Geography Reference
In-Depth Information
different ways. The importance of studying the geography
of commodity chains is that such an undertaking sheds light
on the origins of products and helps explain why produc-
tion occurs where and how it does and how production
affects places and peoples at each step in the chain.
these changes. Charlier stressed the importance of co
n-
tainerization to the growth of sea trade in the Benelux
ports and explained the locational advantage of Rotte
rdam,
which is no more than six hours by rail or truck from
85 percent of the population of western Europe.
The container system and the growth in shipping at
Rotterdam and other Benelux ports have combined to foster
the development of other industries in the region, helping
to make the Netherlands, in Charlier's words, a warehouse
for Europe. The Netherlands is now home to more than
1800 U.S. fi rms, including call centers, distribution centers,
and production centers, especially for food. Over 50 per-
cent of all goods entering the European Union pass through
Rotterdam or Amsterdam (also in the Netherlands).
Major Infl uences on the Contemporary
Geography of Manufacturing
As the iPod example illustrates, multinational corporations
frequently subcontracts many of the steps in the produc-
tion and retailing process to outside companies or su
bsid-
iaries, including the extraction of raw materials, manufac-
turing, marketing, and distribution. As such, industrial
location is not just infl uenced by wage rates. The other key
variables include transportation costs and options, regula-
tory constraints, expertise, and access to energy.
Regulatory Circumstances
Regional trade organizations such as the North American
Free Trade Agreement (NAFTA) and the European
Union (EU) have trade agreements that infl uence where
imported goods (and components of goods) are produced.
Similarly, governments have individual agreements with
each other about production and imports, and most gov-
ernments (153 as of 2011) are part of the World Trade
Organization (WTO), which works to negotiate rules of
trade among the member states.
The WTO promotes freer trade by negotiating
agreements among member states, agreements that push
the world in the direction of free trade, typically dismiss-
ing import quota systems and discouraging protection by
a country of its domestically produced goods. Agreements
negotiated under the WTO are typically enacted in steps
in order to avoid a major shock to a state's economy. In
2001 when Europe and the United States agreed to allow
China to become a member of the WTO, they also agreed
to remove the quota system that restricts the importation
of Chinese goods into Europe and the United States (dis-
cussed in Chapter 10). Soon after these quotas were elimi-
nated, both the United States and the European Union
issued “safeguard quotas” against certain Chinese imports.
These quotas buffered the impact of Chinese goods on
domestic producers. But most of the quotas have now
expired, paving the way for mass exports from China to
the United States and Europe.
In addition to the growth of the purview of the
WTO, the proliferation of regional trade associations in
the last two decades is unprecedented. The list of acro-
nyms for regional trade associations is almost over-
whelming: EU, NAFTA, MERCOSUR, SAFTA,
CARICOM, ANDEAN AFTA, COMESA, to name but
a few (see Chapter 8). The World Trade Organization
estimates that close to 300 regional trade organizations
are in existence. Regional trade organizations are similar
to bilateral agreements on trade between two countries,
although they involve more than two countries. Most
Transportation
Relatively inexpensive transportation is one of the foun-
dations on which the fl exible production system rests.
Whereas a century ago the cost of transportation accounted
for half or more of the fi nal price of many goods traveling
over signifi cant distances, that fi gure is now down to fi ve
percent or less. In an era of vastly improved infrastructure,
relatively cheap oil, and container ships, spatially disaggre-
gated production systems are cost effective.
Effi cient transportation systems enable manufactur-
ers to purchase raw materials from distant sources and to
distribute fi nished products to a widely dispersed popula-
tion of consumers. Cost is not the only issue.
Manufacturers also consider the availability of alternative
systems in the event of emergencies (e.g., truck routes
when rail service is interrupted). Since World War II,
major developments in transportation have focused on
improving
intermodal connections
, places where two or
more modes of transportation meet (including air, road,
rail, barge, and ship), in order to ease the fl ow of goods
and reduce the costs of transportation.
The current volume of resources and goods shipped
around the globe daily could not be supported without the
invention of the container system, whereby goods are
packed in containers that are picked up by special, mecha-
nized cranes from a container ship at an intermodal con-
nection and placed on the back of a semitrailer truck, on a
barge, or on a railroad car. This innovation lowered costs
and increased fl exibility, permitting many manufacturers
to pay less attention to transportation in their location
decisions. Refrigerated containers also ease the shipment
of perishable goods around the globe.
Jacques Charlier has studied the major changes to the
Benelux (Belgium, the Netherlands, and Luxembourg)
seaport system and the role containerization played in
