Unit 5

• Gives us insight into selected secondary activities in

which humans engage as they transform raw
materials, provided by primary activities, to more
finished forms.
• Manufacturing utilizes capital and labour inputs to
move materials through a series of processes until a
higher-value added product is obtained.
• Services involve the “manufacturing” of intangible
goods or services for human use.
• You will examine the importance of the secondary and
tertiary sectors and factors that help to account for
their location
Three Sectors of the Economy

• Primary economic activity involves the

collection of raw materials from the
earth. Farming, fishing, mining, forestry
are the classic parts of the primary
economy.
• The farmer takes plants from the land,
the forester takes trees from the forest,
the fisher takes fish from the ocean and
the miner takes ore from the ground.
• All involve collecting natural resources.
 Three Sectors of the Economy
• Secondary economic activity involves processing or
manufacturing raw materials into products for people to buy.
• It is often referred to as the manufacturing or processing
sector. The cows are butchered in to roasts, T-bone steaks and
ground beef and packaged for sale at the grocery store; the
trees are milled into lumber or pulped into paper; the fish are
gutted, filleted, and frozen for market; while the ore is refined
into steel ribbons or copper wire or gold ingots.
• You can see that there would be a multitude of examples for
secondary processing but all the activities start with a raw
material and convert it to a product for sale.
• This is sometimes referred to as Value adding.
• The tree would be much less expensive to buy than the lumber.
The lumber has value added. Ship building, as depicted above,
is an example of the manufacturing sector.
 Three Sectors of the Economy
• Tertiary economic activity does not involve
raw materials rather it involves providing
service to people.
• Hence it is often referred to as the service
industry.
• Nurses, doctors, lawyers, teachers, waitresses,
hairdressers, sales people all provide services
for other people.
• Tourism is an important part of the tertiary
sector and golf has become a thrust for
investment in Newfoundland & Labrador.
The Language of Manufacturing
• Inputs: materials & factors that go into making a product.
Example; raw material, power, buildings, land, labor,
decisions, capital, machinery

• Manufacturing processes: those processes that change a

raw material to a usable form. Three types:
– Conditioning: minimal change to a resource. Example; logs into
lumber; fish into fillets
– Analytical: resource converted to a number of different products.
Example; cow into leather, milk & cheese
– Synthetic: several resources are combined to make one resource.
Example; light bulb has glass, tungsten, Nitrogen & aluminum.

