Economic Geography
Explore the spatial distribution of economic activities worldwide. Understand why businesses locate where they do and how global trade shapes our world.
From farming to software development, learn about the economic sectors and forces that drive global commerce.
1Introduction
Think about your morning routine: the coffee you drink, the clothes you wear, the phone you use. Where did each item come from? How did they get to you?
Economic Geography studies where economic activities occur, why they occur there, and how they are connected globally. It helps us understand everything from why cities develop where they do to why your clothes are made in different countries.
Interactive: Economic Geography Timeline
Click on any event to learn more.
2Key Definitions
Economic Geography
Study of where economic activities occur and why.
Supply Chain
The entire process from raw materials to final customer.
Agglomeration
Clustering of similar businesses in one area for shared benefits.
Globalization
The increasing interconnectedness of world economies.
3Economic Sectors
Economies are divided into sectors based on the type of activity:
Primary Sector - Extraction
Farming, mining, fishing — extracting raw materials from Earth.
Secondary Sector - Manufacturing
Factories, construction — turning raw materials into products.
Tertiary Sector - Services
Retail, healthcare, education — providing services to customers.
Quaternary Sector - Knowledge
Research, IT, finance — information and knowledge-based services.
4Location Theory
Why do businesses locate where they do? Geographers have developed models to explain this:
- Von Thünen's Model (1826): Agricultural activities arrange in rings around a central market. Perishable goods (dairy) are closest; less perishable (timber) are farthest.
- Weber's Industrial Location Theory (1909): Industries locate to minimize transportation and labor costs.
- Agglomeration: Companies cluster together to share infrastructure, labor, and knowledge.
5Globalization & Supply Chains
Globalization connects economies through trade and investment:
- Drivers: Transportation advances, trade agreements, multinational corporations, communication technology.
- Supply Chains: Products are made across multiple countries, with each step happening where it's most efficient.
- Offshoring: Moving operations to another country to reduce costs.
- Deindustrialization: Decline in manufacturing activity, often due to outsourcing.
COVID-19 Impact
The 2020 pandemic exposed vulnerabilities in global supply chains, leading to discussions about reshoring and diversification.
6Trade & Development
International trade shapes economic development:
Free Trade
- Lower consumer prices
- More choices
- Economic specialization
Protectionism
- Protects domestic jobs
- National security
- infant industry support
MMemory Aids
Primary = Pick (extracting), Secondary = Shape (manufacturing), Tertiary = Touch (services), Quaternary = Query (knowledge).
Quick Revision Summary
- ✓Economic sectors include Primary (extraction), Secondary (manufacturing), Tertiary (services), and Quaternary (knowledge).
- ✓Location theory explains why businesses locate where they do (Von Thünen, Weber).
- ✓Agglomeration is clustering of similar businesses for shared benefits.
- ✓Globalization connects economies through trade, supply chains, and multinational corporations.
- ✓Offshoring moves operations to another country; outsourcing contracts work externally.
Frequently Asked Questions
- What is the difference between outsourcing and offshoring?
- Outsourcing is contracting work to an external provider, which can be domestic or international. Offshoring specifically refers to moving a company's operations to another country to reduce costs.
- Why do companies cluster together in certain areas?
- Companies cluster through agglomeration to share infrastructure, labor pools, and knowledge. This creates benefits like reduced transportation costs, access to specialized workers, and knowledge spillovers.
- What is Von Thünen's Model?
- Von Thünen's Model explains the spatial arrangement of agricultural activities around a central market. It shows that perishable goods (dairy, vegetables) are grown closest to the city, while less perishable goods (timber, grain) are grown further away.
- How does globalization affect developing countries?
- Globalization can bring jobs and investment to developing countries through foreign direct investment. However, it can also lead to dependency on developed nations, exploitation of workers, and vulnerability to global economic fluctuations.
- What is a supply chain?
- A supply chain is the entire process of making and selling a product, from raw materials through production to the final customer. It includes suppliers, manufacturers, distributors, retailers, and customers.
Practice Quiz
Test your understanding — select the correct answer for each question.
1.Which economic sector involves the extraction of raw materials from the Earth?
2.The clustering of similar businesses in one area, leading to shared benefits, is known as:
3.According to Von Thünen's Model, which agricultural activity would likely be found closest to the central market?
4.When a company moves a part of its own operations to another country, often to reduce costs, it is called:
5.Which of the following is an argument often made in favor of free trade?
6.The decline in industrial activity in a region, often due to automation or moving production overseas, is called:
7.Which of these is NOT considered a major driver of globalization?
8.A company that develops new software applications would primarily belong to which economic sector?
9.The entire process of making and selling a product, from raw materials to the final customer, is called the:
10.Which model emphasizes that industries will locate to minimize transportation and labor costs?
Final Study Advice
- 1.Remember the four sectors: Primary, Secondary, Tertiary, Quaternary.
- 2.Understand Von Thünen: perishable goods closest to market.
- 3.Know the difference between outsourcing and offshoring.
- 4.Think about both benefits and challenges of globalization.
- 5.Connect concepts to real examples: container shipping, NAFTA, supply chain disruptions.