The geography of the world economy

THE GEOGRAPHY

OF THE WORLD

ECONOMY

The Geography of the World Economy provides an in-depth and stimulating introduction to

the globalization of the world economy. The book offers a consideration of local, regional,

national and global economic development over the long historical term. The theory and practice

of economic and political geography provide a basis for understanding the interactions within

and among the developed and developing countries of the world. Illustrated in colour

throughout, this new edition has been completely reworked and updated to take account of

recent significant changes in the world economy.

A new companion website also accompanies the book, with additional resources for each

chapter including multiple choice and short essay questions and links to relevant websites.

Figures and tables are also available for download located at www.routledge.com/cw/knox

The text is signposted throughout with an glossary of key terms, and is richly illustrated

with full-colour maps, diagrams and illustrations. It is ideal for upper level university

undergraduates and for post-graduates in a variety of specializations including geography,

economics, political science, international relations and global studies.

Paul Knox, University Distinguished Professor and Senior Fellow for International Advance￾ment, Virginia Polytechnic Institute and State University, USA.

John Agnew, Distinguished Professor, University of California, Los Angeles, USA.

Linda McCarthy, Associate Professor, University of Wisconsin-Milwaukee, USA.

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THE GEOGRAPHY

OF THE WORLD

ECONOMY

Sixth Edition

Paul Knox, John Agnew and Linda McCarthy

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Routledge

Taylor & Francis Croup

LO ND O N A N D NEW YORK

First edition published in 1989 by Edward Arnold

Fifth edition published in 2008 by Hodder Education

Sixth edition published in 2014

by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Routledge

711 Third Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

© 2014 Paul Knox, John Agnew and Linda McCarthy

The right of Paul Knox, John Agnew and Linda McCarthy to be identified

as authors of this work has been asserted by them in accordance with

sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced

or utilised in any form or by any electronic, mechanical, or other means,

now known or hereafter invented, including photocopying and recording,

or in any information storage or retrieval system, without permission in

writing from the publishers.

Trademark notice: Product or corporate names may be trademarks or

registered trademarks, and are used only for identification and

explanation without intent to infringe.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging in Publication Data

Knox, Paul L.

The geography of the world economy/Paul Knox, John Agnew and

Linda McCarthy.

pages cm

Includes bibliographical references and index.

1. Economic geography. 2. Economic history. I. Agnew, John A.

II. McCarthy, Linda (Linda Mary) III. Title.

HF1025.K573 2014

330.9–dc23 2013027243

ISBN: 978-0-415-83128-4 (hbk)

ISBN: 978-1-44-418470-9 (pbk)

ISBN: 978-0-203-77518-9 (ebk)

Typeset in Gill Sans and Sabon

by Florence Production Ltd, Stoodleigh, Devon, UK

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List of figures viii

List of tables xi

List of boxes xiii

Acknowledgements xiv

PART 1

ECONOMIC PATTERNS AND THE SEARCH FOR EXPLANATION 1

1 The changing world economy 3

1.1 Studying the world economy 5

1.2 Economic organization and spatial change 6

1.3 Spatial divisions of labor 12

Key sources and suggested reading 19

2 Global patterns and trends 20

2.1 What “economic development” means 23

2.2 International patterns of resources and population 29

2.3 International patterns of industry and finance 45

Summary 59

Key sources and suggested reading 60

3 Geographical dynamics of the world economy 61

3.1 History of the world economy 62

3.2 States and the world economy 66

3.3 “Market access” and the regional motors of the world

economy 79

Summary 91

Key sources and suggested reading 91

PART 2

RISE OF THE CORE ECONOMIES 93

4 Preindustrial foundations 95

4.1 Beginnings 95

4.2 Emerging imperatives of economic organization 100

4.3 Emergence of the European world-system 100

Summary 113

Key sources and suggested reading 115

Contents

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5 Evolution of the core regions 116

