Geography Reference
In-Depth Information
Figure 12.20
Duisburg, Germany.
The old industrial canal cor-
ridor is being converted to a pedestrian district that
local authorities hope will attract locals and tourists.
© Alexander B. Murphy.
Germany's Ruhr Valley—abandoned steel mills were
turned into tourist attractions and warehouses were con-
verted into retail establishments, restaurants, and offi ces
(Fig. 12.20).
Service economies have their own vulnerabilities.
Tourism can fall off in the face of economic downturns or
natural hazards, and offi ce work can be outsourced to dis-
tant places. Mechanization can also have a negative impact.
We usually think of manufacturing jobs being affected by
mechanization, but service jobs are vulnerable as well. In
recent decades countless jobs in the travel planning industry
have been lost to the Internet, scanning machines in super-
markets have reduced the need for employees, and auto-
mated answering services have taken the place of live voices
in many businesses. Changes of this sort can create the same
sorts of hardships and pressures for economic readjustment
that communities reliant on secondary industries face.
At a different spatial scale, the very geographical struc-
ture of large-scale service economies can affect the fortunes
of places, regions, countries, and even the globe. Places
dominated by the service sector cannot exist without exten-
sive connections with other places because those living in
such places still need food and material products, and they
often need a large market to sustain their services. Hence,
the dramatic shift away from the primary and secondary sec-
tors that has taken place in some parts of the world is inextri-
cably tied to economic globalization. But economic decision
making in a globalized economy can easily become discon-
nected from the fate of individual places and regions.
The burgeoning fi nancial service industry provides a
case in point. That industry has grown explosively over the
past few decades with the development of increasingly inno-
vative products and arrangements. Some people made spec-
tacular amounts of money in the process, but in recent
decades key fi nancial instruments and procedures were
developed based on unrealistic assumptions about concrete
circumstances. Banks made loans they should not have
made, and mortgages were issued to people who were
unlikely to be able to meet their payments. These practices
helped to bring about the dramatic economic downturn that
began in 2008, when a housing slump precipitated high lev-
els of defaults on so-called subprime mortgages. A banking
crisis ensued that rippled throughout the economy and, in
our interconnected world, affected the fortunes and pros-
pects of places near and far. The crisis serves as a reminder of
the continuing vulnerabilities of places in a service economy,
even in the absence of any direct challenge to the specifi c
service industries on which particular local economies are
based. It also raises a key question with a geographical foun-
dation: what are the consequences of divorcing the develop-
ment of wealth in a knowledge economy from the fate of
individual places, regions, or countries?
How does a place change when deindustrialization occurs?
Consider a place that has experienced deindustrialization,
and research recent news articles on the Internet to fi nd out
how the economy of the place has changed since the loss of
industry. What has happened to the place and its economy?
