2019

Prepared by Amaha Kiros

Amaha Kiros
Aksum University, Department of
Geography and Environmental
Studies
10/11/2019
CHAPTER ONE: INTRODUCTION TO ECONOMIC GEOGRAPHY
Concept of Economics
 Economics is concerned with the production, distribution and consumption of goods and
services.
 It is concerned with the allocation of scarce resources to satisfy unlimited human needs and the
internal functioning of the economic system (cost-benefit).
 It is the study of how human beings in a society coordinate their wants and desires and seeks to
give a better understanding of how our economy operates and what can be done to avoid
unemployment, inflation and waste.
 Economists focus on the way in which individuals, groups, business enterprises, and governments
seek to achieve efficiently any economic objective they select.
Concept of Geography
 Geography is a spatial science which as a body of knowledge deals with the study of the:
 Organization,
 Interrelationships, and
 Variations of the physical and cultural environment on the earth’s surface.
 Geography is an integrative science which shares views and aspects with other disciplines such as
Economics, Sociology, Demography, etc.
Scope of Geography
o More importantly, Geography is focusing on the surface of the earth, treats the interface of the
atmosphere, lithosphere, hydrosphere, and biosphere which provides the habitat in which
humans are able to live.
o Generally speaking, geography can make us better informed citizens, more able to understand the
important issues facing our communities, and better prepared to contribute solutions.
o To be geographically illiterate is to deny oneself not only on the ability to comprehend world
problems but also the opportunity to contribute meaningfully to the development of policies for
dealing with them.
o To sum up geography:
 Enables individuals to know the basic features of the world in which they live the great varieties
of lands and peoples and complex interrelations of humans with resources.

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  Provides explanations of the distribution of physical, biological and human features on the earth
and their complex chains of interconnection.
 Is useful in resource management, understanding problems of the environment, (pollution,
flood ) in analyzing natural hazards.
 Is crucial for land use planning for different sectors and housing.
Economic Geography
 Economic Geography is a sub-field of human geography concerned with describing and explaining
the varied places and spaces where economic activities are carried out and circulate.
 Economic Geography is the study of the spatial variation on earth’s surface of activities related
to production, distribution, and consumption of goods and services.
 It focuses on the location of economic activities at a local, national, regional, and global scales and
it is the science of the formation, development, and function of socio-economic territorial systems
and the management of them.
 The economic geographer wishes to show the spatial distribution of economic activities and
understands why they are located as they are and recognize how economic activities are interrelated
in particular areas and how the activities are tied to other economic activities at other locations.
Scope of Economic Geography
 Economic geography studies mainly about man and environment interaction in the process of
production, exchange and consumption of goods and service.
 As a human geography, it involves all phases of human social life in relation to the physical earth.
The sub-fields of economic geography are:
1. Agricultural geography: deals with the spatial distribution and variation of agricultural
production of crops and raring of animals for human use.
2. Transport geography: deals with the exchange and interactions of areas and people. The
establishment of transportation facilities, trade routes, and resort areas depends on the results of
geographic studies.
3. Industrial geography: deals with the location of industries and the industrial use of the
geographic environment which rely on geographic studies concerning raw materials, sources of
labor and distribution of goods.
4. Tourism geography: is the study of travel and tourism, as an industry and as a social and
cultural activity. It covers a wide range of interests including the environmental impact of
tourism, the geographies of tourism and leisure economies, and management and locations.
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 5. Geography of resources: deals with the distribution and spatial variation of natural resources
such as mineral and oil deposits, forests, grazing lands, and farmlands with reference to their
position, productivity and potential uses;
6. Geography of minerals: study about the distribution and spatial variation of mineral resources;
7. Geography of marketing: study concerns with market locations and sales potentials based on
geographic studies.
Key Differences between Economic Geography and Economics
 It is important to stress from the outset that the approach that geographers use to study the economy
is very different from that used by most economists.
 The key difference is that economists usually pay little attention to the geographical dimensions
of economic processes while economic geographers consider geography as being essential for the
understanding of the way economies work.
 Most economists see the economy as a machine that works according to certain principles and
whose behavior can be predicted using modeling techniques. Mathematics is therefore the main
‘language’ economists ‘speak’.
 Economists believe that:
 All people are behaving in a rational, self-interested and economizing, profit-maximizing
manner.
 The market is the best mechanism to ensure economic efficiency in a way that perfect
competition on the market guarantees supply will meet demand at a particular price and the
economy will be in equilibrium.
 The market economy operates according to certain laws and principles that could be studied as a
‘science’. One of the main concerns of this economic ‘science’ is to predict the behavior of
the economy using mathematical models and equations.
 In contrast to the ideas of most economists, geographers emphasize the fact that no economy can
function on a vacuum. In other words, ‘all economies must take place. Geography, therefore, is
always intrinsically present in all economic processes. One could therefore argue that, in fact, there
are ‘no economies, only economic geographies.’
 It follows then, that the kind of universalism that mainstream economics assumes is somewhat
problematic. Indeed, if all economic processes have a geographical dimension, then it is difficult
to imagine that economic rules can apply equally to all places.

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 Another major difference between Economists and Geographers concerns the notion of a
‘rational man’. As we have seen above, mainstream economists assume that people are always
behaving as rational, profit maximizing individuals responding to market signals. However, life is
more complex than that and people’s behavior is not always the outcome of rational decision-
making. Rather, it can be influenced and conditioned by their gender, race, age, class, religion,
culture, health or disability. Geographers are keen to take these aspects on board when studying
economies. A ‘geographical man/woman’ – can behave very differently from the way they are
supposed to behave according to many economists. This has important implications for the
remaining assumptions of economists. Indeed, if people are not behaving in a predictable way, then
it is hard to expect that the entire economy will behave according to some predictable laws and
principles. However sophisticated, mathematical models may not be able to capture all the
complexity of economic processes happening in the real world.
Approaches to Economic Geography
1. Positivism
o Positivism employs the scientific method to interpret issues in economic geography.
o The scientific approach is based on empirically verifiable and commonly agreed upon
evidence through replication of analytical results.
o It involves hypothesis testing for empirical generalizations and theories. Besides, it uses
statistical or mathematical techniques and Geographic Information System (GIS).
2. Structuralism
 This approach to economic geography assumes what we see in the world doesn’t reveal the
cause of what we see.
 The structure of the economy cannot be directly observed and we should develop ideas and
theories that will help us understand what we see and experience. For example, consumption of
a product cannot be merely related to distance and price in market but social class and political
plight also maters. For example, Marxism- focuses on social class structure and struggles
between the forces of labor and capital. In Structuralism geographers emphasize on studies in
industrial geography where conflicts between management and labor have been keen.
3. Humanism
 This approach to economic geography assumes that knowledge is gained personally and
individually focuses on human thinking and feeling.
 Humanism also values subjective experience and disdains scientific objectivity as impossibility.
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 Types of Economic System
 To achieve the economic growth and development, various countries employ different
economic systems.
 This means economic problems of a country or a region can be solved in various ways.
 The economic system describes the relationship that exists between consumers, producers and
the state. That is, patterns of production and consumption and the location of economic
activities within each system.
 Economists recognize the following types of economic systems practiced in the world based on
resource allocation, property ownership, and decision making.
1. Traditional Economic System
o This type of economic system is mostly known as the third world socio-economic system
characterized by a subsistence economic type, a non-monetary system with limited exchanges
conducted through bartering.
o Only the most isolated societies in the world remain in this category.
o Agricultural, rural, and technologically underdeveloped regions are parts of this economic
system.
o Primitive type of economic activity is culturally directed and mostly characterized by hunting
and gathering undertaken using backward tools.
o Now-a-days, it is practiced in small areas for subsistence purpose.
o Production takes place for home consumption and very little for market.
o Allocation is often made by community leaders and resource distribution is based on social
status.
2. Commercial Economic System
 This type of economic system is mostly known as developed or capitalist world socio-
economic system.
 It is a system run entirely by private enterprises with no public ownership. However, this is a
theoretical concept as no national economy has ever reached this extreme, but the United States
is generally recognized as the nearest country to a free market economy.
 Market economy is characterized by complex, advanced economies, hierarchical, and spatially
linked in patterns of consumption, production, and exchange of goods and services.

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  The ultimate objective of the free market economic system is to maximize profit through
comparative advantage (skill, labor, environment, and resources), intervening opportunity,
distance decay and accessibility, specialization even in agriculture, complementarities,
interdependence, and trade.
 In this economic system producers produce for market and made available based on the laws of
demand and supply and market competition.
 Most resources are privately owned and decision is made by individuals.
3. Planned or Command Economy System
 This is an economic system where the state decides what is to be produced, where production
will be located, and what can be consumed.
 Such a system denying private ownership is associated with socialist states.

 Central planning is needed to achieve government-determined objectives; government agencies

control supply; decide where to locate industries and crops to grow on social criteria.
 Supply is done by central planning authority or government.

 In general, now-a-days, there is no pure command economic system.

4. Mixed Economic System
 This type of economic system is one where some sectors of the economy are in public
ownership and others in private.
 The nations of Western Europe are classic examples of this type of economic system.
 In terms of spatial distribution, most countries show combinations of each system using dual
economies.
Themes in Economic Geography: Production and Consumption
1. Production
 Primary and secondary economic activities are production sectors.
 People are producers and consumers of wealth. Some people who engage in these economic
activities produce more than one kind of commodity or service.
 Productive activities are usually concentrated at places where there are different factors of
production.
a. Labor
 It is of primary importance since without its productive processes cannot be fully
accomplished.

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  Some activities require relatively few labors in relation to the scale of the operation
while others employ a great deal of labor.
 The reward to labor for the work performed is related to output.
 Labor varies in its capacity to perform work as some tasks call for higher skills than
others commanding higher wages.
b. Capital
 It refers to the tools, equipment, and other materials to that are used to carry out
production activity.
 Some activities require little (very small) capital while others demand expensive (very
large).
 The volume of output increases with the size of the capital investment.
 Therefore, power driven mechanized production yields a higher return to each unit of
labor employed than a process carried out by hand.
c. Land
 Every production process takes place in geographical space (land).
 The amount of land required varies depending on the nature of the activity.
 For instance, pastoralism demands more land than crop production.
Note
1. Factors of production can be combined in any activity in different proportions.
2. Factors of production can in some measures be substituted for one another. (e.g.
mechanization and floating labor), intensive use of land (scarce).
2. Consumption
o It refers to the final use of goods and services to satisfy human needs and greed.
o Some forms of consumption consume goods quickly (non-durable goods) while others do it
gradually (machines and tourism).
o Some people consume a great deal of goods and services more than others and some others
may consume less than they wish and still others less than what is normally considered
necessary to maintain life.
o The producer may consume the greater part of their produce or sell off it into the market.
o No individual or family can live entirely to itself as each is part of a wider community.
There is a world of interdependence where one depends on the other.