5.1 The Industrial Revolution and spatial change 116

5.2 Machinofacture and the spread of industrialization in Europe 117

5.3 Fordism and North American industrialization 125

5.4 Japanese industrialization: Two economic miracles 130

5.5 Emergence of “organized” capitalism 137

5.6 Principles of economic geography: Summarizing lessons from the

industrial era 142

Summary 144

Key sources and suggested reading 144

6 Globalization of economic activities 145

6.1 Transition to advanced capitalism 145

6.2 Patterns and processes of globalization 159

Summary 174

Key sources and suggested reading 174

PART 3

SPATIAL TRANSFORMATION OF CORE AND PERIPHERY 177

7 Spatial reorganization of the core economies 179

7.1 The context for urban and regional change 180

7.2 Spatial reorganization of the core economies 182

7.3 Old industrial spaces 194

7.4 New industrial spaces 196

7.5 Regional inequality in core economies 205

Summary 211

Key sources and suggested reading 212

8 Dynamics of interdependence: Transformation of the periphery 213

8.1 Colonial economies and the transformation of global space 213

8.2 Economic mechanisms of enmeshment and maintenance

in the colonial world economy 218

8.3 Influence of colonial administration on interdependence 226

8.4 Mechanisms of cultural integration 228

8.5 Changing global context of interdependence 230

8.6 Alternative models of development? 242

Summary 243

Key sources and suggested reading 244

9 Agriculture: The primary concern? 245

9.1 Agriculture in the periphery 246

9.2 Land, labor, and capital 251

9.3 Rural land reform 260

9.4 Capitalization of agriculture 262

9.5 Science and technology in agriculture 270

Summary 272

Key sources and suggested reading 273

vi CONTENTS

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10 Industrialization: The path to progress? 274

10.1 National and global stimuli to industrialization 275

10.2 Limits to industrialization in the periphery 280

10.3 Geography of industrialization in the periphery 285

10.4 Rise and fall of the Soviet model of industrialization 299

10.5 China’s rise in the world economy 304

Summary 310

Key sources and suggested reading 312

11 Services: Going global? 313

11.1 Defining and theorizing services 315

11.2 National and global stimuli to the growth of services 318

11.3 Services outsourcing: Benefits and drawbacks for all? 319

11.4 Limits to service export growth in the semi-periphery and periphery? 322

11.5 Geography of services 325

11.6 Variety in the internationalization of services 332

Summary 347

Key sources and suggested reading 349

PART 4

ADJUSTING TO THE WORLD ECONOMY 351

12 International and supranational institutionalized integration 353

12.1 Economic change and geopolitics 353

12.2 International and supranational institutionalized integration 356

12.3 Spatial outcomes of economic integration 362

Summary 377

Key sources and suggested reading 378

13 Reassertion of the local in the age of the global: Regions and

localities within the world economy 379

13.1 Regionalism and regional policy 380

13.2 Nationalist separatism 386

13.3 Grassroots reactions 391

Summary 396

Key sources and suggested reading 397

14 Conclusion 398

Key sources and suggested reading 401

Glossary 403

Bibliography 423

Index 453

CONTENTS vii

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1.1 The inter-relationships surrounding economic organization and

spatial change 6

1.2 Major features of economic change in the world’s developed economies 8

1.3 Employment outsourcing and insourcing, United States 14

1.4 Basic elements of commodity chains 15

2.1 The world-system: core, semi-periphery and periphery 22

2.2 GDP per capita (PPP, constant 2005 international dollars) 22

2.3 Gap in growth of GDP per capita (PPP, constant 2005 international dollars) 23

2.4 Happy planet index, 2012 27

2.5 Change in human development index (HDI) in regions as a percentage

of potential 27

2.6 Human development index (HDI) 28

2.7 Human development index (HDI), 2011 28

2.8 North American shale plays 31

2.9 Estimated shale gas resources in 14 regions 31

2.10 Marine “dead zones” 31

2.11 World energy consumption by fuel, historical and projected 35

2.12 The world’s cultivable land 37

2.13 Stress on freshwater supplies, 1995 and 2025 38

2.14 Ecological footprint 39

2.15 Share of agricultural products in world merchandise exports, 1950–2009 40

2.16 The demographic transition 41

2.17 Demographic transition map of the world 42

2.18 Remittance flows 43

2.19 Remittance flows, top countries, 2010 44

2.20 Share of a country’s nationals with a university degree living in an(other)

OECD country 45

2.21 Growth in volume of world merchandise trade and GDP, 2005–13

(annual % change) 50

2.22 Trade, imports and exports 51

2.23 Intra- vs. inter-regional connectedness of major exporters 52

2.24 Index of commodity concentration of exports, 2011 53

2.25 Government debt of euro-zone countries, 2011 (Maastricht limit: 60%) 55

2.26 Iceland and the global financial crisis 57

3.1 Shifting fortunes in the world economy (after Maddison) 62

3.2 Corruption perceptions index, 2011 63

3.3 The increasing pace of the world economy 69

3.4 F.D.I. inflows, developed, developing, and transitioning* countries

(*includes South-East Europe and Commonwealth of Independent States) 69

3.5 United States military expenditure 76

Figures

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3.6 The product life cycle model and possible effects on U.S. production

