Local and Regional Development

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Oct 28, 2013 (3 years and 7 months ago)

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Local and Regional
Development

Lecturer: Prof. Gunther Maier


By Rory O′Connor and Philipp Hollenstein

1.
Industrial Geography

1.
Introduction to Industrial Geography

2.
Theoretical Approaches




2. Historical Developments

1.
Manufacturing Change in Historical Perspective

2.
Smith vs. Marx

3.
Industrialization as a Process of Creative Destruction




Overview

1.1
Introduction to Industrial Geography



Industrial Geography/Manufacturing Geography


Explains changes in location of and growth/decline in industrial activity and the
implications of such changes on local development


The watershed of the 1950s/1960s


Idiographic (Pre
-
)


Concerned with individual cases


Nomothetic (Post
-
)


Concerned with theory on widescale


Modern Theories


Neoclassical


Behavioral


Structuralist (Radical)

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1.2 Theoretical Approachs

Conventional: Neoclassical and Behavorial


Neoclassical


Competition maximizes individual efficiency and social welfare in the
longrun


Characteristics


Focuses soley on economic variables, disregarding factors such as social processes


Assumes universial economic laws


Challenged idiographic view of unique environments


Behavioral


Challenged neoclassical


Real world decisions do not follow set rules


Applied additional factors to decisions such as preference, rational, and
abilility (i.e., small firm v. multinational fim)



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1.2
Theoretical Approachs

Radical and Structuralist


Influenced by institutional and marxian economics


Challenged the notion that capitalism provides the most ideal outcomes


Instead, unregulated capitalism generates instability


Emphasises political economy


Ability of corporations to manipulate their markets and locations


Structuralism


Strong marxian influence


Capitalism is crisis
-
ridden and exploits labor


Criticisms


Unclear, lack form of evolution


Overemphasis of macro
-
economic forces


Spread of Industrialization


Powerful tendencies help to standardize supply and demand


Geographically uneven, causing modification due to local circumstances

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2.1 Manufacturing Change in Historical
Perspective



The Industrial Revolution of the late 18th century brought changes in
the nature, scale and growth rates of manufacturing activities


Primitive accumulation


Handicraft industry, large workshops, factory system


Large workshop promotes division of labor by seperating workers from means of
production


Industrialization follows through further labor exploitation and control


Proto
-
industrial


Handicraft industry, putting out system, factory system


Promotes large
-
scale industrialization through the capacity of rural areas to increase
levels of production


In reality, path to industrialization is more complex


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2.1 Manufacturing Change...


Evolution of Paper Making


Illustrates several aspects of the diffusion of traditional industry


Process was invented in China


Travel of merchants, explorers, artisans, etc. brought paper making to
various regions worldwide


Through its evolution, experimentation with different processes and
materials changed technology


By 1800, paper making was labor intensive and based in small
workshops


Within 100 years, it became capital intensive and based in large
factories


Expansion to areas of geographic significance (i.e., coniferous forests,
rainforests, urban areas)

7

2.1 Manufacturing Change...

English Wool Industry


Different organization than that of paper making


Domestic system based in West Riding of Yorkshire


Putting out system based in West Country


Domestic system


Process was organized amongst small land owning families


Limited class differences between masters and workers


Putting out system


Organized by merchant manufactorers


Merchants owned material and equipment and paid workers to complete
specialized processes


Workers based more heavily on agriculture, thus more susceptible to changes in
harvest or wages


Workers borrowed more increasing merchant control of entire process


Encourgaged class alienation and conflict


Industrialization started through cooperative mills


Later developed into putting out system in which merchants owned factories and
employed labor


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2.1 Manufacturing Change...

The Factory System


Originally, factories and traditional industries existed side by side


Factories could higher quantities of goods at lower costs than
traditional industries


Despite opposition, factory system grew in importance


Capitalists found motivation in profit, status, and control


Regulations were established to ensure the continued existence of a
modern society


The industrial revolution helped develop capitalism‘s significant
characteristic for self
-
generated change

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2.2
Smith vs. Marx

The truth is somewhere in between



Smith view: the markets work most efficiently when they
are regulated by freely competitive processes


laissez
-
faire


no restriction of competition by the government


efficient allocation of resources



Marx view: industrialization is an exploitative processe at
the expense of the labour force


capitalists are able to drive down wages to provide surplus value



Both sides where wrong


Perfect competition will not always serve the best results


Labour has developed abilities to cope with capitalism (labour unions)