• Outputs: finished product from a manufacturing process. For

example the output from the fish plant is fish sticks or frozen
fish fillets.
 Labour Intensive vs. Capital
Intensive
• Industry can be classified in many different
ways:
– We shall look at two ways of classifying
industry.
• Manufacturing businesses can be
classified based on the process.
• All manufacturing businesses can be
classified as either requiring large
quantities of labour or of machinery to do
the processing.
 Labour Intensive vs. Capital
Intensive
• Machinery now does much of the work formerly
done by humans.
• Some manufacturing businesses might be more
difficult to classify because they require large
quantities of both capital labour.
• Labor intensive: requires a lot of person hours
to produce the product. Ex. Jewelry making
• Capital intensive: requires a lot of expensive
equipment to make the product. Ex. Automotive
industry
 Heavy vs. Light Industry
• Manufacturing businesses can be classified
based on the output.
• All manufacturing businesses can be classified
as either producing large, expensive items for
other business to use in manufacturing or
transportation or as producing small items for
consumers to purchase directly.
 Heavy vs. Light Industry
• Some manufacturing businesses might be more
difficult to classify because they produce items
that might be used by business or by private
people.
• Heavy industry: produces big expensive
products for for other industry. Ex. Ship yard,
tractor production
• Light Industry: produces products for
consumers. Ex. Pop industry.
factors that influence the location of
an industry
• Site/Physical Cost Factors
• Three major factors of site (physical location)
• Proximity to raw material. Heavier & bulkier the raw
material the closer the industry will be located to
reduce transportation costs.
– resource oriented industry
• industries that are located close to the resource because it is to
heavy/bulky to transport;
• communities frequently spring up around resource industries.
Labrador City, Churchill Falls, Grand Falls-Windsor and Bonavista
are good examples. Can you think of other examples?
• Land: price, level, good drainages, dense well-settled
soil
• Energy: not as important a factor today due to our
ability to transport power long distances.
 Human-based Cost Factors
• Market Oriented Industry
• Industries that are located close to the market
because the product is expensive to transport. The
resources are not bulky or expensive to transport.
The Soft drink industry is a good example.
• Market vs. Resource Oriented Industries:
• As we examine the influence of “weight gain” &
“weight loss” on the location of industry we see that
if the product weight is greater (weight gain) than the
input resources it is located near market.
Conversely if product weight is less (weight loss)
than the input resources it is located near resource.
 Human-based Cost Factors
• Agglomerating Tendency
• Agglomerating tendency refers to the tendency for
factories producing related products to locate close to
each other for mutual benefit.
Ex. Car factory & tire factory. How does each benefit
by being located close to each other?
• Industrial Parks
• Industrial parks provide many advantages for a
business. Existing infrastructure of roads, on ramps
and off ramps to highways, large lots, sewer, ample
electricity, and close location to related industries
make industrial parks attractive for manufacturing
businesses.
 Human-based Cost Factors
• Labor force characteristics that attract business
• Wages expected: lower wages in some developing
countries like Mexico, and the Philippines attract
manufacturers
• Training: highly skilled labourers can attract
businesses that require welders, mechanics,
carpenters etc.
• Benefits (EI, Pensions etc); lower costs of
employment insurance, pensions , etc. can attract
business just as easily as low wages.
• Availability; a high unemployment rate might attract
business, especially if large numbers of workers are
required
 Government Influence
• Transportation subsidies affect the
location of industry.
• Subsidies allow businesses to locate
farther from the resourse.
• Subsidies allow governments to
encourage industry in rural areas.
Examples:
– ice breakers in Botwood;
– roads in Labrador;
– cost of coastal transportation in Labrador;
– cost of crossing the Gulf.
 Government Influence

• Tax breaks affect the location of

Industry.
• Provinces like Newfoundland have
attempted to attract business by
offering tax breaks. The company
obtains a financial break while the
province gets the advantage of
putting people to work.
Industry Location; The Global
Picture
• The highly industrialized areas on
the earth's surface are concentrated
in 4 definite regions:
• North America
• Western Europe
• Japan
• Australia
Industry and the environment

• Industry has waste out put as well

as product output. Three of the
many types of waste are outlined
below.
• Green house gasses; ex. Carbon
dioxide, Chlorofluorocarbons &
methane. Causes global warming &
associated problems.
Industry and the environment

• Acid Rain; ex. Sulphur & nitrogen. Decreases

soil fertility, kills fish, corrodes buildings
• CFC’s (chlorofluorocarbons); ex.
Refrigerants & sprays. Breaks down ozone
which filters harmful cancer causing UV rays.
• Industrial wastes are obviously mostly
related to areas of heavy industry. However,
when we look at the maps on p. 238 and
realize prevailing winds play a role we can
see that pollution does not recognize political
or economic boundaries.
 The Role of GOVERNMENT and INTEREST GROUPS in the face of environmental
threats posed by industry.

