the way industrial activities are organized and work;

The deindustrialization process implied the reduction of jobs in manufacturing, i.e. losses in the number of their labor force. They still remain included in the world league of industrial producers due to significant gains in productivity (increasing output and declining workforce). The deindustrialization process implies basically an employment change through shifts from manufacturing to services;
Many developed countries experience reindustrialization as a result of various processes of new investment and growth. These include a resurgence of new and small firms, a rapid growth of high-technology industry, wide-spread adoption of new computer-based technologies and a surge of new inward multinational investment, between the cores of the world economy: United States, European Union and Japan.

Structural changes from Fordism to flexible production

At the beginning of the 20th century improvements in transports and communications, large companies based in the major metropolitan centres, more intensive division of labor, flow-line assembly and scientific management, increases in efficiency and productivity, waves of company mergers and ever-larger companies mass production and mass consumption; In early 1970s crisis emerged abruptly, slow down of economic growth, fall in profits, decreasing demands for capital goods, rising levels of inflation, increasing labor costs, major technological investments, reductions in profits and capital accumulation, dependency on financial investment, increased interest rates that retarded technological advancement capital-intensive industries and laborintensive industries entered a sharp decline; Changes in social values related to welfare provision and environmental protection, new products and new markets, increased costs, higher tax burden on producers and consumers; Innovations and technological changes, in response to higher energy and labor costs, depressed demand in traditional industrial activities; Improvements in production technologies, finer degree of specialization, routinization of many operations, cheaper and less militant labor, extension of locational capability of many industries a new production system, based on flexibility, new technologies and new forms of cooperation between firms.

The decline of old industrial regions

This idled Pennsylvania steel mill typifies the structural changes occurring in post-industrial America and in other advanced economics where comparable dislocation and changes are taking place. For heavy industrial jobs lost, replacement employment must increasingly be found in the service industries of the tertiary and quaternary sectors. In adaptive advanced economies that the restructuring is normal. The site of the USX Homestead steel works along the Monongahela River near Pittsburg, closed in 1986, is being rebuilt, for example, as the mixed-use Waterfront development with more than 50 retail shops, a 22-screen Movie theaters, and 500 apartments.

Spatial changes in developed countries

Regional decentralization is a product of the migration of some firms together with the transfer of productive capacity by plant shutdowns in core, metropolitan regions and the opening of new branch-plant in declining or peripheral cities and regions; Diffuse industrialization directed towards the reserves of unskilled labor in peripheral rural regions; involves activities in which labor costs are an important part of overall production costs and there is little scope for reducing labor costs through technological change. The main attractions of rural areas are: the availability of relatively low-cost labor, inexpensive supplies of easily developed land, lower levels of taxation and low levels of unionization; Branch-plant industrialization involves activities which require significant inputs of technology and of skilled labor and a certain degree of centrality in order to assemble and distribute raw materials and finished products; Metropolitan decentralization the migration of industry and employment from innercity areas to suburbs.

Some leading technology districts or technopoles

United States

Europe

Asia

Southern California (including Silicon Valley) Boston, MA Austin, TX Seattle, WA Boulder, CO Raleigh-Durham, NC

M4 Corridor, London Munich Stuttgart Paris-Sud Grenoble Montpellier Nice/Sophia Antipolis Milan

Tokyo Seoul-Inchon Taipei-Hsinchu Singapore

Source: Dicken, 2007

Silicon Valley a success story

The archetype of new-technology oriented regions in Santa Clara county, the state of California In the 1950s Santa Clara was a quiet agricultural county with a population of about 300,000 inhabitants By 1980, it had been transformed into the worlds most intensive complex of hightech activity, with a population of 1.2 million During the 1970s, the high-tech industries generated over 40,000 jobs a year, each new job creating at least two or three additional jobs in other sectors The beginning is due to Professor Frederick Terman of Stanford University in Palo Alto who encouraged his graduates in electrical engineering to establish their own companies A special industrial park was created by the end of 1950s generating significant eternal economies and attracting other high-tech industries Locational advantages: University of Stanford and close relations between research and production, attractive environment and climate, success stories HP, Apple, Mackintosh, constant demand of the defensive federal sector In the late 1970s: the entrance of microelectronics in its maturity phase, the penetration of the world market by dynamic Japanese and western European firms; late 1980s: the reduction of the financial support from the federal budget the geographical segmentation of functions production in Asia, assembly in rural areas of western USA, research-development in Silicon Valley

Bangalore, India a landscape of high-tech industries

Industrialization strategies in developing countries

Local processing and exports of indigenous commodities;

Import-substituting industrialization the manufacture of products that would otherwise be imported, based upon protection against such imports;

Export-oriented industrialization.

Changing sectoral focus in Koreas developmental strategy

Developmental phase

Major industries

Primary import-substituting industrialization

Food, beverages, tobacco; textiles, clothing, footwear; cement, light manufacturing (wood, leather, rubber, paper products)
Textiles and apparel; electronics; intermediate goods (chemicals, petroleum, paper, steel products) Automobiles; shipbuilding; steel and metal products; petrochemicals; textiles and apparel; electronics; recorders; machinery

Primary export-oriented industrialization

Secondary import-substituting industrialization and secondary exportoriented industrialization

Source: Dicken, 2007

Growth in export processing zones

1975 No of countries with EPZs No of EPZs Employment (millions) Asia Central America and Mexico Middle East North Africa Sub-Saharan Africa North America South America Transition economies Caribbean Indian Ocean Europe Pacific Source:ILO, 2003, Financial Times, 2005 25 79 -

1986 47 176 -

1995 73 500 -

1997 93 845 22.5

2003 116 5000 43 36.8 2.2 0.7 0.4 0.4 0.3 0.3 0.3 0.2 0.1 0.05 0.01

Maquiladoras are factories that assemble imported, duty-free components and raw materials into finished products, most of which are reexported back to the USA market

SEZs (Open Cities or Open Coastal Areas) attract technologies and investments from abroad offering important incentives (low taxes, simplified regulations in respect to import-export and land leasing, profits may be sent back to the investors home countries)

The Jakota Triangle comprising Japan, Korea and Taiwan is a region of great cities, huge consumption of raw materials from all over the world, important exports and global financial linkages

Georgetown, Kentucky, was chosen as the location of a Camry assembly plant partly in order to draw on supplies of parts from around the United States conveniently

Toyota locates factories throughout Asia, lowering its manufacturing costs by seeking low-wage countries. The map shows Toyotas expansion plants and costs in 2003

Organization of the Nike production network

Source: Dicken, 2007

Nikes global supplier network, 2005

Source: Nike Inc., 2005