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 Concept of Resource
 Resource is anything obtained from the living and non-living environment required for human
survival, comfort and prosperity.
 According to the eminent professor of economics, Zemmermann (1951), resource must possess
two important properties: functionality and Utility. To define anything as resource one must
critically examine whether it has the property of both utility and functionality.
 The functionality is a function of time and space. The resources of yesterday may not be
considered as resource today. Resource considered by one country may be considered as waste
product by other countries.
 Anything or substance, be it tangible or intangible, should be either resource or neutral stuff.
 If anything, or substance does not contain functionality or utility value, it is termed neutral
stuff.
 Neutral stuff should not necessarily remain neutral forever. What is considered neutral stuff
today may transform into resource tomorrow.
 Man’s knowledge, wisdom and technological innovation and changing social values may
transform neutral stuff into precious resource.
 For example, Petroleum was not considered as a resource until 1859, since the world’s first
commercial oil-well was dug in USA.
Concept of Natural Resource
o Natural resource can be defined as any part of natural environment (biosphere, lithosphere,
atmosphere and hydrosphere)-such as land, water, air, minerals, forest, range land, wild life,
fish or human population-that man can utilize to promote his life.
o Human beings do not produce natural resources, but can only modify them. For example,
humans cannot produce petroleum, which is the result of natural processes of conversion of
dead plants that have been processed for millions of years slowly become petroleum. But we
can process it into component parts.
Classification of Resources
Resources can be classified in a number of ways. Some of these include:
1. Material and non-material resources
o This classification is based on whether the resources are tangible or non-tangible.
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 o Material resources are tangible substances such as petroleum, iron ore, copper water, etc.
On the other hand, non-material resources are intangible substances like health condition,
culture, ethics and freedom.
2. Biotic and Abiotic resources
 This classification is based on origin of resource.
 Biotic (living) resources are resources that can replace themselves through biological
processes (e.g. Plants and animals).
 Abiotic (non-living) resources are resources that can regenerate; sustain themselves through
different process but not biologically (e.g. soil)
3. Inexhaustible and exhaustible resources
 This classification is based on level of exhaustibility.
 Inexhaustible resources are resources that the rate of use does not have any relation or
important effect on the quantity of resource (e.g. solar energy).
 Exhaustible resources are resources where the quantities decrease with use (e.g. wild life).
4. Renewable and Non-renewable resources
 This classification is based on the inter-temporal characteristics of the resource.
 This is the commonly used classification of resource.
 Renewable resources are resources that capable of natural regeneration into useful products
within a time span relevant to man. They are potentially renewable and could be indefinitely
available provided that their capacity to regenerate is not damaged by natural catastrophe or
human activity.
 The renewal of some of these resources (living organisms) may be affected by man, while
others (solar radiation, wind, tides) are principally not influenced by human activity.
 On the other hand, non-renewable resources are those resources whose physical quantity
does not increase significantly with time. That means the rate of renewal is so slow as to be
negligible.
 The non-renewable resources are often defined as “stock resources”. The total supply of the
resource is limited in quantity, and each rate of use diminishes some future rate of use.
Global Natural Resources Utilization
 The recent period in human history contrasts with all the earlier ones in its strikingly high rate
of resource utilization.

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  Global trends of increasing population, increasing natural resource consumption, and decreasing
natural resource availability have pushed many human social, economic and political systems to
an important tipping point.
 Poor management of natural resources exacerbates the problem. We face large-scale future
dislocations and crises unless significant action is taken now by leaders in both developed and
developing countries.
 The increasing demand of natural resource is mostly generated from the industrially advanced
countries of the North and the industrial territories in the underdeveloped countries of the
South.
 Besides, when it is viewed in the context of developing versus developed world,
overexploitation of resources has had contrasting connotations.
 Resource exploitation in the developing world has largely been geared to meet the very basic
needs of food, fuel wood and shelter of a large section of deprived societies. On the other hand,
developed parts of the world have largely concerned themselves in trying to maintain and
accelerate the already very high levels of resource consumption.
 In many developing countries, the combination of poverty, unequal distribution of land and
other resources and population growth creating incentive for people to overexploit existing
resources to survive. Exacerbating this is the fact that economic systems do not always contain
automatic self-regulating mechanisms for ensuring the lasting environmental sustainability of
the current economic development paths.

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CHAPTER TWO: PRIMARY
ECONOMIC ACTIVITIES
Agriculture
The term agriculture is derived from two Latin words ager and cultura. Ager means, field or soil and
cultura mean culture or tilling. Hence, agriculture is the art of raising plant from the soil. But it is not
merely tilling of land, but also a conscious and determined effort on the part of man to utilize the soil
for his benefit. Agriculture has been differently defined by different scholars/institutions:
Whatever the definition given to it; agriculture is:
 The purposeful growing of crops and rearing of livestock, either for subsistence or for sale;
 It is an art, science, and industry of managing the growth of plants and animals for human use
including:
 Cultivation of the soil,
 Harvesting of crops,
 Raising livestock,
 Dairying and forestry.
 It is the dominant source of food, raw material for industry, export and employment.
Factors Influencing Agricultural Systems and Land Use Pattern
 The type of crops,
 The methods of farming,
 Patterns of land-use and
 Amount of yield
varies from place to place depending on a number of factors. Interrelated factors influencing
agricultural systems and land-use patterns are grouped into three broad headings: natural, economic
and other factors.
Natural Factors
 Climate,

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 Soil, and
 Topography.

Economic Factors
 Market
 Transport facilities
 Labor supply
 Capital
 Government policy
Other Factors
 Level of Technology
 System of Land Tenure
 Farm size:
 System of Land Utilization
Classification of Agricultural Practices
Agricultural practices may be classified on the basis of:
 Supply of land,
 supply of moisture/water,
 cropping system,
 crop-livestock combination and
 volume of production and market.
On the Bases of Supply of Land
1. Intensive Cultivation
 It is defined by the ratio of labor, capital and other inputs to the available land area.
 It is practiced in thickly populated countries where cultivable land is limited,
 In this type of agricultural practice,
 Farmers use limited land intensively so as to obtain the maximum output;
 Farmers try to raise more than one crop from the same field;

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  Extra care is essential to maintain the fertility of soil.
 High levels of inputs (machinery, fertilizer, and labor are applied per unit of area with the
intention to achieve high yields per unit area.
 Labor productivity is high.
 A lot of labor and capital is applied to maintain the fertility of the soil as high as possible;
 Scientific fertilizers and quality of seeds are used;
 Water is provided through irrigation in water scarcity seasons.
 This type of agricultural system is used in Countries like Japan, China, India, Britain, Holland,
Belgium and Germany follow this method.
2. Extensive Cultivation
 This method is generally practiced in those countries where land is abundant and the population
relatively sparse.
In this method:
 Agriculturalists think in terms of overall returns across the whole land holding and not primarily in
terms of yield per unit area.
 The amount of inputs (capital and labor) applied per unit area is relatively low and yield per unit
area is low.
 Total agricultural output can be high because of very large landholding.
 Farmers concentrate on keeping cost per unit area as low as possible,
 Farmers specialize in one or two major commercial crops and perform farming operations with the
help of machines. The chief characteristics of this system are as follows:
 Farms are very large in size and spread over hundreds of hectares.
 No extra care is required to maintain the fertility of soil in most cases fertility of soil is replenished
through natural processes;
 Farmers specialize in one or two major commercial crops,
 Farmers get very large aggregate outputs, though yield per hectare is generally low’
 The countries practicing extensive cultivation raise bumper crops and have large surpluses for
export
 Countries that practice this type of agriculture include: U.S.A, Argentina, Brazil, the Australia, etc.
On the Bases of Supply of Moisture or Water
On the basis of moisture or water, agricultural practices can be classified into:
1. Humid Farming

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 This type of farming system is practiced in areas having sufficient rainfall;
 Under this system,
 Agricultural crops are produced without the help of irrigation.
 The fields are prepared during the rainy season and the seeds are sown.
 Harvesting is done in autumn or winter.
 As the moisture requirements of crops differ from one another, the amount of rainfall
determines the types of crops that can be grown.
 Thus, rice, jute and sugarcane are grown in areas of heavy rainfall, while areas receiving
moderate rainfall grow cotton, tobacco, wheat, barely, etc.
 Monsoon lands, tropical rainy climates, the Mediterranean regions and the cool temperate
countries of Europe and America practice humid farming.
 This method of farming is less costly as there is no need for irrigation.
 The amount of rainfall received by an area determines the type of crops to be cultivated in that
area. Areas receiving heavy rainfall grow rice, sugarcane, jute, coffee, tea, etc. while areas
receiving moderate rainfall grow cotton, wheat, tobacco, barley, millets, etc.;
 Rainfall influences the method of land utilization. In areas having rainfall throughout the year,
the land is under the plough throughout the year, while in areas having seasonal rainfall the land
is left fallow during the dry season;
 The quantity and quality of crops is also determined by the rainfall. The timely occurrence of
rainfall in sufficient amount yields bumper crops of good quality grain.
 This is the cheapest method of farming, by which farmers can start their farming operation
immediately after the onset of the rainy season;
Problems of Humid Farming
 Water logging and the draining of this excess water;
 Soil erosion;
 In areas of seasonal rainfall, farming operations are restricted to the wet season only, and in the dry
season, large areas of land remain uncultivated.
2. Irrigation farming
Irrigation farming is:
 Practiced in areas where rainfall is either seasonal or insufficient for certain crops.
 The most important method in the monsoon and subtropical regions, example: India

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 Is practiced only in regions where there is perennial supply of water from rivers, reservoirs or
underground sources, and the ground is level.
 largely practiced in the important river valleys of the world. For example, Gangetic Valley, Indus
Valley, Nile Valley, Mississippi-Missouri and Sao Joaquin Valley practice irrigation farming.
 A costly method of farming. Thus, only crops as can bear the high cost of irrigation are cultivated.
Cash crops (sugarcane, tobacco, cotton, etc.) are cultivated with the help of irrigation

In irrigation farming:
 Crops are grown throughout the year and no part of the cultivable land is left fallow;
 Market conditions determine the nature of crops to be cultivated;
 As farmers get ready cash for their produce, they are able to buy and make use of fertilizers, better
seeds, insecticides and good implements for growing crops. This results in better quality and higher
yield of crops per hectare. Hence, farmers are generally rich and prosperous.
 Irrigation canals regulate the flow of water and check soil erosion, which would otherwise occur in
fertile flood plains of the rivers.
Problems of Irrigation Farming
 Fertile land near the irrigation canals and reservoirs becomes useless due to water logging;
 In certain irrigated areas, land becomes infertile because the upper layers of the soil are washed
away by the force of the flowing water;
 Leaching of the soil and salinity of the soil is another important problem in many irrigated areas,
particularly in the semi-desert areas. For example, owing to soil leaching and salinity large tracts of
fertile land have been rendered useless for cultivation in the valleys of river Nile, the Euphrates and
Tigris.
3. Dry Farming
 This method is practiced in areas where rainfall is scanty (less than 50cm) and the irrigation
facilities are either absent or very little.
 Under this method, an attempt is made to make the maximum use of available water resources.
 Dry farming is usually practiced in the drier plateaus and the interior of the continents.
 In these areas, sandy loams are extremely suitable for dry farming. The warmth of the sandy soil
helps in the quick maturing of the plant.