• Remember: “It is the extreme views that define

the middle”.
• Interest groups often play the extremist. They
raise valid points of concern and argue them
vehemently.
• Government has the role of balancing
environmental concerns & encouraging
economic development.
 Averting an environmental
threat posed by an industry
• prevailing winds are transporting
acid rain from industrialized areas
and depositing it in locations down
wind from the industrialized area. It
is important to note that
industrialized areas as well as those
areas down wind from industrialized
areas are affected.
 Averting an environmental
threat posed by an industry
• Any solution to industry related
problems will have to be dealt with by
cooperation and consultation between
different nations. The major
environmental summits that have been
held in recent years are examples of
that. The recent Kyoto summit and the
summit held in Rio de Janeiro several
years ago attempted to get countries to
reduce their carbon dioxide emissions.
 Solutions to solving the acid
rain problem include:
• government regulation to reduce
sulphur & nitrogen emission;
• development of sulphur filtering
equipment;
• tax breaks for companies if they reduce
pollution output;
• meetings and consultation between
business, environmentalists and
government to decide on a plan of
action
selected social/moral issues associated with
manufacturing operations
• There are many social/moral issues associated with
manufacturing operations. Examples include child
labour, safety of workers and a Company’s
responsibility to be environmentally friendly.
• Business drives the economy and provides us with our
high standard of living here in the western world. The
question we have to keep asking ourselves is "are
industries acting within the moral parameters of our
society?".
• In Canada and most well developed nations there are
strict regulations about safety, waste emissions, age of
workers, and corporate responsibility. In some
developing nations the regulations might not be in
place or they might be relaxed in the hope of
stimulating business instead of inhibiting it.
 types of tertiary activities
• Tertiary Activity
• Service industry.
• Providing services for people
• Ex. Doctor, lawyer, waitress, tourism industry,
mechanic, teacher
• Public vs. Private Tertiary activity.
• Private service industry is run by private
business and requires that a profit be made
from the service. Ex. Mechanics, Lawyers,
Tourism.
The four types of tertiary activity are:
• Distributive activities: involves the transportation and
sale of all products from manufacturer to consumer.
ex. truck driver, warehouse manager, sales person
• Financial Activity: involves banks, insurance
companies, financial advising companies, and trust
companies.
• Personal Service: involves a wide range of services
from legal services, to food services, to
entertainment and counselling services.
• Government service: Public service industry is
operated by Government and is not for profit. On the
contrary it cost tax payers money. Ex. Education,
health care, mail, water, sewer, roads. Hence the
term “ public servant”
The four types of tertiary activity are:

– It is important to note that many

careers in the tertiary sector can not
be classified as public or private. A
teacher can work in the public school
system which is public service or s/he
can work for a private college which is
private service.
– Why does the government provide
some tertiary services?
 factors that determine the
• location
Proximity oftwo
& price are service industries
key factors that determine
the location of service industries.
– Location: services must be located close to a large enough
market to produce DEMAND.
– Viability: services are only viable as businesses if the
demand is high enough & the price is reasonable.
• Service Availability vs. Population Size.
– Larger populations support a wider range of services.
– Consider: Health services, Education, recreation facilities,
shopping facilities, hotels, restaurants and you will see that
the range of services available is directly related to
community size.
 factors that account for patterns in world
trade for a selected commodity

• Tourism is one of the fastest growing

sectors of the economy.
• It is also one of the most profitable.
• If your country happens to be located in
a sunny area or to have good ski slopes
or to have cultural attractions then
people will flock there and spend money.
• Furthermore from a country's perspective
international tourism is new money
coming to the country.
 Tourism
• International tourism has increased dramatically for 6
reasons:
• people have increased leisure time due to available
technologies;
• retired people have secure incomes and are able to
travel;
• people have increased discretionary spending money;
• travel has become easier and less expensive;
• travel agencies have packaged attractive "all
expenses paid" trips;
• advertising has been effective using attractive & exotic
pictures.
 Tourism