and trade (after Vernon, 1966) 83

3.7 Cheaper transport and communications costs on the global highway 88

4.1 The urbanization of the classical world 99

4.2 Plan of a medieval manor 103

4.3 The rise of merchant capitalism and the changing space-economy 105

4.4 Towns and cities of the Hanseatic League 105

4.5 The emergence of a European-based world-system 108

4.6 Transoceanic rim settlements of the mercantile era 110

4.7 Colonialism and urban settlement patterns 114

5.1 Output growth in Western Europe, 500–1990 118

5.2 Europe in 1875 121

5.3 Core and periphery in Europe 124

5.4 The American Manufacturing Belt in 1919 (after Conzen, 1981: 340,

Figure 9.13) 128

5.5 Index of manufacturing production for selected countries 134

6.1 Forces in the deindustrialization of the United Kingdom: dramatic loss of

competitiveness (1978–83) and consequent import penetration 148

6.2 Internet users 149

6.3 Boeing’s 787 Dreamliner global production system 165

6.4 The changing global geography of clothing manufacturing 168

7.1 The foreign automobile industry in the United States 184

7.2 Research and development (R&D) in the USA by U.S. affiliates of

foreign companies and R&D performed abroad by foreign affiliates

of U.S. TNCs 185

7.3 Geography of an Indian offshore services provider 187

7.4 The system of world cities 191

7.5 Employment by sector in the United Kingdom 195

7.6 Employment shares, by economic sector, USA 196

7.7 French competitiveness clusters 200

7.8 Regional inequality across the European Union 206

7.9 An index of deprivation in England in 2010, by district level

(average score) 207

7.10 The relationship between interregional inequality and levels of economic

development, as posited by Williamson (1965) 208

7.11 Regional trends in per capita incomes in the United States 209

7.12 Myrdal’s model of regional cumulative causation 210

8.1 Geographical extent of European political control, 1500–1950 214

8.2 Long waves and colonization: the two long waves of colonial expansion

and contraction 216

8.3 The Atlantic system, 1650–1850 219

8.4 Geographical distribution of British foreign investment, 1860–1959 220

8.5 Colonization of Africa: (A) 1850; (B) 1914 220

8.6 World steamship routes, by volume of trade, 1913 221

8.7 Telegraph system in Asia and Africa, 1897 222

8.8 Development of roads and railways in the River Plate region of South

America, 1885–1978 223

8.9 New states of the world since the Second World War 231

FIGURES ix

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8.10 Exports between and from developed and less developed countries,

