industry and development terms (AP HUG)

industrial revolution

shift from farming to factories using machines, causing urbanization and economic change

location theory

explains why businesses choose certain locations

variable costs

costs that change (up or down) depending on how much a business produces

friction of distance

distance creates costs or obstacles (like time, money, and effort) that reduce interaction between places

least cost theory

explains how industries choose locations that minimize costs (especially: transportation, labor, and agglomeration)

agglomeration

clustering or grouping of people, businesses, and economic activities in a concentrated area to gain economic advantage

deglomeration

industries or economic activities spread out or disperse from a clustered or concentrated are (due to disadvantages outweigh benefits of being clustered)

locational interdependence

a business’s location choices depend on competitor locations

multiplier effect

one economic boost leads to more growth in the region

break of bulk point

location where goods are transferred from one mode of transportation to another

fordist

economic and production system based on mass production of standardized goods using assembly lines

post fordist

flexible and tech based production instead of mass assembly line

just in time delivery

materials arrive just when they’re needed to a factory or production site

global division of labor

countries specialize in different parts of production

intermodal connections

places where transport modes connect so transfers can happen

deindustrialization

decline of manufacturing and industrial jobs (shifts to service based economy)

outsource

hire external workers or companies to do tasks for you

offshore

economic activity taking place in another country (often to reduce costs)

technopole

a high tech hub where technology companies and research cluster

primary activity

extracting or harvesting natural resources

secondary activity

processes, manufactures, or transforms raw materials into finished goods and products

tertiary activity

providing services, not making goods

comparative advantage

explains how countries benefit by specializing in producing goods or services that they can make at a lower opportunity cost than others and then trading with each other

absolute advantage

producing more of a good or service using the same amount of resources, or the same amount with fewer resources than others

substitution principle

firms swap resources (like labor vs capital) to minimize costs and maximize profit

quaternary activity

services based on knowledge, research, and information

quinary activity

high-level decision making and specialized services

vertical integration

business strat where a company controls multiple steps in its supply chain

synergy

working together to achieve more than working individually

gatekeepers

people or groups that control who gets access to info, resources, or opportunities by deciding what gets through and what doesn’t

horizontal integration

when a company grows by joining with or buying other companies that do the same kind of thing

commodity chain

all the steps a product goes through from raw materials to purchase

gender inequality index (GII)

a measure of gender inequality based on health, empowerment, and work participation (0= low inequality, 1=high inequality)

gross national product (GNP)

value of goods and services produced by a country’s citizens and companies, anywhere in the world

gross domestic product (GDP)

total value of goods and services produced inside a country in a year

gross national income (GNI)

total income earned by a country’s citizens and businesses wherever they are (at home or abroad)

per capita GNI

total income of a country’s residents divided by total population (tells average income per person)

formal economy

legal and regulated economic activity that pays taxes and follows government rules

informal economy

jobs and businesses not regulated or tracked by the government

rostow's modernization model

a five stage model showing how countries develop economically from traditional to advanced economies

neocolonialism

indirect dominance of powerful countries over less developed ones, especially through economies and influence rather than direct rule

structuralist theory

development theory that blames structural economic barriers and global inequality for underdevelopment

dependency theory

poor nations stay poor because they’re economically dependent on rich nations in a global system that benefits the wealthy and exploits the less developed

dollarization

using the U.S. dollar (or another foreign currency) instead of your own money

world systems theory

a global economic system where core countries benefit most and peripheral countries remain less developed

neoliberal economic policies

market driven policies that reduce government control and promote free trade and privatization

structural adjustment loan

money that global lenders (usually IMF or world bank) give to a country that is in financial trouble, but only if that country agrees to make major economic changes

human development index

ranking or countries based on health, education, and income

export processing zones

designated areas in a country where governments offer special incentives (tax breaks, relaxed regulations) so that companies (often foreign) can manufacture or assemble goods specifically for export

maquiladoras

duty free factories in Mexico that assemble imported parts and export finished goods

special economic zones

a special area with different, business-friendly rules to attract companies and boost economic activity

NAFTA

trade agreement between the US, Canada, and Mexico that removed most trade barriers to boost trade and economic integration

MERCOSUR

a south american trade bloc that promotes free trade and economic cooperation among member countries (agrentina, brazil, paraguay, and uruguay)

nongovernmental organizations (NGOs)

independent nonprofit group working to solve social, environmental, or humanitarian problems

microcredit program

a service that gives small loans to poor individuals so they can start or grow businesses