• Travel agents see that people are usually looking for one of three different
kinds of vacations:
• Climate oriented (skiing & sun bathing are at opposite extremes but both
rely on climate)
• Landscape oriented (some people like to view the sites)
• Culture oriented (cultural land marks are of interest to people ex. Athens)
factors that affect the location
of a quaternary activity
• The quaternary sector of the economy is a
specialized part of the Tertiary Sector.
• QUATERNARY activity refers to activities
which involve the collection, recoding,
arranging, storage, retrieval, exchange,
and dissemination of information.
• Computers, Cell Phones, E-mail, and the
WWW are some of the examples of new
information technology which drives the
quaternary sector.
 Factors Affecting Location of
Quaternary Activity
• People & Infrastructure:
• Populations of people concentrated in an
area makes the information sector viable.
• Think about the areas that can avail of digital
cell phone service, high speed Internet
connection.
• Historically, information technology like
cable TV, telephones, and Radio flourished in
areas where there was a population large
enough to support them.
 Factors Affecting Location of Quaternary
Activity
• Infrastructure is required for the communication of
information.
• The infrastructure has been closely linked to
populated areas. Interestingly enough the
development of infrastructure is changing so much
and decreasing in price to the point it may change the
patterns of infrastructure.
• Lesser developed nations currently do not have much
access.
• However, Lesser developed nations are not tied to the
old and outdated infrastructure.
• This might be the time for lesser developed nations to
build infrastructure and increase their share of the
information technology market.
 Factors Affecting Mass
Communications Patterns.
• In the telesphere of global
communications there are islands and
continents of activity and there are
deserts or areas where there is no
activity because there is no connectivity.
• The areas of connectivity are closely
associated with development and you
will see that in your readings and
activity.
Mass Communication Affects
Workplace Location.
• As more and more people work in
the information sector we may see a
trend towards reducing urbanization.
• People would not be tied to an office
building if they could work at home.
• Maybe they could work at home on
the country farm and submit work
electronically.
Mass Communication Affects
Workplace Location
• Businesses need not be located
physically near other businesses as
we saw with the agglomerating
tendency of the manufacturing sector.
• If Infrastructure improves to the point
it overcomes distances information
technology will be a new source of
employment and economic activity in
rural depressed regions.
 the economic importance of
the tertiary sector
• Economists recognize that the tertiary industry
has expanded significantly in the last 100
years.
• In Canada the tertiary sector of the economy
has grown from 36% of GNP - 73% of GNP
over the last 100 years.
• A quick survey of any high school class will
reveal that students are expressing a
preference for a career choice in Tertiary
activity
the economic importance of the tertiary
sector

• The entire tertiary sector is growing and is

becoming a much larger part of the economy of
developed nations.
• The multiplier effect is in part responsible for
this phenomenon.
• As the secondary sector of the economy grew
there were more people working in urban areas
as manufacturers.
 the economic importance of the tertiary
sector
• The concentration of people meant there was
more need for services.
• Service industries grow in turn.
• The people working in the tertiary industry
need services too so the growth of the service
industry continues.
• While the entire service industry is growing we
will look at two tertiary growth sectors in
particular, International tourism and information
technology.
 International Tourism
• In the last quarter of the twentieth century
International tourism increased 12.5%. There
are several reasons for this which are
outlined below.
• More leisure time since WWII:
– More retired people because of aging population
– Younger retirement age. It did average 65 now it
is closer to 55.
– The average holiday time has increased from 2
weeks to 4 weeks
 International Tourism
• More money for leisure & recreation since
WWII.
– Wages have increased giving people more
disposable income
• Travel time and travel costs have decreased
• Travel agencies are offering all inclusive
packages which attract people
• Appealing advertising campaigns by travel
agencies
 Tourist Destinations

• Travel agencies and related tourism

industries have both been a cause
and a result of the increased
interest in tourism.
• Tourists tend to be looking for any
one or combination of three
destination sites.
• Tourist Destinations
Climate-oriented Sites:
• warm climates, sunbathing and swimming
attract some tourists from colder regions.
• Abundant snow and good skiing conditions
attract those avid skiers and snowmobilers
• Landscape-oriented Sites:
• some tourists are attracted by site seeing
opportunities.
• Culture-oriented Sites
• Some tourists are attracted by historic sites
like Athens and Jerusalem.
 Quaternary Sector of the
Economy
• The quaternary sector of the economy is a
specialized part of the Tertiary Sector.
• QUATERNARY activity refers to activities
which involve the collection, recoding,
arranging, storage, retrieval, exchange, and
dissemination of information. Computers, Cell
Phones, E-mail, and the WWW are some of
the examples of new information technology
which drives the quaternary sector.
 Economic Indicators