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 Farmers make special efforts to conserve soil moisture and to make the maximum use of the limited
rain water.
 They spend considerable amount of money and time on leveling or terracing the slopes, on
constructing dykes or wells around the field, and in carrying on constant weeding. Thus, the
farming becomes too expensive and only crops which can bear the high cost of production can be
grown under this method, e.g. wheat and cotton.
 This method is practiced in the western part of U.S.A. and Canada, in the drier highlands of Mexico
and Central America, in South-West Brazil, in South Africa, in West Australia, in Israel, Syria and
Turkey.
Features of Dry Farming
 Land is terraced and divided into compartments so that the rain water moves under controlled
condition;
 The land is ploughed before the rains to make the surface of the soil loose. Deep ploughing is done
after every rain to preserve most of the rain water;
 A dust-much is spread over the soil to check soil erosion and evaporation of moisture;
 Repeated harrowing is done before sowing in order to conserve soil moisture;
 Small wells are also constructed around the field to prevent run-off of the water from the field;
 Constant weeding is done to remove useless grasses which would otherwise consume the precious
water from the soil;
 Short maturing and drought resistant crops, like wheat, millets and pulses are mainly grown;
 This is very costly method of cultivation and only such crops as can bear the high cost of
production can be cultivated under this method, e.g. wheat and cotton.
On the Bases of Cropping System
On the basis of cropping system, agricultural practices can be sub-divide into:
1. Mono-culture or single cropping
 Mono-culture refers to a situation where only one crop is grown during the year,
 It is also known as a single cropping.
 Monoculture is undertaken generally in those places where:
 Soil and climate conditions favor specialization in the production of a particular crop.
 Transport service and wide market are not available for the sale of agricultural products.
 The examples of single cropping are tea of Assam or West Bengal, rubber of Indonesia or
Malaysia, cocoa of Guinea cost of Africa, coffee of Brazil and sugarcane crop of Cuba.

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2. Double Cropping
 Double cropping implies the raising of two crops simultaneously from the same plot of land during
the year.
 It is practiced in densely populated areas where climatic conditions permit the growth of two crops
during the year.
 China, Japan, and Bangladesh practice it.

3. Multiple Cropping
 Multiple cropping is a highly intensive method of cultivation under which the cultivators try to
raise as many crops as possible from the same plot of land during the year.
 In this king of agricultural practice, soil nature is scientifically treated, better seeds and sufficient
manures are applied, and regular water supply is ensured through irrigation.
 India, Bangladesh, China and the U.S.A. practice this method of agriculture.
On the Basis of Crop-livestock Combination
On the basis of Crop-livestock Combination, agricultural practices are divided into:
1. Arable-production of crops.
2. Pastoral farming- animal rearing in unsuitable land for arable farming.
3. Mixed farming- the combination of the two.
On the Bases of Volume of production and market
On the basis of the amount of agricultural production and market, agricultural practices are categorized
into:
1. Subsistence Farming
 This type of agriculture practice is primarily used for the maintenance of the family.
 Under this system, the farmer tries to produce everything he requires without regard to the fitness
or suitability of soil for the cultivation of those particular crops.
 Most of the produced crop is consumed by the farmer and his family, and only a small surplus, if
any, is marketed locally.
 Under this system, the yields are small, so that the farmer remains poor and is unable to introduce
improvements, and the vicious circle continues.

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 The methods of cultivation are old, the tools and implements are primitive and animals rather than
machines are used for cultivation.
 There is little or no fertilization.
 This method is generally practiced in backward areas.
 This is also practiced in densely populated countries where agricultural land holdings size is small,
the yields are low and thus the bulk of the output is consumed by the producers leaving a little
surplus for the market. For example, 85% of the rice produced in India is consumed locally.
 Subsistence agriculture, which is essentially primitive, may take the form of either migratory
primitive agriculture or sedentary primitive agriculture.

A. Migratory primitive agriculture

 This type of agriculture is widespread throughout the rainy tropics with the exception of Australia;
in Africa, it extends over considerable areas of the dry tropics as well.
 It is perhaps, the most dominant form of agricultural activity in the African continent.
In this type of primitive agriculture:
 Farming is confined to small, scattered, patches of land within the tropical rainforests and on the
margins of savannas and bush lands.
 Farm size varies from one to five acres.
 Land is cleared with the aid of fire;
 The cleared land is used for two or three years and then is abandoned because of the decrease in
fertility of soil and occurrence of diseases. Hence, the name migratory primitive agriculture;
 Farming operations are done mainly by hand and there is very little use of tools and implements.
 Draft animals are absent and the human music/composition supplies the necessary labor;
 There is no application of manures;
 There is no private ownership of land. Land belongs to the community, tribe or village so that each
number of the community may use as much land as he can clear and cultivate;
 Production is very small and is just sufficient to maintain the farmer and his family. There is no
marketable surplus;
 Most areas of migratory primitive agriculture are very sparsely populated
 The regions where migratory primitive agriculture is practiced include:
 Amazon lowlands and Guiana coastal areas of South America,
 Congo basin and Guinea cost of Africa,

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  Australian Archipelago and
 Certain other backward areas like the Chittagong Hills and the tribal areas of Assam.
 This type of farming supports nearly 3/4th of the population living in the tropical rain forest areas.
B. Sedentary Primitive Agriculture
 This type of agriculture is confined to plateaus and highland areas in the tropics, and is also
practiced in small scattered areas in the tropical lowlands.
 In these areas the farmers are sedentary and permanently settled near ponds, lakes and streams.
 The realization that many valuable materials can be obtained from forests and sold profitably has
made the farmers sedentary in character.
 The natives of Southeast Asia, Amazon basin and the East Indies now engage in sedentary farming
in the neighborhood of major collecting and shipping points.
 They collect species from the East Indies, rubber and Brazil nuts from the Amazon basin and
cinchona and rubber from South East Asia.
 This type of farming is found in those areas of the tropics where conditions are favorable for
agriculture.
2. Commercial Farming
 This type of agricultural system involves specialization in the production of those agricultural
products only for which soil and climatic conditions are most suited.
 In this kind of agricultural practice, the farmer produces for the market rather than for his own use.
 Farmers try to reduce the cost to minimum by making extensive use of machines and rational
utilization of resources.
 Commercial farming presupposes a well-developed transport system in the absence of which it
shall not be possible to put the produce in the market.
 Modern agriculture is of this type.
 It is largely practiced in sparsely populated areas of the cool temperate regions. In such areas labor
is scarce and costly and therefore farming is highly mechanized;
 In terms of region, commercial farming is practiced in the:
 Middle latitudes of central and western parts of North America,
 Central Asia,
 South America and Australia.
 Wheat is the principal commercial crop in those areas. Maize, oats and barely are also very
important.

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 Under this system,
 Farmers grow crops for the market and not for their own consumption;
 Farmers use modern machineries and make extensive use of fertilizers, good quality seeds,
insecticides and irrigation;
 Farmers specialize in one or two crops or animals or fruits for which soil and climatic conditions
are most favorable;
 Farms are large in size, sometimes running into hundreds of hectares;
 Farmers get large aggregate output though yield per hectare is relatively low due to lack of personal
attention;
 Farming areas are well connected with the market system by excellent transport facilities;
3. Plantation Farming
 Plantation farming refers to large tracts of agricultural land owned by private individuals or by
corporations operated by a centralized management.
 Plantations were established by Europeans in the early days of colonization in certain tropical areas
for growing crops like sugarcane, cotton, coffee, rubber and tea, that is, the crop which could not be
cultivated in their own country because of climatic limitations.
 Thus, plantations where established in Malaysia, Indonesia, Sri Lanka, Australia, South Africa and
South America with the help of foreign capital.
Under this system,
 Farming is on an extensive scale and plantations specialize in the production of one crop only.
 To achieve the best results the best possible methods of cultivation are used;
 The managerial ability, technical know-how, farm implements, machinery, fertilizers, transport
equipment, etc., come outside the tropical regions mainly from western Europe and North America;
 Laborers required in the plantations are recruited locally, but the management talent is generally
from Europe;
 As the plantation crops are primarily meant for export to temperate lands, most of the plantations
are suited near the sea coast;
 The size of the plantations varies from place to place.
 The size is large—about 6 to 2000 hectares in big rubber estates of Malaysia, and coffee plantations
of Brazil. In India, the size of the tea plantations is usually small—a few hectares only;
 The economy of many tropical countries has been completely changed by plantation farming. The
economy of Malaysia, Brazil, Sri Lanka, etc., is also much dependent upon the export of their

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 plantation crops that a little fall in the international prices of these crops may cause their
destruction.
Problems of Plantation Farming
a. As rainfall is heavy and comes in torrential showers, it causes erosion and leaching of soil. As a
result, many plantations, especially those located along the hill slopes, have to be abandoned and
shifted to new sites involving huge cost and investment;
b. Hot and humid climate of the plantation areas results in various plant diseases causing huge damage
to crops and heavy looses too many companies. For example, blight diseases completely ruined the
coffee plantation of Ceylon (Sri Lanka) at the end of the 19th century;
c. Hot and moist climate also leads to quick growth of weeds and other vegetation. Removal of weeds
and clearing of dense vegetation is therefore a big problem;
d. Dependable on one single crop is a great threat to the economy of these countries. Any fluctuation
in the international price of the crop may cause serious repercussion for the economy and may
result in the liquidation of a number of companies.
The most important regions of plantation agriculture are:
a. Sugarcane plantation - Java, Jamaica, Hawaii, Mauritius, Cuba and Philippines
b. Tea plantation - Sri Lanka, Formosa, West Bengal, and Assam in India.
c. Coffee plantation - South east Brazil
d. Rubber plantation – Coastal plains of Caribbean Sea, Indonesia, Malaysia, and Sri Lanka
4. Mixed Farming
 In this case, the farmer combines farming with cattle rearing, fruit and vegetable growing or poultry
farming.
 The same field is used for producing more than one type of produce.
 This type of farming is most prevalent in England and other European countries but in recent years
has also spread to Canada, Eastern U.S.A., Argentina and the U.S.S.R.
 Mixed farming has special scheme of crops. While fruit crops like sugar-beet, potatoes, etc., are
grown under the earth, barley, oats and rye are over the ground as cover crops.
 As soon as these cover crops are harvested, the farmers grow some quick maturing crops, known as
the ‘catch crops’
 This is therefore a highly intensive method of cultivation that necessitates the use of commercial
fertilizers, careful rotation of crops and use of modern machinery.
Under this Farming system,

