AP HUG Unit 7

self study

What is Unit 7 all about?

Mainly all about economic development - economic sectors, how the industrial revolution effected economic development, various measures of development, theories of economic development, how women affect it

Also includes trade & the world economy, today’s global economy, changing economic effects, and sustainability

The Industrial Revolution

A historical process when agrarian economics transformed into industrial economies

What happened as a result of the industrial rev.?

Factories produce more goods = less need for people & can charge less for products

How did the industrial revolution start its beginning?

The industrial revolution got its start from the development of new technology, such as agricultural techniques - made crops give more and become more efficient

How did consumer goods production grow in factories?

With a factory system made up of new inventions of the time & access to natural resources

Examples:

water frame

steam engine

spinning jenny

Water Frame

This invention positioned water to give power to machines in factories

Steam engine

It created machines without running water

Spinning Jenny

This invention allowed for the production of mass-scale textiles

Social consequences of the Industrial Revolution

Increased global food supply

Increased population

increased migration and urbanization

changed class structures (commercial farming & wage labor and the working, middle, and upper/capitalist classes)

What did industrialized countries want during the industrial revolution? What did it create as a result?

Industrialized countries wanted raw goods and new markets, which created a 2nd wave of imperialism

Development

A country’s relative level of economic well-being - how rich or poor a country is

What does wealth depend on for countries?

Wealth depends on how industrialized a nation is

Economic sector

The kind of products produced in a place and the kind of jobs available to its workforce

Primary - economic sector

The poorest of five economic sectors, in which this sector extracts raw materials (mining, fishing, etc)

Secondary - economic sector

The second poorest sector of five that processes raw materials from Primary sectors - they do most of the world’s manufacturing

Tertiary - economic sector

The third of five sectors that provides services to businesses/consumers

Quaternary - economic sector

The fourth of five economic sectors that gives services that require a higher education and expertise level

Quinary - economic sector

The fifth of five economic sectors that includes top influential economic people, such as government officials and CEO’s of the world’s largest corporations

These people are always withing Quinary’s

Least-Cost theory

Developed by Alfred Weber, which suggests that factories locate themselves in the most cost-efficient location for business operations

What are two determining factors for Least-Cost theory?

Distance and weight

Location factors for businesses to find a new location to build

Least-Cost theory

access to energy

access to materials

transportation

Fragility Theory

explains that political orders fail when they can no longer project authority, provide basic public services, maintain territorial integrity, or protect their citizens' rights

Break-of-bulk points

Major transportation hubs (airports for example) that ship and deliver bulk quantities on unpackaged goods, such as coal or timber

shipping containers

Standardized metal boxes used to ship non-bulk cargo (food and clothing) or raw materials

Gross National Product (GNP)

A method to measure economic output by measuring the total value a nation produces in a given period of time - focuses on products

This is done regardless of where the good is produced

Example of GNP

Ford Motor Company manufactures a car in a Detroit plant, and the vehicle's value is counted toward U.S. GNP. If Ford also produces a car in a manufacturing plant in Germany, the profit from that German operation is sent back to the United States and counts toward U.S. GNP. Conversely, the profits made by Toyota (a Japanese company) producing cars in Kentucky are counted in Japan's GNP (because it is Japanese-owned), not the U.S. GNP

Gross domestic product (GDP)

A way to measure economic output of a country/nation by measuring total value of goods and services within a coutry’’s borders in a given time - it is all about the location where the good is produced

Example of GDP

If a Japanese company, like Toyota, builds and sells cars in Ohio, that factory’s production adds to the United States' GDP, not Japan's (which would be tracked as Japan's GNP or GNI)

Gross National Income (GNI)

The total income earned by a country’s businesses and labor force, which include GDP and citizen’s earning produced overseas

This focuses n the value of income earned through economic activity and foreign investment

GNI per capita

Divides GNI by a country’s population, which gives an average, but not distribution of GNI

Income distribution

Considers the difference between the wealthy and the poor

What does it mean if a nation’s fertility rate is going down, relatively speaking?

A nation is relatively more developed when the fertility rate goes down

Relatively speaking, what does it mean if a country’s infant mortality rate goes down?

Relatively speaking, a country’s infant mortality rate going down means that that nation is more developed

What does access to healthcare mean for countries?

Access to healthcare in countries are, relatively speaking, more developed

Formal sectors

Every business that is part of and registered according to state and national laws

Informal sector

All kinds of economic activity - they operate outside of government oversight

Gender inequality index (GII)

A social measure that measures equality/inequality of the ender ratio in a given society

Empowerment

The percentage of women with high education

Labor market participation

the percentage of a country's working-age population that is employed or actively looking for work; this is used as a core social and economic indicator to measure a population's productivity, size of the labor supply, and level of gender equality

Human Development Index (HDI)

This measures human well-being in a given society - includes bits of everything else (the last few flashcards)

What happens to women’s role in society as countries develop economically?

Women’s roles in that society change

What happens as a result of women gaining higher education?

There is a delay in marriage and have less babies

Gender parity

Equality between men and women ni terms of access to education and earned wages from work

What happens when there is various levels of economic development?