• Development is a difficult thing to

define.
• Economists, sociologists, cultural
geographers and all social
scientists use "indicators" to give
some degree of measure to the
concept of development.
 Economic Indicators
• There seems to be two aspects to
development, economic (financial) and social
(human).
• Social scientists have developed economic
indicators and social indicators.
• There is some debate over which indicators are
a better measure of development.
• It is very likely that a variety of indicators is the
best way to determine the level of economic
development.
• This lesson deals exclusively with 2 economic
indicators.
 Employment Structure
• Economists have recognized that those
countries that have become "developed" have
been able to move their economy beyond the
primary sector to the secondary sector which
in turn grows the tertiary sector.
• In other words developed countries have a
much larger percentage of their work force
employed in the secondary and tertiary
sectors, while lesser developed countries have
most of their work force employed in the
primary economic sector.
 Employment Structure
• When economists calculate the percentage of
people working in each economic sector the
statistic created is known as the employment
structure.
• By way of example we will look at country "X"
and country "Y" which have very different
employment structures. By using fictional
countries you have no other preconceived
notions of the countries or their level of
development. We will see how economists
would classify each countries development
based soley on the employment structure.
 Employment Structure

• Employment Structure for Country "X"

• Primary sector
• Secondary sector
• Tertiary sector
• 60%
• 15%
• 25%
 Employment Structure

• Economists would look at country X

and realize that it is not a developed
country. It might be developing but
a developed country would have a
great majority of its workers in the
secondary and tertiary sectors of
the economy.
 Employment Structure

• Employment Structure for Country Y

• Primary sector
• Secondary sector
• Tertiary sector
• 5%
• 25%
• 70%
 Employment Structure

• Economists would classify country

Y as a developed country. It has a
great majority of its workers in the
secondary and tertiary sectors of
the economy.
•
GNP per Capita
GNP per capita is a measure based on the
Gross National Product (GNP) of a country.
GNP refers to the total value of the production
of goods and services in a nation measured
over a year, together with any money earned
from investment abroad, less the income
earned with in the nation by non-nationals.
• The GNP per capita takes that dollar value and
divides it by the population of the country.
 GNP per Capita

• For example if the GNP for Country X

was $5,000,000 and there were 1,000
people in the country then the GNP
per capita would be $5,000,000 ¸
1,000 people = $5,000 per person or
a GNP per capita of $5,000.
• It is very likely that country X would
have a much higher GNP per Capita.
 GNP per Capita
• Economists do recognize there is a major flaw
in this measure as a measure of "Standard of
Living."
• This measure is an average which assumes
that the wealth in the country is evenly
spread.
• This is often not the case. If one or two
families in the country are very rich and
control most of the money then many of the
people could be living in poverty even though
the GNP per capita is high.
The level of development in a country refers to two type
of development, economic development and social
development.

• GNP and GNP per capita are usually

expressed in U.S. Dollars.
• Economic development refers to how well
the economy is doing and how much
money people have at their disposal.
• Social development is often closely tied to
economic development but refers to more
human indicators of well being such as life
expectancy, infant mortality rate, literacy
rate, availability of communications.
• Generally speaking, people in more
developed countries are better off and
have an easier life than people in
lesser developed nations.
• Economists and sociologists use the
term "standard of Living" to describe
how well off people are. Standard of
living equates to quality of life.
• The level of development among nations is
far from equal.
• Some countries have a very high standard
of living with long life expectancy, equal
rights, high average wages, strong
economies, great health care and high
literacy rates
• while other countries have a short life
expectancy, fierce discrimination against
woman, very low wages, faltering
economies, little health care and very low
literacy rates.
 The United Nations recognizes the disparity and has set
forth eight "millennium goals" to reduce the disparity
among nations.

• Eradicate extreme poverty and hunger

• Achieve universal primary education
• Promote gender equality and empower women
• Reduce child mortality
• Improve maternal health
• Combat HIV/AIDS, malaria and other diseases
• Ensure environmental sustainability
• Develop a global partnership for development
By the year 2015 all 189 United Nations Member
States have pledged to meet the above goals