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 Farmers are busy on their farms throughout the year producing crops and animal products for the
market;
 Farming is done on most scientific lines.
 Farmers make use of commercial fertilizers, hybrid seeds, irrigation and modern machinery.
Scientific rotation of crops is also done;
 As soil is scientifically treated and land is intensively cultivated, the yield per hectare is very high.
Hence, farmers earn high profit;
 Farmers are better off and more secure, because their income comes from various sources. Even if
agriculture falls due to adverse climatic conditions, they can still, earn through other sources;
 Due to heavy demand in the domestic market, the whole product is consumed internally and very
little enters the world market.
Vonthunen’s Agricultural Land Use Theory
 This theory was developed by J.H Von Thunen in 1826 who lived (1783-1850).
 J.H Von Thunen carefully complied economic data on different farming activities on his own
large estate in north eastern Germany and was able to determine the relative rent-paying abilities
of each major agricultural product.
 In so doing, Von thunen constructed the world’s first formal spatial model entitled ‘Der
Isolierete Staat- “the isolated state”.
 Johann Heinrich von Thünen´s model of agricultural land from the first half of the 19th century is
considered the first ever location model.
Core Idea of the Theory
 Von thunen theory is concerned with how agricultural land use patterns change with distance from
centrally located market.
 According to Von thunen, agricultural land use pattern changes with distance from centrally
located market-The Isolated State.
 Von thunen economic model is based on two primary costs:
1. Cost of land;
2. Cost of transporting product to market which mainly is influenced by:
 Distance to market;
 Product weight;
 Potential to spoil of a product.
Important Generalizations

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 The closer to the center of a town, the more valuable a land is. Thus, intensive land use is
recommended.
 The farther away from the town, the more costly it becomes to transport your products to the
market.
 The farther away from the town, the less valuable the land is. Thus, extensive agriculture is
practiced.

Location Rent
 Even though Von Thünen managed to eliminate almost all the variables except distance, his
transportation costs also included the bulk, weight, and perishability of the commodities moved
from the rural area to the market. Moreover, it was through rent that transportation costs influenced
the spatial patterns of land use.
 According to this model, the spatial patterns of agricultural production are the result of competitive
bidding among various rural land uses for access to a given parcel. Accordingly, the type of
production that can yield the highest return for a given parcel of land will bring the highest bid for
the use of that plot. Land uses that cannot pay enough to get the highest price land will settle on less
expensive land. It is the net return (income minus expenses) per unit of land upon which rent
calculations are based, not the value of any unit of weight or volume. The following figure is an
example of location rent of agricultural products where areas nearest to the market is occupied by
vegetables, areas in the middle of the location rent curve is occupied by wheat, and the last part of
the location curve is an area for cattle production. This shows the decreasing value of land with
distance from the market.

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 Figure 2.1: Von Thünen Model for Location Rent.
 In von Thünen’s model, rent was not the amount actually paid by a tenant for the use of property
belonging to someone else (contract rent). Instead, Von Thünen was interested in location rent. it
is a relative measure of the advantage of one parcel of land has over another for a given use.
Location rent is similar with Economic Rent. The theory of economic rent was first postulated by
David Ricardo (1772-1823), a British economist. Economic Rent differs from contract rent (the
price an individual pay to use a parcel of land) in that it is a relative measure of the advantage one
parcel of land has over another for a given use. Factors such as the productivity of the land relative
to a given use, and distance from the market, must be considered in the calculation of economic
rent. That is why the most productive land (all else equal) is always brought into production first.
Of course, new space and time adjusting technologies (and/or farm technologies) affect economic
rent. In short, economic rent is the surplus income that accrues to a unit of land above the amount
required to bring a new unit of land into use (e.g., clearing the land, building a road, etc.).
 The type of production which is capable of yielding the highest net return per unit of land on a
particular parcel of land will make the highest bid for the use of that land. Through the bidding
process, the most desirable land nearest to the market is preempted by those crops capable of
extracting the highest return from it. The progressively cheaper land at a greater distance is less

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 demanding and is consequently left to uses that can not compete for the prime locations near the
market. The result is a ZONATION OF PRODUCTION which ideally assumes the form of
CONCENTRIC RINGS around the urban center.
Summary
 As distance from city center increases, cost of land goes down.
 Different crops have different location rent distribution patterns (Bid-Rent Curves).
 Different crops compete with each other’s farmland.
 Then, concentric land use pattern is formed.

Figure 2.2: Von Thünen Concentric Ring Model

Assumptions
 Existence of an isolated state in which there is only a single urban market (central city) whose
needs are supplied by the surrounding agricultural hinterland, which is cut off from the rest of the
world. All farmers received the same price for a particular product at any one time.

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 The city is located centrally within the “Isolated State” which is self-sufficient and has no
external influence and interaction with outside world.
 There are no governmental regulations and policies that affect agricultural productivity.
 Existence of an extensive plain of cultivable land of uniform (homogeneous) physical character i.e.
identical climate and soil conditions.
 A uniform transportation surface on which the cost increase equally with distance and transport
was equally easy in every direction. The market is served by one mode of transport-horse& cart.
 The farmers acted as economic men wishing to maximize their profits and all having equal
knowledge of the needs of the market.
 The land is completely flat and has no rivers or mountains.
 These assumptions lead Von Thünen to conclude that the cultivation of a crop is only worthwhile
within certain distances from the city (transportation costs would be higher that sales price).
Contemporary Significance of Von Thunen Model
 Von Thunen model is still relevant today in spite of its weaknesses. J.H. Von Thunen's "model"
remains relevant today primarily for the theoretical aspects that draw a direct connection between
distance from market and profitability of product. Von Thunen noted the increasing costs of
land the closer one got to a city, and postulated that the transportation costs associated with
different agricultural products-taking into account the model's development prior to the full onset of
the Industrial Revolution -- would be determinative of the structure that would naturally emerge
around the city.
 The basic principles involved in the model remains valid. Transportation costs associated with
agricultural products remain an important consideration, and land costs remain very much relevant
to decision-making regarding myriad industries, the latter being directly responsible for the
elimination of thousands of farms around the country that became increasingly encroached upon by
ever-expanding metropolises. As land values increased in traditionally suburban areas due to
demand for quality housing in such areas, the costs associated with agricultural activities became
prohibitively high. Farmers couldn't afford the property taxes associated with quality land close to
cities due to the latter's horizontal expansion.
 The model still serves a prime example of the ideal distribution of land based on property cost and
production. Alonso’s bid-rent theory is based heavily on von Thunen’s postulations on land rent
costs for agricultural functions, work reflected in his model. The model lends itself well to
modification, thus establishing itself as a jumping-off point for future models and arrangements.
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 The von Thunen model is most relevant today in less developed countries. There, the development
of transportation and food preservation is much less than in rich countries and von Thunen's model
still applies to a greater degree.
 In the rich world, the model is also applicable in that it emphasizes that land near to cities is more
expensive and therefore cannot really be used for uses that do not bring in a great deal of money per
unit of land area

Limitations of Von Thunen Model

 The model does not allow for things like roads or railroads that make it easier to transport goods
over long distances.
 Von Thunen does not anticipate things like refrigerated transport that would allow even perishable
things to be transported over long distances.
Forestry
The Meaning of Forest
According to Allen and Sharp “it is a community of trees and associated organisms covering a
considerable area; utilizing air, water, and minerals to attain maturity and to produce itself; and capable
of furnishing man and land with indispensable products and services”.
Concepts of Forestry
 Forestry is a management of forestlands for maximum sustained yield of forest resources and
benefits.
 Although forestry originally concerned mainly timber production, it now also involves the:
 Management of grazing areas for domestic livestock,
 Preservation of wildlife habitats,
 Watershed protection and
 Development of recreational opportunities.
 The management of forestlands therefore helps to ensure that wooded areas are used for maximum
benefit according to their nature.
Economic Importance of Forests
Forestry and forest-based industries still play a key role in some parts of the world. Numerous people
are solely dependent on forest products. The function of forest can be grouped in to two types.

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I. Direct Function
 Food  Raw materials for industries
 Clothing  Medicinal plants
 Shelter  Ecological balance
 Fuel
II. Indirect functions of forests
 Influence on climate
 Influence on soil
 For tourism
Major Forest Regions and Lumbering of the World
The world occupies an immense area of forests along lower and higher latitudes. The factors of size,
relief, climate and natural resources make the world geographically diverse. Commercial forests also
occur in two huge global belts.
 Tropical equatorial zone including large part of S. America and Africa.
 Higher latitudes of northern hemisphere (Eurasia and North America).
Lumbering
 Lumbering is the widest spread and dominant type of forestry activity which is broadly known as
the gathering of tree products.
 Almost all the forest regions of the earth have developed its own lumbering industry which is
markedly different from one another.
Major Activities in Lumbering
 Preparation of the land: refers to:
 Refers to survey of the area,
 Identification of useable trees and
 Finding out the transportation route.
 Felling: cutting and felling process is done with the help of either machines or manual labor.
 Extraction-refers to the removal and transportation of trees from the forest to the market.
 Afforestation and replanting:
 Are concerned about restoration of ecology within forest areas.
 Efforts are being made to regenerate forests through replantation so that sustainable
development can be archived in lumbering industry.
Lumbering in Tropical Forests
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Despite having innumerable tree species untouched dense forest of tropical rain forest, lumbering
industry has not yet been properly developed. Several reasons liable for this:
 Innumerable species
 Unhygienic and hostile conditions
 Backward and age-old methods
 Lack of demand
 Non- generation of tree
 Transportation problem
 Migratory cultivation
 Soil erosion
Lumbering Industries in Temperate Regions
Nearly 80% of lumbering products are obtained from temperate coniferous forests of North America
and Europe through integrated, coordinated and well managed ways. Scale of operation and number
of people in this industry is massive. Various geographical, socioeconomic and cultural factors have
contributed significantly for its origin and development. The factors responsible for this development
are:
 Homogeneity of forests;  Developed forest management system;
 Easy transportation;  Conducive Climate;
 Mechanized way of operation;  Ready market for products;
 Cheaper power;  Government policies, etc.
 Steady demand for products;
World Production and Trade in Timber and Timber Products
A few numbers of countries which have vast forest resources actually dominate the output of timber.
 The former USSR constitutes about 15% of the global output of timber;
 United State of America contributes 13% of the global output of timber;
 Canada provide 5% of the global output of timber;
 Central Europe-Germany, France, Belgium, Denmark, Hungary, Yugoslavia, Romania& Bulgaria;
 Baltic States (Estonia, Latvia, and Lithuania), Norway, Sweden and Finland;
 Asia- Japan, China, India, S.E.A-Burma, Thailand, Malaysia, Singapore, Indonesia, Sumatra.
Although about one-fifth of the continent is covered by forest, there is relatively little forest industry in
Africa. Most felled trees are cut down for farms or to supply fuel wood. The most desirable timber trees

