APHG 11.4

• Industry


  On the move around the world
• Site factors

  • Labor costs have stimulated industrial growth in new regions, both internationally and in developing regions
• Situation factors


  • Proximity to growing markets have played a role in the emergence of new industrial regions
• In 1970, nearly one-half of world industry was in Europe and nearly one-third was in North America; now these two regions account for only one-fourth each
• Industry's share of total economic output has steadily declined in developed countries since the 1970s
• The share of world industry in other regions has increased from one-sixth in 1970 to one-half in 2010
• Manufacturing Value Added as Percentage of GNI


  Manufacturing has accounted for a higher share of GNI in developing countries than in developed countries since the 1980s
• China is by far the world's leading producer of motor vehicles
• New international division of labor

  Transnational corporations have been especially aggressive in using low-cost labor in developing countries to remain competitive in the global economy
• Outsourcing


  Turning over much of the responsibility for production to independent suppliers
• Outsourcing has had a major impact on the distribution of manufacturing because each step in the production process is now scrutinized closely in order to determine the optimal location
• Vertical integration


  A company controls all phases of a highly complex production process
• Carmakers once made nearly all their own parts, but now most of this operation is outsourced to other companies that are able to make the parts cheaper and better
• Outsourcing is especially important in the electronics industry. The world's largest electronics contractor is Foxconn, a major supplier of chips and other electronics components for such companies as Apple and Intel
• Foxconn employs around 1 million people in China, including several hundred thousand at its Foxconn City complex in Shenzhen. Working conditions at Foxconn have been scrutinized by Chinese and international organizations
• A large percentage of Foxconn's employees live in dormitories near the factories, and they work long hours for low wages and limited benefits
• More controversial is an internship program employing young people during the summers that critics charge is a way for the company to get free child labor
• Manufacturing has been increasing in Mexico. Several trade agreements have eliminated most barriers to moving goods among Mexico, the United States, and Canada
• Maquiladoras


  Plants in Mexico near the U.S. border where companies receive tax breaks if they ship materials from the United States, assemble components, and export the finished product back to the United States
• More than 1 million Mexicans are employed at more than 3,000 maquiladoras
• Integration of North American industry


  Has generated fear in the United States and Canada that more manufacturers will relocate production to Mexico to take advantage of lower wage rates
• Labor-intensive industries such as food processing, electronics, and textile manufacturing are especially attracted to regions where prevailing wage rates are lower
• Environmentalists argue that trade agreements have encouraged firms to move production to Mexico because laws there governing air- and water-quality standards are less stringent than in the United States and Canada
• Mexico has adopted regulations to reduce air pollution in Mexico City, but environmentalists charge that environmental protection laws are still not strictly enforced in Mexico
• Although much lower than in the United States, Mexican wages are higher than in China. Despite the higher site costs, however, Mexico still competes effectively with China because it has much lower shipping costs to the United States and Europe than does China
• Mexico has also signed free trade agreements with many other countries in addition to the United States
• BRICS is an acronym coined by the investment banking firm Goldman Sachs for Brazil, Russia, India, China, and South Africa
• The five BRICS countries together encompass 26 percent of the world's land area and 42 percent of the world's inhabitants, but account for only 23 percent of world GDP
• China is expected to pass the United States as the world's largest economy in the 2020s, and India is expected to become second around 2050
• China and India have the two largest labor forces, whereas Russia and Brazil are especially rich in inputs critical for industry
• China, India, and Russia could form a contiguous industrial region, but long-standing animosity among them has limited their economic interaction so far
• The textile and apparel industry accounts for 6 percent of the dollar value of world manufacturing but a much higher 14 percent of world manufacturing employment, an indicator that it is a labor-intensive industry
• Textile and apparel production steps

  • Spinning of fibers to make yarn
  • Weaving or knitting of yarn into fabric
  • Assembly of fabric into products
• China produces one-fourth and India one-fifth of the world's cotton thread
• China accounts for nearly 60 percent of the world's woven cotton fabric production and India 30 percent
• Developed countries play a larger role in assembly than in spinning and weaving because most of the consumers of assembled products are located in developed countries
• Nonetheless, most clothing is assembled in developing countries
• In 1980, 81 percent of world steel was produced in developed countries, but by 2010 this had fallen to 52 percent
• Changes in the relative importance of the main inputs and increasing importance of proximity to markets have altered the distribution of steel producers within the United States and worldwide
• Steel is an alloy of iron that is manufactured by removing impurities in iron, such as silicon, phosphorus, sulfur, and oxygen, and adding desirable elements, such as manganese and chromium