Levels of development = levels of gender parity; less development = less parity, opposite also true

Wage gap

A phenomena that appears often in most developed countries, in which women are often paid less than men for the same amount of work

Microlending

A practice that empowers women economically to help them start/grow a business - given to impoverished women

How much of a role does geography play in a country’s economic development

Geography plays a big role in a country’s economic development

Global North

wealthy, industrialized, and highly developed countries primarily located in the Northern Hemisphere (like the US, Canada, Western Europe, and Japan)

Global South

encompasses less developed, emerging, or poorer nations

Rostow’s stages of economic development

One of the four major frameworks to theories of economic development that says that every country will ultimately pass through 5 stages of development

It roughly goes along with the DTM

Main criticism of Rostow’s stages of economic development

It is too simple to explain reality because it is based on European and Anglo-American development

Dependency theory

One of the four major frameworks to theories of economic development that argues that peripheral countries are poor because of consistent explanative economic practices carried out by core countries - neocolonialism

Wallerstein’s World Systems Theory

One of the four major frameworks to theories of economic development that says that the world progressed through several stages of socioeconomic systems - the world today arrived at a time with an interconnected capitalistic economic system, which plays out in nation-state economies

World systems theory

One of the four major frameworks to theories of economic development that explains uneven distribution of development in the world, saying that core countries aren’t special, just started industrialization earlier

Why are peripheral countries the least developed nations?

Peripheral countries are the least developed nations because of imperialism from developed countries

Commodity dependency theory

One of the four major frameworks to theories of economic development that suggests a strong link between economic underdevelopment and countries whose economies are dominated by commodity exports

The percentage of a country’s economy devoted to commodity export often determine development levels

• long-term = prices steadily decrease over time

• short-term = prices fluctuate

Complementarity

Countries trade because no one country has the capacity to create/extract all the goods/resources for economic flourishing

Comparative advantage

A country specializing in a certain set of goods because they produce it more efficiently than anyone else

Neoliberalism

Movement to promote free trade and reduce government interruption to trade relationships

What does a reduction in barriers mean for the economy?

A reduction in barriers = growth in economy

European Union (EU)

Created after WWII to manage issues within the Europe region/continent

Mercosur

Known as the Southern Common Market, it is a South American trade bloc established in 1991 by Argentina, Brazil, Paraguay, and Uruguay (with Bolivia and Venezuela also joining). It promotes regional economic integration, free trade, and the movement of goods and people

Mercosur is classified as a supranational organization. It serves as a prime example of how neoliberal policies and free trade agreements foster globalization

Organization of Petroleum Exporting Countries (OPEC)

an intergovernmental cartel of major oil-producing nations that coordinates petroleum production and prices to stabilize the global market and secure steady revenue for its members.

Unlike trade organizations (like the WTO or EU) that exist to lower tariffs and promote free trade, OPEC functions as a cartel. Members agree to limit supply together to deliberately raise global prices, exerting major influence over the world economy

In Unit 7 (Trade and the World Economy), OPEC is a prime example of global economic interdependence. When OPEC adjusts its production quotas, every country that relies on imported petroleum feels the ripple effects at the gas pump

World Trade Organization (WTO)

This organization regulates global trade & assist in trade deal negotiations, acting as a mediator for countries

Tariffs

Taxes on imported goods

Why are tariffs created?

Tariffs are created to protect domestic industry

What is a negative effect that tariffs can cause?

Political rivalries - can cause trade wars between nations, which can drastically raise the prices of certain imported goods

Effects of a financial crisis

Because each country is so interconnected, it effects everyone

Great Depression

Global Financial Crisis

Solution to a financial crisis

Establishment of international leading organizations

International monetary fund

An organization that promotes economic development by reconstructing a country’s loan/overhauling their entire economy

Deindustrialization

A form fo economic restructuring, in which it is the disappearance of industrialized sectors

Fordism

A form of economic restructuring, in which the economy is structured around mass consumption and mass production of standardized goods

Why does Fordism eventually go away?

Fordism goes away when manufacturing in core countries costs more/becomes more expensive

Changing labor sectors

A form of economic restructuring, in which companies move production to peripheral and semi-peripheral countries because wages and production costs were lower

What type of work dominates core countries?

Knowledge work dominates core countries

New manufacturing zones

Created to keep trade barriers low - there are 3 kinds of them

Special economic zone (SEZ)

A type of new manufacturing zone, in which business and trade laws are different from the rest of the country inc ertain sectors - created to attract foreign investment

Export Processing Zone (EPZ)

A type of new manufacturing zone, in which it lower taxes and has less strict labor laws - a subtype of SEZ

Free trade zone (FTZ)

A type of new manufacturing zone, in which it is tax-free

Post-Fordism

Dispersal of the manufacturing process to multiple sites around the world became common practice

Multiplier effects

Phenomena that has one job create other jobs

Just-in-time delivery

Process of manufacturing smaller batches of goods in response to consumer demand - reduces need for a large, permanent workforce

Agglomeration economies

Spatial concentration of businesses in a similar industry within the same geographic area

Often found in high tech sectors; referred to as growth poles/technopoles

Natural resource depletion

A problem with sustainability, in which manufacturing relies on non-renewable resources

What factor continues putting pressure on the environment?

The growing demand for consumer goods puts pressure on the environment

Climate change

warmer Earth can cause a chain reaction of problems around the world

Ecotourism

A solution to sustainability, in which it is the effort to protect natural landscapes against industrial encroachment by creating sustainable tourist spots

What benefits does ecotourism provide?

It provides locals economic benefits

portion of the revenue is allocated for environment protection

infrastructure created to support ecotourism end up impacting a small portion of the poorer country’s population

What goals does the UN have for sustainability?

Since 2000, the Un released multiple goals for sustainability as a response to environmental and social injustice concerns

Many UN members embraced goals, but progress is very slow