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are mahogany, obeche, iroko, and other tropical hardwoods. Tropical forests rarely offer dense stands
of a single species inhibiting massive logging operations. Selective cutting is very expensive, especially
in the interior where transport costs become prohibitive.
Fishery
Concept of Fishery
Fishery refer to industry of harvesting fish. Fisheries may be large commercial, recreational or small
subsistence. The term fishery is also used to describe the waters where fishing takes place. Fish are an
important source of high-quality animal protein in the diet for the world’s population. They are
also important source of income, jobs and recreation for people. Fish as source of food is particularly
true in island nations of China, Japan and Iceland where seafood is eaten as a major source of protein.
Dependence on fish is also heaviest in S.E.A, Sub-Saharan Africa and parts of Latin America. The
developed world also has a high demand for fish meal as an animal food and for fertilizers.
Important Fish Producers by Continents
 Europe- USSR, Norway, Denmark, Iceland, Spain, United Kingdom, etc.;
 North America- United States of America and Canada;
 Asia- China, Japan, India, and Korea;
 South America- Peru, Chile, etc.
Major Fishing Regions of the World
1. Fishing in Temperate Region
 It is the most important fishing region in the world.
 Planktons are rich in temperate seas in northern hemisphere.
 It provides 60% of global marine catch.
 Atlantic and pacific oceans together supply 80% of the catch, Indian Ocean only 4%.
 The remaining 16% in this region is collected from inland seas.
Most large commercial fishing grounds are located in the temperate regions of northern hemisphere
while very few are found in the tropical areas and southern hemisphere. The reasons for undisputed
supremacy of temperate fishing grounds are:
Physical/Geographical Factors
 Availability of plankton
 Conducive nature of the continental shelves
 Indented or broken coastal line
 Variety and better-quality fish

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 Temperate climate
 Topography
 Presence of forest
Socio-Economic Factors
 preservation facilities
 skill of fishermen and cheap labor
 transportation
 food habit
 demand and market for products
 lack of agriculture and other occupations
 economic development& banking systems
 lack of alternative protein source.

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Five major temperate fishing grounds are providing bulk of the marine fish in the region. Among these
four are northern hemisphere regions and another is in southern hemisphere.
1. The North- West Pacific
 This refers to the vast stretches of Eurasian region comprising countries like China, USSR
Korea, Japan and CIS. This region accounts for 16% of the global fish catch securing second
position.
2. The North- West Atlantic
 This region secures fourth position among fishing regions contributing 9% of the global catch
stretching from New Found Land in north to New England State of USA in the South.
3. The North- East Atlantic
 This region secures top position in total fish catch. It roughly accounts for 21% of the total
global catch and stretches from Iceland to Mediterranean coast through CIS, Denmark, Norway,
Spain, Iceland, UK, etc known as North West European zone.
4. North- East Pacific
 This region stretches from Alaska to California in U.S.A. This is the 5th largest fish producing
area on earth accounting for 7% of the world’s fish catch. San Francesco, Los Angeles,
Vancouver, etc are under this area.
5. Temperate fishing grounds of Southern hemisphere-includes Peru and Chile.
2. Tropical Fishing Grounds (30-Degree N&S of Equator)
Compared to temperate region, commercial fishing in tropical region is insignificant both in quality and
quantity. But at present tropical areas are registering significant growth. Fish producers in this region
include China, Peru and Chile.
Problems of Tropical Fishing
 Lack of plankton
 High Temperature
 Ability of workers and preservation is difficult;
 Absence of shallow shelf;
 Lack of indented coast line
 Transportation bottleneck
 Unhygienic condition
 Underdeveloped economy and low investment, etc.
Recent Development of Tropical Fishing
In recent years dramatically increase of fish production has been observed due to:
 High internal and external demand;
 Abundance of fish species;
 Lack of alternative occupation;
 Shifting of global fishing agencies.
Mining Industry
Definitions of Concepts
Mineral
A mineral is generally defined as any naturally occurring substance of definite chemical composition
and consistent physical properties.
Ore
An ore is a mineral or combination of minerals from which a useful substance such as a metal can be
extracted and marketed at a price that recover the costs of mining and processing and yield a profit.
Mining
In its broadest sense is the process of extraction of useful minerals bearing substances (ores) from the
earth’s crust. The process includes excavations in underground mines and surface excavations in
open-pit, or open-cut (strip) mines. Mining normally means an operation that involves the physical
removal of rock and earth.
Quarrying
Is extraction of construction minerals from the shallow earth without further processing for direct use.
Mineral Deposit
Mineral is concentrated occurrence of one or more minerals which can be formed within any kind of
rock and consist of any type of mineral. They are valuable economically because they contain high
concentrations of metallic and nonmetallic elements or other valuable materials that are essential to an
industrial society.
Formation Processes and Occurrence of Minerals
Minerals occur in five main ways depending on the geological set-up. These include:

1. Magmatic Processes
During cooling and crystallization of magma, minerals with a high temperature of crystallization form
early and may settle to the floor of the magma chamber. These early-formed minerals such as pyroxene
or olivine tend to be relatively rich in iron and magnesium and poor in silicon and oxygen compared to
the entire magma. They also typically contain no potassium or aluminum. Consequently, minerals with
lower temperatures of crystallization that form later tend to be relatively rich in potassium, aluminum,
silicon and oxygen but poor in iron and magnesium. This process is called fractional crystallization,
segregates minerals.
Fractional crystallization can lead to valuable mineral deposits because many rare and valuable
elements form mineral crystals either early or late in the crystallization process. For example, when
magmas have compositions with abundant chromium, the mineral chromite crystallizes early and can
form deposits on the floor of the magma chamber. Extensive chromite deposits are mined in the
Bushveld Complex of South Africa and in the Stillwater Complex of Montana, United States. In other
magmas, the latest-forming mineral crystals may contain a variety of rare elements such as beryllium,
lithium, boron, molybdenum and uranium. These deposits are called pegmatites. Numerous well-
known pegmatites are scattered throughout the western United States.
Igneous ore deposits are originated from volcanic activity (magma) with different forms of
metamorphization by the application of heat and pressure changed to rocks and crystals. Cracks and
fissures in different types of igneous intrusions become sources of metallic minerals of significant
economic importance. The number of metallic minerals together with volcanic eruptions are iron ore
deposits in northern Sweden (Koruna); copper and nickel deposits in Canada (Ontario) and tin, silver,
zinc and lead in different parts of the world.
2. Hydrothermal Processes
Hydrothermal processes involve the transportation of elements dissolved in hot water and the
subsequent precipitation or crystallization of minerals when the water cools. In some cases, the
elements precipitate in their native states such as pure gold or copper. More often, however, they
precipitate as sulfide minerals, including pyrite (iron sulfide), galena (lead sulfide), sphalerite (zinc
sulfide), cinnabar (mercury sulfide) and chalcopyrite (copper sulfide). Hydrothermal processes are
particularly effective at segregating minerals because the fluids contain only a small variety of
dissolved elements. Hydrothermal processes are responsible for most of the world’s metallic mineral
deposits such as gold, silver, lead and copper.
Hydrothermal fluids originate in several different ways. Some originate from magmas that have water
dissolved in them. As the magma cools and crystallizes, the water is excluded from the growing
crystals and separates from the magma. Such fluids are very hot and rich with elements dissolved from
the magma. Other sources of hydrothermal fluids include circulating groundwater that comes into
contact with hot rock or seawater circulating through seafloor sediments that interacts with newly
created volcanic rock on the ocean floor. These fluids migrate away from their heat sources along
fractures and cool. This cooling causes some minerals to precipitate. When minerals form a precipitate
within open fractures, the resulting deposit is called a vein. Veins of highly concentrated gold are
exploited throughout the western United States. Besides cooling, other causes of precipitation include
sudden decreases in pressure or reactions with the surrounding rock. When precipitation occurs at the
earth’s surface, the minerals form hot springs deposits.
3. Evaporation Processes
When water containing dissolved minerals evaporates, the minerals precipitate. Deposits of minerals
formed in this way are called evaporites. Evaporite deposits can be formed on land in enclosed arid
basins. Incoming water cannot exit except by evaporation. Because the incoming water also carries
dissolved minerals, the basin continually receives additional minerals and the resulting deposit can be
quite thick. Land-based evaporites currently are forming in desert lakes in the American states of
California, Nevada, and Utah and in the Dead Sea between Israel and Jordan. Evaporite deposits also
formed in tropical seas or bays connected to the open ocean through narrow passages. Seawater flows
through the narrow passages to replace water lost through evaporation. Because the incoming water is
salty, the basin continually receives additional sea salts. If the concentration of salts is high, the
minerals precipitate. If the conditions persist for a long time, the resultant deposits can be very thick.
Some examples of common evaporite minerals are halite (sodium chloride), gypsum (calcium sulfate),
and borax (sodium borate) and potash salt. Many evaporite deposits are mined for use in table salt,
fertilizers, wallboard, plaster, detergents and fluxes.
4. Residues of Weathering Process
Chemical weathering causes minerals to decompose into clays and other materials. This weathering
leads to the removal of all material that does not resist weathering. In regions of intense weathering
such as the tropics, everything except oxides of aluminum and iron becomes weathered and is
eventually removed. Through this process of weathering and removal of the nonresistant material,
aluminum and iron oxides form a concentrated residue. These residues, if extensive, can be mined for
aluminum and iron.
Bauxite is a rock made from aluminum oxide residues and is the principal ore of aluminum. The
world’s leading producers of bauxite, the countries Surinam, Jamaica, and Guyana are all located in
the tropics. Commercial bauxite deposits occur outside of the tropics (in the United States and the
former Soviet Union).
5. Depositional Processes
Some mineral deposits are formed in river beds because running water tends to segregate dense
minerals. Rivers deposit grains that are either larger or denser first, and then carry grains that are either
smaller or lighter farther downriver. Relatively dense minerals or metals, such as cassiterite (a source
of tin), diamond, or gold, erode from their sources and get deposited with the heavier, coarser grains.
The sites of deposition are most frequently the gravel or sandbars that form on the inside bends of
meandering rivers. Mineable deposits of these materials are called placer deposits. Placer
mining has provided humankind with more than half of its gold. Well-known placer deposits include
gravels formed about 40 million years ago during the Eocene Epoch. Much of this placer gold
originally eroded from hydrothermal vein deposits of gold associated with igneous intrusions.
Precambrian deposits in South Africa formed more than 500 million years ago are the largest known
placer gold deposits in the world.
These are also known as sedimentary ore deposits. Some minerals occur in horizontal layers or strata in
the form of sedimentation. Sand and limestone deposits by transgression and regression of ocean water
to land and vice-versa, respectively and iron ore deposits in France, Western Germany, Russia, South
Africa and Brazil. Alluvial deposits which are continuous processes from high to low lands contain
minerals at the bases of hills or valley bottoms. It is the outcomes of erosional activities through two
sources: movement of waters from the high land to the low land; and intensive erosional activities
exposed some minerals when deeply penetrate the surface. For example, gold, tin, diamonds and
platinum in S. Africa and Ethiopia in Metekel and Wellega (Yubdo) are formed by this process.
Oceanic mineral resources in both ocean water and its floors are very rich in mineral resources. The
problem is its expensiveness to extract. E.g. $2million is needed to extract 1m3 areas. 60% of
Magnesium and 70% of Bromine are derived from oceans.
Factors Influencing Exploitation of Minerals
The concentration of a mineral deposit is critically important in determining whether it can be mined
profitably or not. For the mining of metals, concentration is measured in two ways. A great many
physical and economic factors affect the exploitation of mineral resources in various parts of the world.