2.3
Industrialization as a process of
creative destruction

New Innovations as response of a crisis



Kondratieff cycles


industrial revelution occured in terms of a series of long waves


each wave comprises periods of recovery, prosperity and recession
and is terminated by severe depression



Development of the waves


each new wave is created by the clustering of basic innovations


This stimulate the opportunities for investment and employment in new
branches of industrie


after some time markets for the new goods become saturated


the
emphasis is now on improving precess technology (reducing labour)


This creates a crisis because of the excess capacity and decreasing
demand


the way out is another cluster of innovations




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2.3
Industrialization as a process of
creative destruction

Each wave was started by an important innovation



5 Kondratieff waves have been identified:


1. Wave started in the 1770‘s evoked by clustering of innovations in
the iron and textile industrie



2. Wave started in the 1820‘s evoked by clustering of innovations in
steam power and railways



3. Wave started in the 1880‘s evoked by clustering of innovations in
electric power and chemicals



4. Wave started in the 1940‘s evoked by clustering of innovations in
petrochemicals, electronics, autos and aerospace



5. Wave started in the 1980‘s and is still in progress evoked by
clustering of innovations in microelectronics



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2.3
Industrialization as a process of creative
destruction

The new approach try to improve the old theory



Critique and improvements of the Kondratieff cycles theory


The emphasis is only on technological variables



But the reason way industrial development happens is more
complicated and includes other variables



New approach


based on recognizing shifts in techno
-
economic
paradigms


Long waves of economic activity are broadly based and embedded
within a society




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2.3
Industrialization as a process of
creative destruction

Radical innov. have an greater impact than incr. innov.



Shifts in techno
-
economic paradigm


4 different types of innovations are distingushed


Incremental innovations


occur continuously


no single incremental innovation has a dramatic effect


but all all incremental innovations together have a great influence on the
industrie



Radical innovations


occur unevenly over time, space and sectors


they have a dramatic impact


the basis of investment booms


the impact is may limited to the new products


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2.3
Industrialization as a process of
creative destruction

Techno
-
economic paradigm herald a new wave



New technology systems


combine radical and incremental technological innovations with
organizationl and managerial innovations


broade impact on several branches of the economy


create new industries



Techno
-
economic paradigm


the new technology systems exercise pervasive effects throughout the
entire economy


major industrial and infrastructural innovations


new principles of productivity


emergence of new forms of business organization


innovations in international and national systems of regulation


Broad shifts in industrial and technological leadership






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2.3
Industrialization as a process of
creative destruction


new paradigms are associated with a main industry


New techno
-
economic paradigms occure:


As a response of a downswing phase of the previous Kondratieff wave


Because it offers some decisive advantages over the previous one e.g.
reducing the costs of production



Main industries and infrastructure


each paradigm is associated with specific mixes of dominant industies
and expansions of particular forms of infrastructure


the new small industries of a paradigm which grow rapidly become the
main carrier branches of the next paradigm


each wave adds layers of new activity and infrastructure while
simultaneously forcing changes in existing structures


Interdependencies among industries is a very important feature for the
industrializaton process











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2.3
Industrialization as a process of
creative destruction


new paradigms are supported by a key factor


Sources of producivity improvement:


economies of scale


fordism


highly spezialised labour can do the work faster and better


reduction in labour costs and improvement in quality


but there also diseconomies of scale e.g. rooted in the boring work
or inflexibility



Key factor


each paradigm is associated with a key factor, e.g. oil or micro
-
electronics


they fulfill three conditions:


avarage cost (and price) of key factors falls rapidly


key factors are in almost unlimited supply for long periods


key factors have potential for incorporation in many products and
processes













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2.3
Industrialization as a process of
creative destruction

A crisis pave the way for a new paradigm



Institutional innovations


each paradigm is implicated with new forms of international and national
systems of regulation


In addition to that each paradigm is associated with institutional
innovations affecting business organization (e.g. plc.), labour relations
and systems of innovation (e.g. r&d laboratories, universities)



The crisis of structural adjustment


The shift from the old to the new techno
-
economic paradigm occurs
mostly in time of recession


way?


Old paradigms are considerable resistance against changes because of
the made investments, human attitudes (the sense of tradition) and
because of the fear of new challenges


Thus, as the economic and social problems of the old paradigm become
apparent, the people are willing to change their mind












18

Thank You For Your
Attention