2001–2010 236

8.11 Soviet and U.S. spheres of influence, 1982 238

9.1 External migration flows in Sub-Saharan Africa 257

10.1 Manufacturing as a percentage of GDP, 2010 286

10.2 Three “tests” of industrialization, 1975 and 2004 287

10.3 The geography of growth in manufacturing output, 1995–2005 289

10.4 Share of certain NIEs in total LDC exports, 2005–06 by value 289

10.5 Labour processes in three manufacturing industries 290

10.6 Locally owned electronics industry plants in Malaysia, 1999 291

10.7 Share of U.S. and European companies’ outsourcing contracts with

an offshore element, 2003–12 293

10.8 Manufacturing establishments of the Japanese electronics industry

in Asia, 1995 297

10.9 Economic and demographic growth in China 305

10.10 Percentage of China’s GDP from industry and services 307

11.1 Changing share of employment in primary, secondary and tertiary

sectors of the economy 314

11.2 Service employment and GDP per capita, selected countries 314

11.3 The world’s largest service providers 315

11.4 Service encapsulation 318

11.5 Submarine fiber-optic cable network 323

11.6 Percentage of workers in services 327

11.7 Informal economy and level of development 327

11.8 Average annual percentage growth in services 328

11.9 Service production 328

11.10 Exports and imports of services, 2010 330

11.11 International tourist arrivals and receipts, 2006 337

11.12 The world’s major stock markets 343

11.13 Major world areas of offshore banking 343

11.14 Global R&D service providers, 2012 347

12.1 Selected supranational integration agreements 358

12.2 Enlargement of the European Union 368

12.3 Regional policy in the European Union, 2007–2013 374

13.1 The Thatcher government’s rolling back of regional aid, 1979–84 385

13.2 Governmental decentralization of Russia, 1993 389

13.3 Geographical clustering of export shares in Italy, by province, 1985–1999 392

13.4 How plant size in the United States has shrunk 393

x FIGURES

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1.1 Technology systems and the evolution of the world economy 11

1.2 Global foreign exchange market turnover (daily averages, US$ billions) 17

2.1 World manufacturing 46

2.2 World’s top non-financial TNCs ranked by foreign assets, 2010 47

2.3 Types of special economic zone 48

3.1 The continuum of geographical incorporation into the world economy 65

3.2 The geographical development of the world economy in the nineteenth

century 66

3.3 The institutions and ideological basis of the world’s dominant capitalisms 72

3.4 The old and the new pillars of world trade 81

3.5 “Hymer’s stereotype”, in which the space–process relationship takes

the form A→B→C 87

3.6 Spatial transaction costs versus externalities: six scenarios 88

5.1 Growth rates in Europe 123

6.1 Percentage of value of shipments accounted for by the four largest

companies in selected manufacturing industries in the USA 156

6.2 Inter- and intra-regional merchandise trade, 2011 (US$ billions) 160

6.3 United States trade in goods and services with the European Union

(US$ billions) 161

6.4 Contrasts in production and labor: Fordism versus flexible production 163

7.1 Contrasts in governance: Fordism versus flexible production 182

7.2 World Internet users 199

7.3 Propulsive industries and new industrial spaces 203

8.1 Stock of foreign capital investment held by Europe, 1825–1915

(US$ billion) 220

8.2 World exports by region, 1876–1937, percent of total 224

8.3 World imports by region, 1876–1937, percent of total 224

8.4 Barter terms of trade and world prices for primary product commodity

groups 232

8.5 Adaptations to global capitalism 243

9.1 Food production per capita for selected countries (2004–2006 = 100) 249

9.2 Land, labor, capital, and markets: haciendas and plantations 252

9.3 Index of total (and per capita) gross agricultural production: selected

African countries (2004–2006 = 100) 255

9.4 Average farm size, 2010 258

9.5 A typology of land reforms 261

9.6 Selected export crops in some Latin American countries (metric tons) 266

10.1 Labor conditions in global manufacturing 278

10.2 Changing geography of manufacturing employment: paid employment in

manufacturing (millions of people) 279

Tables

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10.3 International variations in the concentration of incomes (higher figures

indicate greater inequality) 284

10.4 Manufacturing plants outside the USA owned or leased by top US

electronics corporations, 2013 292

10.5 Stages in South Korea’s export-oriented industrial development 296

10.6 China Mobile Limited’s cellphone global production system 298

10.7 The BRIC road to economic growth 309

11.1 Deciphering the outsourcing terminology 321

11.2 Changing employment in services as a percentage of total employment 326

11.3 EPZs targeting services 331

11.4 Wal-Mart retail stores 334

11.5 World’s largest financial TNCs, 2011 341

11.6 E-finance, 2009 342

11.7 Major international business process outsourcing (BPO) corporations 345

12.1 Average tariff levels (percent) for selected countries, 1988 and 2009–2011 359

xii TABLES

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1.1 Outsourcing and global commodity chains 14