A. Physical Conditions
1. Grade
 Grade refers to the percentage by weight of a metal in a mineral deposit.
 This percentage is measured by dividing the weight of the metal by the weight of the rock.
 The concentration factor (also called enrichment factor) is the number of times more abundant a
metal is in a mineral deposit than it is in average crustal rock.
 It is measured by dividing a mineral deposit’s grade by the average grade of crustal rocks for that
metal.
  A concentration factor of ten, for example, means that a metal is ten times more abundant in a
particular deposit than in the earth’s crust.
2. Location/accessibility
 The location of mineral deposits from settlements, roads transport lines and facilities influence
mining process.
 For instance, location of minerals in jungle forests and valley gorges are obstacles for
exploitation.
3. Depth from the surface
 It is an important factor in the exploitation of minerals.
 The shallow the depth, the easier exploitation of minerals, as the depth increases it needs
additional cost of production.
4. Quantity-refers to the size or amount of ores sufficiently in the given site.
5. Quality of the ore-indicates the proportion of impurities or richness of the mineral deposits.
B. Human factors/Economic factors
 The availability of capital
 Skilled or trained man power
 The development of infrastructure
 Political influence and government interference. Government willingness to extract minerals
unstable political conditions (Ethio-Somalia boarder) also influences mining.
Stages in Mining Operation
1. Prospecting or the search for mineral deposits;
2. Exploration or the work involved in assessing the size, shape, location, and economic value of
the deposit;
3. Development or the work of preparing access to the deposit so that the minerals can be
extracted from it; and
4. Exploitation, the work of extracting the minerals.
Economic Impacts of Mining
Mining and the processing of mineral extraction exert tremendous impact on the economic well-being
of a country in the following ways:
 provide employment opportunities for many people
 attract population to be settled around the mining sites
 stimulate the development of transportation infrastructure
 open new scope for export earnings
  Minerals extend the scope for the development of domestic industries.

CHAPTER THREE: SECONDARY ECONOMIC ACTIVITIES: THE INDUSTRIAL SECTOR

DEFINITIONS AND CONCEPTS
The word industry comes from the Latin word industria, which means “diligence,” reflecting the
highly disciplined way of human energy, natural resources, and technology are combined to produce
goods and services in a modern economy. The term industry also refers to a group of enterprises that
produce a specific type of good or service. Some industries produce physical goods, such as lumber,
steel, or textiles. Others such as the airline, railroad, and trucking industries provide services.
Manufacturing refers to producing goods that are necessary for modern life from raw materials. The
word manufacture comes from the Latin manus (hand) and facere (to make). It is the use of machines,
tools and labor to make things for use or sale. The term may refer to a range of human activity from
handicraft to high tech but is most commonly applied to industrial production in which raw materials
are transformed into finished goods on a large scale. Such finished goods may be used for
manufacturing other more complex products such as electrical device or machine that is used for a
specific purpose in the home, or sold to wholesalers who in turn sell them to retailers who then sell
them to end users - the consumers.
Manufacturing is the process through which the utility of the product increases and at least some
amount of value is added to the raw materials used. The essence of manufacturing process is the
conversion of raw materials to finished and semi-finished products and distribution of the final product
to the consumers. These transforming operations are undertaken in factories. Modern manufacturing
includes all intermediate processes required for the production and integration of product components.
Some industries such as semiconductor and steel manufacturers use the term fabrication instead.
Classification of Manufacturing Industries
An industry is usually classified either by a major input (good or service used to produce the final
product) or by the industry’s final product or the technology they use.
Cottage industries
 Are done manually
 Worked by ordinary people
 Use less capital
 Less quality in output
 Not affected by locative factors

Manufacturing industry
 Use machineries
 Needs skilled labor
 Needs more capital
 Better and refined products
 Affected by many locative factors

Manufacturing industries are also further divided into two depending on the machineries/ or
technologies, the labor, capital and energy they use. These are:
1. Light Industries
 These industries require relatively small capital, energy, skilled labor and machineries which
are producers of consumable goods and are mostly characterized in the less developed
countries
 Examples include textile, food processing and beverage industries.

2. Heavy Industry
 Are industries that process large amounts of bulky raw materials and require large capital, energy,
highly skilled labor and sophisticated machineries.
 The notable examples are the iron and steel industry, shipbuilding, chemical, electronics and
electrical industries, metallurgy, machine producing industries and aluminum smelting.
 These are more common in more developed countries and are non-consumable producers.
 These industries are often located close to their supplies of raw materials.
Generally, manufacturing processes can produce either durable or nondurable goods. Durable goods are
products that exist for long periods of time without significant deterioration such as automobiles,
airplanes and refrigerators. Nondurable goods are items that have a comparatively limited life span
such as clothing, food and paper.
Factors Influencing Industrial Location
The important factors that affect industrial location include:
 Raw Materials
 Capital
 Labor
 Power
 Transport
 Market or demand
 Production technology, etc.
Industrial Location Theories
In order to understand manufacturing geography better, we must examine the general principles or
theories of industrial location.
Broadly, industrial location theories are classified into:
I. Classical Industrial Location Theories
1. Weber’s Least Cost Theory,
2. Losch Profit Maximization and
 3. Smith’s Spatial Margin
II. Contemporary Locational Principles
1. Behavioral locational principles and
2. Structural Location Theories
I. Classical Industrial Location Theories
1. Weber’s Least Cost Theory
 Alfred Weber, a German economist (1868—1958) proposed the first theory of industrial location.
 The overall objective of Alfred Weber’s theory of industrial location is to determine the minimum
cost location for manufacturing industries.
 His theory is general in that he developed it to apply to any political, cultural or economic systems.
 He formulated a theory of industrial location in which an industry is located where the
transportation costs of raw materials and final product is a minimum.
 His overall objective was to locate industries in important places to minimize cost of production by
reducing cost of transport whereby maximizing profits.
 The three major factors of location treated by Weber were transport cost, labor and agglomeration.
Assumptions of the theory
To develop his theory, Weber made the following assumptions:

 The model is operative in a single, isolated state with homogenous climate, topography, culture,
political and economic systems and technological skills of the population. This assumption is
known as uniform or isotropic plain assumption.

 He considered one finished product at a time, the product to be shipped to a single market
location.
 Industrial owners are profit makers and are fully rational in seeking the most favorable locations to
minimize cost of transport.

 Weber assumed that the raw materials are fixed at certain locations, which are known sites, and that
the point of consumption (market) is also fixed and known.

 Some natural resources (air, water, sand) are ubiquitous whereas others (coal, iron, etc.) are found
in fixed locations.
 Existing workers are not ubiquitous rather they are found in specific places at similar wage rates.
This is to mean that labor is fixed geographically (lacks mobility) but is available in unlimited
quantities at any production site selected.

 Markets are fixed at a certain point only people found at the market are expected to consume
industrial products. That is, one finished product at a time is transported to a single market.

 Raw materials & markets are available to all entrepreneurs in condition of perfect competition.

 Transport costs are a direct function of weight of the item and the distance shipped.

Core Concepts of the Theory

Ubiquitous
 These are materials available everywhere throughout the uniform plain at the same cost.
 Example: Nitrogen from the atmosphere at any location.
Localized Materials
 These are materials ONLY available at specific locations.
 Example: coal deposits, petroleum,
Pure Materials
 These are localized materials that enter into the full extent of their weight into the finished product.
 These materials lose no weight in processing.
 Example: petroleum, for which there is almost no weight loss in the refining process.
Weight-Losing Materials
 These are localized commodities that impart only a portion or none of their weight into the finished
product.
 Example: fuel consumed in manufacturing or a material with a large waste product component.
Some raw materials are pure (the weight of the product is equals to the weight of the inputs) and some
others are gross (loss of weight). He singled out two special cases. In one the weight of the final
product is less than the weight of the raw material going into making the product. This is the weight
losing case. In the other the final product is heavier than the raw material that requires transport.
Usually this is a case of some ubiquitous (everywhere available) raw material such as water being
incorporated into the product. This is called the weight-gaining case.
These raw materials are measured by Material Index (MI) = Total weight of raw material
Total weight of finished product
 If the raw material is gross, the material index is greater than one. The weight of the raw material
is two times greater than the weight of the product.

 If the raw material is perfectly pure, the material index is one.

 If the weight of the raw material is weight gaining, the material index is less than one.
In the following section, the main factors that affect the location of industries, as specified by
Weber, will be discussed in some detail.
1. Transport Cost
Based on these assumptions, we will consider the cost of transportation under two highly simplified
conditions. The first examines transport cost with a single market and one source of material supply.
The second situation deals with two supply sources, and involves Weber’s classic location triangle.
Case 1: One Market and one Raw Material
If one locality demands the product and if only one raw material is involved in the process, there may
be three possible locations for manufacturing industries.

