According not the profits of the next
According to Hoover, economic systems are dynamic entities, and the nature and consequences of the changes that take place in these systems are of great importance. This change affects the well-being of the individual and ultimately the social and political fabric of society and the nation. Hoover represents a framework in which the regional economy can understand the spatial character of the economic systems. They think that determining the factors that determine economic activity distribution and this distribution will have important consequences as individuals and communities change.
Economists have traditionally ignored where the problem is and have not given a spatial dimension to their analysis. Traditional geographers are directly concerned with where they are, they lack the explanatory techniques of human behavior and institutions. They only made explanations and mates. Likewise, traditional city planners are concerned with the physical and aesthetic aspects of idealized urban regimes. Main production sectors such as production within the economic system; There are various industries in the manufacturing industry.
Since a location choice represents a commitment to a site with cost and risk at each location change, it is known that it expresses not the profits of the next week but the expected return in a significant future period. Thus, the prospective growth and dependability of returns are always relevant aspects of the evaluation. Although there are a wide variety of position units, all are at a certain level sensitive to certain basic position factors. Thus, the advantages of locations (for any type of unit) can be categorized into a standard set of several items. To sum up, the relative desirability of a location depends on four types of location factors: 1. Local input: the supply of nontransferable inputs at the location in question 2. Local demand.’ the sales of nontransferable outputs at the location in question 3.
Transferred input: the supply of transferable inputs brought from outside sources to the location in question, reflecting in part the transfer cost from those sources 4. Outside demand: the sales of transferable outputs to outside markets; in particular, the net receipts from such sales, reflecting in part the transfer costs to those markets. (E.M. Hoover, AN INTRODUCTION TO REGIONAL ECONOMICS, page 22-34) 1- In Hoover’s industrial location theorya- Main AssumptionsHoover say ‘Location theory is the attempt to understand how a specified unit or type of economic activity- e.g. a business establishment, a household, and industrydevelops and exercises a preference for certain locations and finds.a location in reference to other units or types.
‘ Hoover tried to come up with the least costly position theory to overcome some of the weaknesses of Weber’s theory. Another assumption, Hoover tries to come up with some weaknesses of Weber’s theory and try to come up with the least costly position theory. Initially, it started with the assumption of perfect competition among producers or sellers anywhere. Second, it assumes excellent mobilization of production factors and takes transportation costs, production or disposal costs as locators. First, extractive industries evaluate the location of their deposits and try to find the area where each production site will serve. The price delivered for any buyer will be the cost of extraction and transportation.
In addition to the location service with the least transportation cost, it was discussed in a cheap retirement location. And in this way it has created a production location that will save labor costs and save up the increased transfer costs. Unlike Weberden, it takes into account other factors that influence location. And he studies a manufacturing enterprise in 3 stages. First stage; Purchasing: buying raw materials and materials and going to the field of business. The second phase; Business: transforming the material into more valuable forms.
The third stage is; Distribution: selling and distributing products. According to Hoover, there are two important factors in industrial site selection. These two factors are the most important for industrial location (i) production cost and (ii) transport cost. If there is no change in production cot, transport cost is the only variable that affecting price of commodity. Hoover includes the influence of diminishing returns to scale. Hoover includes the influence of diminishing returns to scale.
According to Hoover that extractive industries characteristically operate in a situation where average cost rises with increasing production as the market area gets bigger. (A SURVEY OF INDUSTRIAL LOCATION THEORY, psge 37-40) b- Regional Economy Theory ?n Planning; It is an approach to explain the regional growth. The basic idea is that it is simple in the sense that some activities in a region lead to the growth of the region and the general development of the region; while the other (nonbasic) activities are only the general development of the zone. This is the realization of the basic activities, the explanation of the regional growth, consists of two parts: the on-site announcement of the primary activities, the development of the activities of the latter one, not the basic activities of any region. His time-based economic basic theory defines basic activities, bringing money from the outside world, producing goods by exporting goods or services. Another point of view in terms of regional economy; regardless of the price strategy, it’s an outlet-oriented dealership.
The manufacturer should evaluate the advantage of any location on the basis of how much the demand for shoveling is within the market area. These advantages help to transport wages and labor. The previous labor cost is high. But the cost of labor is low. In this case, according to Hoover, the lowest total spot or intermediate spot is the most advantageous place.
When we look at the regional economy scale; house preferences, decisions of units such as households or business firms, and the behavior of all industries or areas such as cities or regions. He examines the relationship of the distance to the cost of the space movements of services and services. For example, a company producing oil drilling or refining equipment should be interested in relocating to the petroleum industry, but a commercial firm that is pleased to enter a market conveniently will be interested in more competitive positions. (E.M. Hoover, AN INTRODUCTION TO REGIONAL ECONOMICS) c- Critiques Hoover’s location theory critiques are firstly Hoover’s approach has limitations.
Transportation cost, production cost and demand emphasis. However, the demand remains very much in the financial sector. Another critiques unless there is a variable in the cost of production, the cost of transport is the only variable that affects the price. And the transportation charge defined by Hoover shall be accepted only as a transit charge on raw materials and finished goods. 2- In Greenhut’s Maximum Profit Location Melvin Greenhut was the first person to make a major effort to integrate the least-cost and interdependent theories of the place. With two books, he tried to look at the influence of the space on conventional economic theory and both in terms of cost and demand factors, as well as price and market factors, trying to explain the location of businesses.a- Main AssumptionsAccording to Greenhut, three possible choices to explain a plant location : (1) a maximum-profit and maximum-satisfaction theory ; (2) a maximum-profit theory which attains generality by defining psychic income as a part of maximum profit ; and (3) a general maximum satisfaction theory which makes either maximum profits or maximum pecuniary plus non-pecuniary returns equivalent to maximum satificaiton.
Both in terms of cost and demand factors, as well as price and market factors, trying to explain the location of businesses. And another assumptions is according to Greenhut, the least costly approach and demand or market approach is a unilateral approach. Greenhut is trying to integrate both the lowest cost as well as the demand approach to find the profit maximization site. For this reason Greenhut’s Theory of Industrial Theory includes factors such as cost factor, demand factor, cost reduction factor, income increasing factor. And Greenhut transportation cost influencing location only when the cost of transportation forms a substantial part of total cost.
Greenhut has adopted maximizing revenue as the optimum location finding criteria to integrate the ‘lowest cost’ and ‘location interaction’ approaches. Greenhut again tried to draw attention to the demand factor. Demand depends on site selection and costs, and is more variable than cost. (A SURVEY OF INDUSTRIAL LOCATION THEORY)b- Regional Economy Theory ?n Planning; If we look at regional planning, an entrepreneur will tend to save in transport if he or she makes a large part of the total cost of transport costs; but this will only be possible if the transfer costs vary considerably in different locations.
Material routing is seen as a product of shipping costs and comes in two special cases. These are where the materials may deteriorate and the shipping cost of the material is much higher than the finished product. As a result, it may be expected that the location of processing costs will be affected where shipping costs or demand factors do not require material or market orientation. (Greenhut M. L. (1956), Plant Location in theory and in practice)c- CritiquesGreenhut’s maximum profit location theory critiques are firstly despite Greenhut’s emphasis on the demand factor, the theoretical and empirical research was later occupied with the cost approach.
And second critiques is he makes useful distinction between demand as an area determining factor of location selecting one area for location instead of others because of the greater size of the market in the one and demand as the site determining factor of location which involves choice in relation to the location of competitors.