Part two -- industry

Diffusion of industry and location theories

The first Railroad in England opened in 1825 and by 1830 Manchester and Lancaster were connected by rail

Diffusion to Mainland Europe

• Early 1800s innovations diffused to mainland Europe-Low Countries & Germany– Location criteria-

proximity to coal fields– Connection to a water

port• Latter Diffusion in late

1800s innovations– Location criteria-access

to railroads strengthened Paris and London as manufacturing centers

Over 50% of goods entering Europe arrive at two ports in the Netherlands

Diffusion of the Industrial Revolution

Diffusion to Mainland Europe• A belt of coal fields stretch

along southern edge of North European Plain-northern France, Netherlands, German Ruhr, western Bohemia & Silesia

• Rotterdam, Netherlands-located on the Rhine-connects Ruhr Valley to the sea-most important port of Europe

• Paris-luxury items-jewelry, perfume, fashions plus metallurgy and chemicals-LeHavre major port connects Paris with the sea

Diffusion of Industrial Revolution

The Paris Basin is the Industrial base of France. Rouen (above) is at the head of navigation point on the Seine River.

How do Location Theories explain Industrial Location?

Location Theory

• Location Theory – predicting where a business will or should be located.

• Location of an industry is dependent on economic, political, cultural features as well as whim.

• Location Theory Considers:– Variable costs-energy,

transportation costs & labor costs

– Friction of distance-increasing distance =increased time & cost

Location ModelsWeber’s Model-The Least Cost TheoryAlfred Weber, (1868-1958) a German economists, published Theory of

the Location of Industries in 1909. His theory was the industrial equivalent of the Von Thunen Model.

Manufacturing plants will locate where costs are the least.

Three Categories of Costs:

Transportation-the most important cost-usually the best site is where cost to transport raw material and finished product is the lowest

Labor-high labor costs reduce profit-location where there is a supply of cheap, non-union labor may offset transportation costs

Agglomeration-when a group of industries cluster for mutual benefit-shared services, facilities, etc.-costs can be lower

Deglomeration-when excessive agglomeration offsets advantage-eastern crowded cities

Location Models• Hotelling’s Model-Harold

Hotelling (1895-1973) this economist modified Weber’s theory by saying the location of an industry cannot be understood with out reference to other similar industries-called Locational Interdependence

• Losch’s Model-August Losch said that manufacturing plants choose locations where they can maximize profit. Theory: Zone of Profitability

Losch’s Model-Zone of Profitability