1. If the raw material is ubiquitous, then the industry can locate at the market since at this point the
lowest transport cost would prevail on both the raw material and the product. This location is
obvious, since it would make no sense to ship a ubiquitous material to a processing plant other than
the market.
2. If the material raw material is pure, processing may occur at the market, the material site, or any
place in between. An intermediate location would involve an unnecessary additional handling
cost-a cost recognized by Weber.

3. If the material is weight-losing, the processing will locate at the material source to avoid
transporting waste material.
Case 2: One Market and Two Raw Materials

1. In the first example of the locational triangle, S1 and S2 are two raw material sources and M is the
market location. M
m
m

S1
S2
Since the distances (and consequently the costs) between these three points are identical, we may
assign each of the three distances a cost of say, 1 dollar. Where will processing occur? The answer is, at
the market, since the two required materials can be shipped there at a total unit cost of 2 dollar. If
processing were to locate at S1, for instance, there would be the cost of shipping one unit from S2 to
S1(1 dollar), and the cost of shipping one unit of material from S1, also now processed to the market (1
dollar). Thus, the total transport cost, if processing were to locate at S1 or S2, is 3 dollars, versus 2
dollar per unit at the market.
2. The situation is different and somewhat more complex when we have two weight-losing materials
to be brought together in processing. Let us assume for simplicity that there is a 50% weight loss for
each of the two materials. Where, according to Weber, will manufacturing locate? Let the cost of
transporting one unit of the weight-losing material be 2 dollars. If a market location is selected, one
would have to ship one unit of material from both S1 and S2 at total cost of 4 dollars. If S1 were
selected for processing, the cost of obtaining the material from S2 would be 2 dollars. No transport cost
would be charged to get the material from S1 and the cost to transport the product to market with the
50% weight losing would be 2 dollars. The market, S1, or S2 would have the same total transport cost.
Weber, however, was concerned with selecting the least cost or optimum location. Look the following
figure:
This figure illustrates Weber’s intermediate location-the least cost production location at P.
 The above figure suggests that an intermediate location at P would be optimum, rather than at M,
S1, or S2, where the transport cost at P would be less than 4 dollars. Further, if one material had a
greater weight-loss ratio than the other, the intermediate location for processing would be
“pulled” toward the site of the greatest weight-loss. Do you understand why?
Certain generalizations emerge from Weber’s generalizations
1. Manufacturing utilizing pure materials will never tie the processing location to the material site,
and the location decision is normally made on the basis of other factors.
2. Industries utilizing high weight-loss materials will tend to be pulled toward the material source as
opposed to the market.
3. Many industries will select an intermediate location between market and raw material. This one is
subject to considerable criticism and is referred to as Weber’s Intermediate Location Bias. The
reason Weber’s model is biased in favor of intermediate locations is that he does not take into
account terminal (extra handling) costs or the tapering effect of freight rates.
2. Labor Costs
 Geographic variation in the cost of labor was viewed by Weber as a “distortion” of the basic
transport pattern.
 An area handicaped by high transport cost might, nevertheless, be attractive to industry because
of inexpensive labor.
 According to Weber’s argument, an industry would select the location that has the least cost
when transport and labor are considered together. In other words, the trade-off may exist
between transport and labor costs, and the firm chooses the location with least combined cost.
 To determine the least cost location, Weber introduced two concepts. These are:

1. Isotim-it is a line of equal transport cost for any product.

2. Isodapane
 It is a line of total transport cost
 It is determined by summing the isotims at a location.
 Once the isodapanes are determined and one is able to identify the point of least total
transport cost, then the variation in labor costs can be considered in combination with
the isodapanes.
3. Agglomeration
 In addition to labor and transport costs, Weber recognized that agglomeration may operate as a
distinct locational factor.
 Weber recognized agglomeration as the dollar savings per unit that would accrue to a plant
from locating within a cluster of other plants.
 Specifically, Weber saw agglomeration not as producing internal-scale economies, but external
economies (including urbanization economies).
Critique of Weber Least Cost Industrial Location Theory
 It must be remembered that Weber’s purpose was to provide a general theory of industrial
location, and in this regard his contribution has proven most valuable over the years. Despite
the significant historical contribution, he made in the area, Weber’s theory contains many
errors and over-simplifications that limit its application in explaining fully actual industrial
location. Some of the critical limitations of the theory include:
1. Weber did not effectively and realistically take into account geographic variation in market
demand, a locational factor of paramount influence.
2. Weber’s treatment of transport, as already noted, did not recognize that these costs are not
proportional to distance and weight of a product and that intermediate location necessitate
added terminal charges. Moreover, transport is seldom regarded empirically as the single most
important locational determinant.
3. Labor is normally quite mobile through migration and is not always available in unlimited
quantity at any location.
4. A great many manufacturing plants obtain a very large number of material inputs and produce a
wide-range of products for many diverse markets. Weber’s theory does not easily apply to
such circumstances.
5. Weber’s treatment of agglomeration was not very satisfactory and he probably under estimate
its effect.
 Weber’s theory is thus no longer wholly acceptable in its original form. Many of the basic
ideas contained in it are sound. Hence, with modifications, Weber’s approach remains useful
for determining the general area within which a firm can locate in order to minimize its costs.
Most of all, the theory continues to provide valuable insights into certain aspects of the
locational process. Filling the gaps left by Weber has occupied many of his successors.
 A. Losch’s Profit Maximization Theory
 August Losch, a German economist, recognized the least cost versus maximum sales (gross
receipts) approach to location theory based on the assumptions and models of Weber.
 His theory is contained in The Economics of Location, which was originally published in German
in 1939 and translated into English in 1954.
 It was widely recognized as the first attempt to construct a comprehensive general location theory
based on maximum profit or trade area.
 A. Losch argued that the optimum industrial location was one, which commanded the largest
market area and maximized revenue.
 Assuming that the costs of production are uniform spatially, a location, which maximized demand,
would also maximize profit.
 Losch noted that in a free economy the correct location of individual industry lies were the net
profit is greatest.
 Net profit is the difference between sales receipts and maximum costs.
 The entrepreneurs’ solution is to find the location where these differences are the greatest.
 His approach largely emphasized on demand or sales factors in the process of profit maximization
by ignoring cost factors.
 According to him, if there is larger trade area, there will be maximum profit and vice-versa.
Assumptions of the Theory
 Losch like most theorists made certain assumptions, the most important of which were:
 A surface exhibiting the same physical properties in all directions;
 An evenly distributed population;
 Transport costs proportional to distance;
 Uniform production costs;
 Uniform levels of production for all firms in the same industry; and
 Uniform purchasing power.

Smith’s Marginal Location Theory

 Smith selected the best sides of Weber’s and Losch’s theories in a more recent attempt to
synthesize various elements of industrial location theory.
 In 1966, D.M. Smith worked to further refine industrial location theory by stressing the need for
empirical research.
 He developed graphic techniques that included the use of cost isopleths or cost contours. These are
graphic lines that join places of equal cost. Cost contours are the sum of all outlays that a firm may
experience anywhere in a region.
 In 1971, Smith further refined industrial location theory even more by noting that firms are seldom
found at the exact least-cost location (LTC) because entrepreneurs never have perfect knowledge of
costs and revenues. Additionally, people do not always act in economically rational ways in any
case.
 On either side of a given least-cost location, there is a locational or spatial margin in which firms
might locate and make a profit; not the maximum profit possible, but a profit nonetheless.
According to Smith, it is within these spatial margins of profitability that firms must locate. Those
that do not will eventually fail because they will operate at a loss.
 He observed that production cost varies in space as do revenues. The most profitable location is
where total revenue exceeds total cost by greatest amount.
 Smith considered three scenarios relative to these spatial margins.
1. Spatial margin of profitability when there are variable costs and constant sales

Figure 3.3: Variable Costs - Constant Sales

2. Spatial margin of profitability when there are variable costs and constant sales
 Figure 3.4: Variable Sales - Constant Costs
3. Spatial margin of profitability when there are Variable Costs - Variable Sales.

Figure 3.5: Variable Costs - Variable Sales

 A problem with this approach is that:

 Costs and revenues are rarely linear.
  Market demand factors are not uniform with distance due to income, taste and performance
variations.
 Impact of advertising and mass media exposure further complicates demand factors.
 But the advantage of this approach is that it combines market demand and production cost
variables.
II. Contemporary Industrial Location Theories
 Although the classical location theories have a considerable significance from the point of
explaining spatial knowledge, they have little significance in relation to the organization and
development of economic activities, because of the constantly changing conditions.
 The contemporary location theories are developed as the classical theories are static in their nature
and they:
 Did not consider social and economic changes;
 Simply focus on one or two variables as opposed to contemporary theories;
 Assume the existence of absolute location of industries;
 Use a number of unrealistic assumptions with their weaknesses
 Contemporary industrial location theories:
 Are dynamic and considered the possible variables that influence industrial locations.
 Don’t consider absolute locations of industries-they consider locations can changes through
time and space working based on the actual or objective conditions.
 There are two types of contemporary location theories: behavioral and structural location
theories.
1. Behavioral Location Theories
 As the name implies, these theories are based on the behavior of individual industries.
 These theories provide alternative on the role of industrial location by focusing on firm decision-
making process.
 Many industries are uncertain and defensive in their behavior, which lead them to be very
conservative and consider a shift in the location only as a last resort.
 There are different ways of changing industrial location:
 Changing in the firms organizational and managerial structure;
 Changing the product mix or demand of the people;
 Diversifying output or quality of the product.
 Some scholars suggest that industrial behavior is governed as much by risk minimization as by cost
accountability.
 The uncertainty associated with risk can be reduced by concentrating options in larger urban areas
because of greater access to supporting services and professional advice an easier access to
markets.
 Uncertainty, normally increase with distance from urban areas. Uncertainty also encourages firm to
maintain smaller plant sizes.
 Location decision process typically involves top management personnel choosing among
alternatives based on available information such as data on the firm operations, forecasts and their
own opinion and preferences.
 The sources for the uncertainty of industries are the existence of product life cycle.
o First Stage/launch phase/-slow sales of a product
o Second Phase/take-off stage-the demand of that product increase rapidly).
o Third phase/maturity stage-industrial product reaches its climax or maximum stage.
o Forth phase/declining stage-the demand of the product starts to decline
o Fifth stage/product exit phase/the death of the industry.

