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2013-09-10 Foundations of Geography of World Business.docx

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Western University
Geography 2143A/B
Milford Green

Foundations of Geography of World Business September 10, 2013 This course covers what I consider the most important topics: -globalization -Population -Energy -China -Japan and the Koreas -The course examines these selected aspects of the international economy from the special perspective of economic geography. -As field of intellectual inquiry, economic geography is primarily concerned with those economic relationships between places that can be generalized under the term spatial interaction Does Geography Matter? -The cliché is that instantaneous global telecommunications, television, and computer networks will soon overthrow time and space -Companies will need no headquarters, workers will toil as effectively from home, car, or beach -e.g. Social interaction still matters a lot – even in an era of disembodied digital identities – Gillian Teft -Software forAmerican companies is already written by Indians and transmitted to Silicon Valley by satellite -Foreign-exchange markets have long been running 24 hours a day -you can check foreign exchange online -But, such developments have made hardly a dent in the way people think and feel about things -For example, at newspapers or news broadcasts anywhere on earth, and you find them overwhelmingly dominated by stories about what is going on in the vicinity of their place of publication -What your neighbours do affects you. The rest is voyeurism. -based on distance -American multinationals going global have discovered that for all their world products, world advertising and world communications and control an office in, say, New York cannot except in the most general sense manage the company’s Asian operations -transnationals have headquarters in large metropolitan areas -U.S.: New York, LosAngeles, Chicago -headquarters: supposed to set general policies, planning, communicate back to other offices and they implement them 1 -distance still matters -Global strengths must be matched by a local feel and jet-lagged visit of a few days every so often does not provide one -some executives fly to and from headquarters -costly -Most telling of all, even the newest industries are obeying an old rule of geographical concentration. From the state of the industrial age, the companies in a fast-growing new field have tended to cluster in a small region -This is why the world got Silicon Valley in California -started in 1920s, not 1960s -a lot of places want to replicate Silicon Valley, but most successful one is Cambridge in UK -it is also why tradable services stay surprisingly concentrated: futures trading (in Chicago), insurance (Hartford, Connecticut), movies (LosAngeles) and currency trading (London). -Silicon Valley companies: Zynga, twitter, Yahoo!, Google, Facebook,Apple, PayPal -Manhattan advertising agencies: -clustered in several block areas -Biotech -pretty spread out across U.S. (e.g. Seattle, San Francisco, Oakland, San Jose, Los Angeles, Orange County, San Diego, Austin, Washington D.C., Boston, Philadelphia, Raleigh -institutional investment: money coming out of various studies -concentrated in 6 centres: New York, Boston, Chicago, L.A., San Francisco, etc. -NYC HGs Institutional Investors, 2010 -more concentrated; more than one company in a building -Main reason is that history counts: -Where you are depends very much on where you started from -Spatial inertia -things tend to stay where they are -e.g. automobile industry in Detroit -lack of change is because of investment -New technologies will overturn some of this, but not so much -The most advanced use so far of the internet, the greatest of the world’s computer networks, has not been to found a global village but to strengthen the local business and social ties among people and companies in the heart of Silicon Valley 2 -As computer and communications power grows and its costs falls, people will create different sorts of space and communities from those that exist in nature. But these modern creations will supplement, not displace, the original creation; and they may even reinforce it. -Companies that have gone furthest towards linking their global operations electronically report an increase, not a decline in the face-to-face contact needed to keep the firms running well: with old methods of command in ruins, the social glue of personal relations matters more than ever -process higher levels of knowledge from outside -The reason lies in the same fact of life that makes it impossible really to understand from statistics alone how exciting, say, China’s economic growth is unless you have physically been there to feel it. -People are not thinking machines (they absorb at least as much information from sight, smell, and emotion as they do from abstract symbols), and the world is not immaterial virtual reality -Cyberspace can help overcome space but it cannot replace Corporate Geography -economics + business + geography = corporate geography Spatial Interaction -Systems of spatial interaction have two components: 1.places that serve as origins and destinations of flows, 2.the flows themselves -can be anything that can be measured and linked to a place -e.g. urban structure of N.A.; look at air traffic -connections between interactions based on flows -money flows between places -Analysis of current locational patterns and their determinants is an important step toward understanding spatial interaction in the economy. -Understanding of a system of spatial interaction requires consideration of the interconnections among places, called the system's spatial structure. -why is biotech restricted to 5-6 locations? Why Silicon Valley exists..? why does automotive industry...? 3 -understand location and how and why the places are -why is NYC premier finance capital inAmerica? Hasn’t always been like that; was between Boston and NY -Increased interaction between rich and poor countries is required not only in the interest of improving standards of living in the world’s poorer countries, but also in the interest of maintaining the prosperity of the world’s richer countries -the have countries (core) has more of the tvs, cell phones, technologies, birth rates, death rate, HDI -three sections: core (big players-U.S., Western Europe, Japan), semi-periphery (China- biggest polluter in world, biggest energy consumer in world) (e.g. Eastern Europe-some developments -Canada: core-tightly connected to US (culturally similar, close borders) -China: economically ‘core’but -periphery (lowest in measures of development): -periphery depends on the core; core runs the periphery -periphery provided raw materials and core manufactures products (e.g. England and India) -periphery: sources of material -things have changed today -China access materials in Africa -Globalization of the economy is a commonly used phrase, arguments have been made that economic regionalization is strengthening and true internationalization of economic activity is a selective prospect at best -today: globalization we experience now is people connection -e.g. 2008: almost total collapse of economy -shows how interconnected everyone was -Technological developments in communications and transportation systems that have helped make the world effectively smaller will continue to take place, and the spread of multinational corporations that serve to link places in the international economy will continue as well. Space/Time Convergence of the World Transport System 1500-1840 Average speed of wagon and sail ships: 16 km/hr 1850-1930 Average speed of trains: 100 km/hr. Average speed of steamships: 25 km/hr 1950 Average speed of airplanes: 480-640 km/hr 1970 Average speed of jet planes: 800-1120 km/hr 1990 Numeric transmission: instantaneous 4 -over time, we have successfully improved our level of transportation -every time we do it, it costs us major changes of our economy Development of Operational Speed for Major Transport Modes, 1750-2000 (km per hour) -Containership: -revolutionary speed in freight traffic -put things in box -takes fewer people to put things in train World shrinking is highly uneven -distance is not necessarily best metric in determining transportation -These “enabling technologies” continually improve the prospects for interaction in the international economy. They provide an infrastructure that supports international trade and investment as they lower transaction costs and improve the stock of knowledge of foreign markets. -enable higher levels of interaction to occur -the reason why International trade growing very rapidly, investment flows growing -more likely to invest in a place when you know more about the country -investment move from coastal regions to inner regions -transportation costs in coastal regions higher -Core and Periphery -connections to grow faster than core; strengthens core and pushes periphery...? 1) countries are the immediate building blocks of the international economy. 2) most national economic policies that affect and are effected by international flows can be viewed realistically as having a uniform distribution across the space of the national states. -sometimes economic decisions are affected by government -e.g. U.S. and Cuba -e.g. China wants to buy an electronic company in U.S.; U.S. government rejected it because of defense reasons -2 features of the international economy often blur the discrete characteristics of individual countries -1. growth of multinational economic blocs 5 -2. the widening spread of transnational corporations (TN
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