Chapter 7: Industrial and Economic Development Patterns and Processes

sectors

sectors

different categories the economy can be divided into

primary production

includes agriculture, mining, energy, forestry, and fisheries

secondary production

includes the processing of the raw materials drawn from the primary sector

tertiary production

includes the transportation, wholesaling, and retailing of finished goods to consumers

quaternary production

includes wholesaling, finance, banking, insurance, real estate, advertising, and marketing (business services)

quinary production

includes retailing, tourism, entertainment, and communications, government, or semi-public services such as health, education, and utilities (consumer services)

commodity chain

exists from the small-scale, family-based producers selling directly from the farm or through local farmers’ markets to transnational supply networks selling to an international customer base

resource processing

oil refineries, metals, plastics, chemicals, lumber, paper, food and beverage, concrete and cement, glass

textiles

clothing, shoes and leather products, artificial fibers and thread

furniture

home, office, bedding

appliances

home appliances, commercial equipment, power tools, lighting

transport

automotive, rail, aerospace, shipbuilding, recreational vehicles

health

pharmaceuticals, medical devices, personal care products

technology

home computers, business computing and servers, industrial control devices, phones, television and audio entertainment

low-benefit services

sectors in which the labor force tends to be hourly employees who receive few if any additional benefits, like paid vacation or health insurance

high-benefit services

sectors in which pay tends to be salaried and includes considerable fringe benefits like health, dental, and vision insurance; vacation; sick days; and retirement reimbursements

deindustrialization

shifting away from manufacturing as the main source of economic production

First World

industrialized and service-based economies that have free markets, a high level of productivity value per person and a high quality of life

Second World

describes the communist countries of which only two communist states remain today: Cuba and North Korea

Third World

countries with mainly agricultural and resource-based economies that have low levels of per-person productivity and a low quality of life

newly industrialized countries (NICs)

Third-World states with economies that have made a distinct shift away from agriculture and toward manufacturing as the focus of economic development and production

foreign aid, or foreign direct investment

funds to develop infrastructure and factories can come from internal sources

technology transfer

where technical knowledge, training, and industrial equipment is provided to NIC governments to increase business efficiency and capacity

Asian Tigers

a term used to describe the industrial economies of Asia that have been aggressive in terms of economic growth rates and their ability to compete for consumers

credit crunch

results from banks and investors holding back on industrial loans and investments

economic indicators

used to help understand the variable levels of development and measure the degrees of uneven development between states

gross domestic product (GDP)

the dollar value of all goods and services produced in a country in one year

gross national income (GNI)

the dollar value of all goods and services produced in a country, plus the dollar value of exports minus imports in the same year

trade surplus

EXPORTS > IMPORTS

trade deficit

EXPORTS < IMPORTS

per capita

“for every head” in Latin, meaning for each person

gross national income (GNI) per capita

the estimated income of a person converted to U.S. dollars at currency exchange rates

gross national income purchasing power parity (GNI PPP)

an estimate that takes into account differences in prices between countries

Human Development Index (HDI)

designed by the United Nations to measure the level of development of states based on a number of social indicators in addition to economic production

Gini coefficient

measures the level of income disparity between the country’s richest and poorest population groups on a scale of 0 to 100

Gender-Related Development Index (GDI)

takes the same indicators used to calculate HDI but replaces GDP per capita with income

dependency theory

holds that most LDCs (including all NICs) are highly dependent on foreign-owned factories, foreign direct investment, and technology from MDCs to provide employment opportunities and infrastructure

Prebisch thesis

detailed the dependency of Third-World economies on First-World loans and investments to pay for the building of new industries and infrastructure

ecotourism

tourism directed toward exotic, often threatened, natural environments, intended to support conservation efforts and observe wildlife

special economic zones (SEZs)

a type of export processing zone, defined as port locations where foreign firms are given special tax privileges to incentivize trade

Wallerstein's World Systems theory

sought to explain uneven development around the world in the 1970s

weight-losing/bulk-reducing manufacturing

involves a large amount of input that is reduced to a final product that weighs less or has less volume or bulk than the input

weight-gaining/bulk-gaining manufacturing

involves a number of inputs that are combined to make a final product that gains bulk, volume, or weight in the production process

supply chain

exists when parts are assembled into components that are then joined together to create larger finished products

Fordist production (Fordism)

relied on a single company owning all aspects of production, from steel manufacture to advertising

just-in-time production

methods in which suppliers send parts to assembly plants on an as-needed basis

spatial margin of profitability

the area where local demand for a service creates revenue higher than the local costs of doing business

footloose industry

businesses whose locations are not tied to resources, transportation, or consumer locations

agglomeration economies

exist where firms with related or similar products locate together in clusters or regions

deglomeration

occurs when a location is overloaded with similar firms and services

economies of scale

achieved when producers expand their operations but incur lower per-unit costs in the process

economies of scope

in which companies benefit from the increase in the number of different products under a larger brand name