 Economists study economic cycles to understand factors that cause industrial growth and decline.
 The factors that are leading to prolonged and short product lifecycle are:
 The size and stability of the market served;
 The degree of innovations/innovativeness of the product: These factors include a new
technological innovation that improves manufacturing equipment and subsequently sparks
industrial cycle.
 The rate of technological change that affects its use;
 The ability to adapt new applications.
2. Structural Location Theories
 This approach focuses on political economy of economic growth and its impact on industrial
location and on the structural arrangements of industries with regard to increasing efficiency.
 According to this theory, efficiency can be achieved through the introduction of more efficient and
standardized production technology, which helps to avoid problems of:
 excess capacity that erodes profit;
 labor cost saving; and
  less productive units;
There are two distinctive types of structural approaches:
1. Free-Market Economy
o In this case, there is high competition that influences the firm with profit motive and high level of
market competitiveness by improving the quality of production through the application of modern
technologies.
2. Marxist Ideology (Central Economy)
o This suggests that all economic activity is controlled by central governments.
o Reduces the competition among firms;
o Still profit is one of the major motives.
o In any of the structural approaches, it is believed that any industry has to be efficient enough in its
structure to increase profit as much as possible.
Major Industrial Regions of the World
 Western and Central Europe
 Eastern North America
 Russia and Ukraine
 Eastern Asia
 CHAPTER FOUR: TERTIARY ECONOMIC ACTIVITIES
Concept of Tertiary Sector
The tertiary economic activities also known as the service sector is one of the three main economic
categories of a developed economy, the others being the primary activities (extraction such as mining,
agriculture and fishing) and secondary activities (manufacturing). The tertiary activities involve in the
provision of services to businesses and final consumers. Services may involve the transport,
distribution and sale of goods from producer to consumers. Goods may be transformed in the process
of providing service as happens in the restaurant industry or in equipment repair. However, the focus is
on people interacting with people and serving the customer rather than transforming physical goods.
The service sector consists of the "soft" parts of the economy such as insurance, government, tourism,
banking, retail, transport, education and social services. In soft-sector employment, people use time to
deploy knowledge assets, collaboration assets and process-engagement to create productivity
(effectiveness), performance improvement potential and sustainability. Typically, the output of this
sector is content (information), service, attention, advice, experiences and/or discussion (also known as
"intangible goods"). Public utilities are often considered part of the tertiary sector as they provide
services to people, while creating the utility's infrastructure is often considered part of the secondary
sector, even though the same business may be involved in both aspects of the operation. The resultant
shrinkage of manufacturing in the leading economies might explain their growing reliance on the
service sector. However, currently and prospectively, with dramatic cost reduction and speed and
reliability improvements in the transportation of people and the communication of information, the
service sector now includes some of the most intensive international competition.
Factors for the Growth of the Service Sector
The service sector is by far the most dominant employer in developed countries and it is also of
considerable significance in most developing countries. As an economy becomes more sophisticated,
the contribution of the service sector increases in terms of employment, GDP, and all other standard
measures. The variety of services has increased over time in response to:
 The adoption of new technology
 Increases in personal disposable income
 Greater leisure time
 Demographic change
 New social values.
Since the late 1960s, communication and computing technologies have stimulated growth of service
activities. Some economists believe developed countries are entering an information age, an era based
on gathering, managing and disseminating information. The aspect of service provision of greatest
interest to the geographer is location. Important location factors affecting service provision include:
 The distribution and density of population
 Variation in purchasing power
 Availability of labor with appropriate skills
 Proximity to other service activities
 Demographic factors such as age and gender.
The Trade Sector
Definitions and Basic Concepts
Trade involves the exchange of commodities that must be transported from one place to another. In
ancient times, transporting commodities over any significant distance was an expensive and risky
enterprise and hence restricted to local markets. As transportation networks improved, trade expanded
considerably. Today trade takes place between neighboring households, neighboring cities, and
neighboring continents. Reliable international shipping, mail services and the Internet enable trade
between people in any locations.
Trade is the function of demand and supply and was started in 5th millennium B.C between ancient
Egypt and Mesopotamia. It is the buying and selling of goods by two or more parties, persons, firms or
countries that involves:
 exchange of goods;
 the movement of goods;
 money transaction;
 Bartering
Trade can be undertaken due to the following foundations. These are:
 Differentiation of products;
 Availability of surplus product;
 Availability of demand for commodities;
 Difference in culture and technology;
 Development of adequate transport;
 Suitable world condition and peace.

Trade can be divided into two: international and internal:

1. Internal Trade (Domestic Trade)
 Internal trade is concerned with the exchange of commodities among people within the territory
of a given country.
 It is not crossing the international boundaries.
 The volume of internal trade is reliant upon:
 Size of a country.
 Variety of its resources.
 Number of populations.
 Standard of living of the people.
 Development of communication and transport
2. International (Foreign) Trade
 This kind is the exchange of goods and services across international boundaries or among
countries or continents.
 In most countries, it represents a significant share of GDP. While international trade has been
present throughout much of history, its economic, social, and political importance has been on
the rise in recent centuries.
 Industrialization, advanced transportation, globalization, multinational corporations and
outsourcing are all having a major impact on the international trade system. International trade
is a major source of economic revenue for any nation that is considered a world power.
 Without international trade, nations would be limited to the goods and services produced within
their own borders.
 There are two types of international trade:
1. Export trade: refers to sending of goods to other country.
2. Import trade: refers to bringing of goods from abroad to home country.
 The positive or negative trade balances are determined by international trade
Economic and Political Risks in International Trade
The risks that exist in international trade can be divided into two major groups: Economic & political.
Economic Risks
 Risk of insolvency (collapse) of the buyer,
 Risk of protracted (prolonged) default - the failure of the buyer to pay the amount due within six
months after the due date
 Risk of non-acceptance
 Surrendering economic sovereignty
 Risk of Exchange rate

Political Risks
 Risk of cancellation or non-renewal of export or import licenses
 War risks and expropriation or confiscation of the importer's company;
 Risk of the imposition of an import ban after the shipment of the goods;
 Transfer risk - imposition of exchange controls by the importer country or foreign currency
shortages;
 Surrendering political sovereignty

Trading Restriction
Trading Restrictions are designed to:
 Benefit domestic product;
 Generate income from tax;
 Make domestic producers competitive in market;
 Stimulate domestic producers.
Major Type of Trading Restriction
1. Embargo
 A government order restricting trade in a given commodity or with a particular nation.
 It is official ban or any official restraint or prohibition.
2. Tariff: heavy tax on import goods,
3. Fixing quota: is the limitation of the amount of goods to be imported determined by importer.
4. Voluntary Export Restrain/VER/: Is an agreement between two countries where the exporting
country will voluntary to restrict the volume of its export.
5. Product Standard Regulation e.g. quality, package.
6. Requiring license.
7. Complex Customs Procedure.
8. Government involvement, like prohibition and subsidies
Major Trading Groups
The formation of the groups or the union is because of two main reasons, these are: Protection policy
and free trade policy like no tariff, trade barrier, no restriction at all.
1. The European Economic Community/EEC/, which was established in 1958
2. The European free trade association /EFTA/ in 1960
3. The North American Free trade association/NAFTA/, which includes USA, Canada and Mexico
4. Latin America free trade association /LAFTA/
5. The central America common market/ CACM/
6. The organization of economic cooperation and development /OECD/
This organization allows Free trade among the member countries
Transportation and Development
Concept of Transportation
Transportation refers to the physical movement of people and goods from one location to another. The
transportation industry is the largest industry in the world.
The Importance of Transportation
Transportation is vital to a nation’s economy. Transporting natural resources to production sites and
moving finished goods to markets is one of the key factors in economic competition. It promotes trade
and allows a nation to accumulate wealth and power. In the business circle, transportation is considered
as an auxiliary to trade as it supports trade and industry by carrying raw materials to the place of
production and distributing finished products for markets and place of consumption. The following are
the major and interrelated significance of transport infrastructure in communication and development
efforts. Transport is:
 A means to provide available raw materials to producers;
 A means to provide goods to customers
 Used to enhance standard of living
 Used for emergencies and natural calamities
 Used as a means to create employment
 Used to increase access for labor mobility
 Used to Bring nations together
Tourism Industry
 Tourism is traveling for predominantly recreational purposes or the provision of services to support
this leisure travel.
 The World Tourism Organization defines tourists as people who "travel to and stay in places
outside their usual environment for not more than one consecutive year for leisure, business and
other purposes not related to the exercise of an activity remunerated from within the place visited".
Factors Affecting Development of Tourism Industry
 Leisure time
 Affluence
 Mobility
 The 5 “a” s
 Peace and security
 CHAPTER FIVE: GLOBALIZATION AND THIRD WORLD POVERTY
Meaning and Trends of Globalization
 In its broader context globalization can be defined as a process of closer interdependence and
integration among countries and peoples.
 Globalization can be explained in different terms such as interdependence, interference,
denationalization, access or openness, linkage and so on.
 It is a comprehensive term for the emergence of a global society in which economic, technological,
political, social, environmental and cultural events in one part of the world quickly come to have
significance for people in other parts of the world.
 It is to say that globalization is the process of international integration by which the people of the
world are unified into a single society.
Reasons for Globalization
Improvements in:

o Communication,

o Transportation, and
o Information Technologies.
Economic and Social Impacts of Globalization
 The flow of goods and services
 Labor/people movements
 Flow of capital

 Technology transfer and use

Institutions of Globalization
 The World Bank
 International Monetary Fund
 World Trade Organization
The Debate over Globalization: Positives and Negatives
Positive Effects of Globalization
o Industrial-emergence of worldwide production markets and broader access to a range of foreign
products for consumers and companies
o Financial: emergence of worldwide financial markets
o Economic: realization of a global common market
o Sharing of experience, skill, knowledge, attitudes, primary and secondary products
o Remittances
o Accelerates voluntary works especially during wars
o Promote debt and aid by improving systems
o Political-the creation of a world government which regulates the relationships among nations.
o Informational- increase in information flows between geographically remote locations.
o Cultural exchange
o Ecological
o Social: the achievement of free circulation by people of all nations.
o Transportation: the death of distance via incorporation of technology to decrease travel time.
o Technical/legal
o Sexual awareness
Negative Effects of Globalization
 Unequal trade balance between developing and developed countries
 Exploitation of foreign impoverished workers
 Shift from manufacturing to service work
 The rise of contingent work
 Weakening of labor unions
 Spread of drug: like hashish, communicable diseases like HIV/AIDS, and prostitution;
 Contributed to a fast spread of many forms of crime such as:
 Drug trafficking,
 Terrorism,
 Money laundering,
 Organized crime,
 Corruption,
 Illegal human trafficking especially of children.
 Computer related crimes are also becoming more global in nature.
 Uncontrolled migration
 Destruction of identity