1.2 Barbie: American icon and global product 16

2.1 HIV/AIDS and the impact on development in Sub-Saharan Africa 24

2.2 Indicators of well-being 26

2.3 E-waste and the digital divide 33

2.4 Migrant workers’ remittances 43

2.5 From darling to disaster: Iceland and the global financial crisis 56

3.1 Neoliberalism 77

3.2 The semiconductor industry and the workings of the market-access regime 84

5.1 Core and periphery in Europe 124

5.2 The growth of the U.S. manufacturing belt 127

5.3 Regional dimensions of Japanese industrialization 135

6.1 Technological breakthroughs and the information economy 150

6.2 Fast fashion and IT: Zara responds rapidly to changing customer demand 154

6.3 The changing geography of the clothing industry 167

6.4 The myth of the new industrial districts of the Third Italy? 170

6.5 Coming to America? 173

7.1 The Sunbelt 188

7.2 Agglomeration and the “relational turn” in economic geography:

Motorsport Valley 189

7.3 The digital divide 198

7.4 The demise of the Celtic Tiger 202

7.5 Hollywood and the cultural economy of cities 204

7.6 National economic development and regional inequality 208

8.1 The Asian financial crisis 240

9.1 The coffee commodity chain 248

9.2 From free trade to fair trade? 250

9.3 Agribusiness and the developed countries 263

9.4 The great land grab? 265

9.5 Science and rice 271

10.1 Dreaming the BRIC future 308

11.1 Bucking the Fisher-Clark thesis in China? Concurrent growth of

manufacturing and services 320

11.2 A day in the life of a call center worker in India 325

11.3 Wal-Mart® 334

11.4 Abu Dhabi, a tourist Mecca? 338

11.5 India’s competitive advantage in BPO 346

12.1 Genetically modified foods and U.S.–EU trade 375

13.1 International terrorism 389

Boxes

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The authors would like to thank the following organizations for permission to use the material

listed:

Figure 1.4 from “Shifting governance structures in global commodity chains, with special

reference to the Internet,” by Gereffi, published in American Behavioral Scientist 44, 2001,

with permission of Sage Publications.

Figure 2.8 from Energy in Brief: What is shale gas and why is it important? by E.I.A. (U.S.

Energy Information Administration, U.S. Department of Energy) 2012.

Figure 2.9 from Analysis and Projections: World shale gas resources: An initial assessment of

14 regions outside the United States by E.I.A. (U.S. Energy Information Administration,

U.S. Department of Energy) 2011.

Figure 2.10 from Aquatic Dead Zones by NASA, Earth Observatory, 2008.

Figure 2.13 from Vital Water Graphics: An overview of the state of the world’s fresh and

marine waters by UNEP (United Nations Environment Program) 2002.

Figure 2.14 from Living Planet Report 2010: Biodiversity, biocapacity and development by

WWF (World Wide Fund for Nature) 2010.

Figure 2.18 from Human Development Report 2009: Overcoming barriers: Human mobility

and development by UNDP (United Nations Development Program) 2009.

Figure 2.20 from Poverty Reduction and Social Development: Migration and the brain drain

phenomenon by OECD (Organization for Economic Cooperation and Development) nd.

Figure 2.21 from World Trade 2011, Prospects for 2012: Trade growth to slow in 2012 after

strong deceleration in 2011 by WTO (World Trade Organization) 2012.

Figure 3.2 from Corruption Perceptions Index 2011 by Transparency International, 2012.

Figure 4.1 from An Introduction to Urban Historical Geography, 1983, by Carter, with

permission from Routledge.

Figure 4.2 from the Historical Atlas, 1923, by Shepherd, with permission from the Perry￾Castañeda Library Map Collection, University of Texas at Austin.

Figure 5.2 from Peaceful Conquest: The industrialization of Europe, 1760–1970, 1981, by

Pollard, with permission of Oxford University Press.

Figure 6.1 from “Industrial restructuring: an international problem,” by Hamilton, published

in Geoforum 15, 1984, with permission of Elsevier.

Figure 6.3 from “Boeing’s outsourcing for the 787 Dreamliner,” published in Seattle Times,

2006, 29 September, with permission of Seattle Times.

Figure 7.2 from Science and Engineering Indicators 2012, 2012, by National Science Board,

with permission of National Science Foundation.

Figure 7.3 from The Offshore Services Value Chain, 2010, by G. Gereffi and K. Fernandez￾Stark, with permission of G. Gereffi, Duke University, North Carolina, Center on

Globalization, Governance, and Competitiveness (CGGC) http://www.cggc.duke.edu/

pdfs/CGGC CORFO_The_Offshore_Services_Global_Value_Chain_March_1_2010.pdf

Acknowledgements

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