Flashcards in Lecture 4 - New Economic Geography Deck (49)
In Britain where is the profit/growth from, economies of scale or scope?
Economies of scope
How has international division of labour came about
Through globalisation of capital/finance
What are the UK competitive in?
High value knowledge, skills and sectors I.e f1 and super cars
What is the area, where f1 development thrives?
What is an economy of scale? (List 4)
- Repetitive Tasks
- Specific items
- Fast time, high quantity
- Competitive through cost, low per unit
What is an economy of scope?
- Competitive through flexible application of skills
- E.g niche breads, olive or forccacia
- but diverse into new markets
- products with dough, pizza, doughnuts etc
- same skills, ingredients, machinery
Profit and growth in UK is found in? (List 4)
1. New International Division of labour
2. Ability to organise operations to make best use of locations, resources
3. Natural resources
List 3 areas UK are competitive in?
-Areas of high knowledge
1. Pharmaceuticals - UK high knowledge
2. Green economy - world leader in wind tech
3. Creative economy - e.g films
In 1 sentence explain Michael Porters New Trade Theory?
Competitor advantage of nations
Name two components of a successful economy?
1. Identifying niche areas
2. Creating value chains
What is a value chain?
It's a process view of organisations. With viewing manufacturing as system with subsystems. Subsystems include inputs transformation processes an outputs
What are inputs, transformation processes and outputs in value chains?
They involve the acquisition and consumption of resources, e.g money, labour, materials, equipments, buildings, land, administration and management
How value chains are carried out determine what?
Costs and affects profits
In short, what is a value chain?
A string if companies or players working together to satisfy market demands for a particular product
Name 3 components of niche competition?
1. Creates unique activities an products that are non replicable of low cost countries
2. Makes activities sticky - embedded activities
3. Agglomeration economies - benefits of location
Name 5 things niche competition brings together ideas of?
1. New international division of labour and spatial division of labour
2. Agglomeration economies
4. Value chains
Who is Paul Krugman?
Main theorist behind New economic Geography
Developed from the new trade theory
What are 2 quotes from Paul Krugman on Agglomeration?
Agglomeration ins 'The outcome of the interaction of increasing returns, trade costs and factor price differences'
'Economic regions with most production will be more profitable and therefore attract even more production'
Thinking of spatial division of labour, what are 3 components of economies of scope?
1. Using capital in multiple ways to create flexibility and maximise advantages
2. Change in factory focus
3. Assembly lines more variation in product ranges and customers due to just in time systems and cad cam technology
What are just in time systems?
The right material at the right time, at the right place, at the right amount. Without the safety net of inventory
What is cad-cam technology?
Computer aided design to cut down on waste
What is spatial division of labour?
Spatial separation of low and high skilled parts of a company. Allows firms to use geography to work out how to increase profits from seeking the least cost location for each part of the production process
What is the neoclassical location theory?
The optimal location is the least cost location
What is the behavioural location theory? (Massey and Meegan 1982,1984)
Businesses make location choices based on other decision e.g the environment, schools etc.
What is the structural location theory?
Location is determined by structural dynamics of capitalism
There are two types of agglomeration economies what are they?
What is an urbanisation economy?
The benefits of using urban places such as infrastructure e.g big cities
What are localisation economies?
Benefits of location in certain places, from the proximity of certain companies (traded and ungraded interdependencies) e.g Silicon Valley
Localisation economies also spillover knowledge in two ways to other companies, how?
Informally - word of mouth, turnover of staff
Formally - through contracts etc.