Unit 7

Industry

any economic activity using machinery on a large scale to process raw materials into products

Raw materials

any metals, wood or other plant products, animal products, or other substances that are used to make intermediate or finished goods

Industrialization

the process in which the interaction of social and economic factors causes the development of industries on a wide scale

The Industrial Revolution

The change in manufacturing methods from small-scale, hand-crafted, muscle-powered production, to power-driven mass production

How were goods produced prior to the industrial revolution?

High quality craft goods were made in isolated, independent, small scale operations.

Cottage Industry

A form of manufacturing in which members of families spread out through rural areas and worked in their homes to make goods.

Where did the Industrial Revolution start?

The Industrial Revolution began in the 18th century in Britan, partially due to their access to natural resources.

What was the first Industry affected by Industrialization?

Textiles

What was the significance of the coal-powered steam engine?

It allowed for machines to produce massive amounts of a product. It also allowed iron workers to generate more heat, creating new ways to fashion iron.

How did industrialization diffuse through Europe and North America?

Relocation: The British textile manufacturer moved to the US in 1789, and his technology became the 1st center of industrial production in the US

What is the relationship between industrialization and the location of coal resources?

Where there was coal, industrialization was able to happen faster. Coal was the basis of the revolution, so the countries that had access to it industrialized

The first industrial revolution

When: 18th century

Powered By: Coal, Steam, and waterpower

Industries: Textiles, iron, and coal

Key Innovations: Spinning jenny, water frame, power loom, steam engine

The second industrial revolution

When: Late 19th century

Powered By: Electricity and internal combustion engine

Industries: Steel, automobiles, airplane, chemical, and consumer appliance

Key Innovations: Assembly line and machine tools

The third industrial revolution

When: After WWII (1945ish)

Powered By: Advances in computerization and miniaturization

Industries: Computer manufacturing, software engineering, telecommunications, banking, and insurance

Key Innovations: Computer changes

How did industrialization expand the middle class?

There was a rise in the amount of factories, which gave more people jobs. This lead to wealth being a marker of class.

What is the fourth industrial revolution?

The growth of robotics, information, and biomedical industries.

economic sector

Collections of industries engaged in similar economic activities based on the creation of raw materials, the production of goods the provision of services or other activities

primary sector

Jobs consisting of extracting, processing, producing an packaging raw materials and basic foods from the Earth.

secondary sector

Manufacturing, processing, and constructing finished goods by transforming raw materials

tertiary sector

Services for the general population and businesses to acquire and use finished goods

Quaternary sector

Knowledge and skills for complex processing and handling of information and environmental technology

quinary sector

High-level economic and social decision making through responsible institutions

relationship between urbanization and industrialization

Industrialization provides a city with more jobs, firstly typically working in factories. This causes more people to come to the cities for stable jobs, causing urbanization.

postindustrial economy

An economic pattern marked by predominant tertiary sector employment with a good share of quaternary and quinary jobs

What is happening in each of the sectors in a postindustrial economy?

Primary: Very low employment, many farmers moved to cities

Secondary: relatively low employment, workers must learn new skills in other fields

Tertiary: predominant employment

Quaternary: rising amount of jobs available

Quinary: rising amount of jobs available

Features of a postindustrial economy

Women get more advanced educations and make up more of the workforce; AI and IT have developed.

GDP

The total value of all goods and services produced by a country’s citizens within the country in a year

dual economy

Economies with two distinct distributions of economic activity across the economic sectors (ex. Brazil)

why do dual economies develop?

There are multiple theories some of which are resistance is due to tradition or agricultural workers don’t see enough benefit to moving to the secondary sector

Least-cost theory

A theory suggesting that business locate their facilities in a particular place because that location minimizes production cost.

3 factors of the least-cost theory

Transportation, Labor, and Agglomeration

Agglomeration

The tendency of enterprises in the same industry to cluster in the same area

break-of-bulk point

A place where goods are transferred from one kind of transport to another

Assumption of the least-cost theory

Ignore political or economic systemic influence; There are fixed amount of raw materials; workers who make up a labor force won’t move; There is a uniform transportation cost.

Bulk reducing industry

An industry where the raw material weighs more then the finished good

Bulk gaining industry

An industry where the raw material weighs less than the finished good

Bulk gaining/reducing influence on location

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Limitations of the least cost theory

Ignores political and economic influence; only works in capitalism systems; market is not located at a singular point

What has changed in manufacturing since the least-cost theory was proposed in 1909?

Use of airplanes, ships, and supertankers; Use of shipping containers; Higher labor cost; Many goods weigh less

Industrial park

A collection of manufacturing facilities in a particular area

Human Development

The process involved in the improvement of people’s freedoms, rights, capabilities, choices, and material conditions

Gross Domestic Product (GDP)

The total value of the goods and services produced by a country’s citizens within the country in a year

Gross National Product (GNP)

Per capita, the total value of goods and services globally produced by a country in a year divided by the country’s population

Formal Sector

Businesses, enterprises, and other economic activities that have government supervision, monitoring, and protection, and are taxed

Informal Sector

Any part of a country’s economy that is outside government monitoring or regulation, sometimes called the informal economy

Human Development Index

A measurement of LE at birth, education access, and GNI per capita to indicate level of development

Three Key Dimensions of HDI

LE at Birth - health dimension

Access to education, measured in years of schooling - education dimension

GNI per capita - economic dimension

Limitations of the HDI

Doesn’t reflect poverty, gender equality, environmental quality or sustainability; Doesn’t take into account lack of equal access to income, education, and healthcare; doesn’t consider political aspects

Gender Parity

A balance between the genders

Gender equality

When everyone has the same level of resources and opportunities for everyone, regardless of gender

Gender equity

The acknowledgment of how the lack of access to opportunities and resources affects people of different genders.

Gender Development Index (GDI)

A measure that calculates gender disparity taking knowledge and standard of living into account

Gender Inequality Index

A measure that calculates inequality based on reproductive health, empowerment, and labor market participation

microloan

A very small short-term loan with low interest indented to help people in need

Key strategies for investment in girls and women

Ensure that financial assets are in the hands of women; Keep girls in school; Improve reproductive health and access to family planning; Support women’s leadership

Sectors of economic growth

A model that suggests that all countries can be categorized on a spectrum from traditional to modern and to become modern, countries need to pass through defined stags of economic growth

Dependency Theory

A theory that explains the development challenges poorer countries face, it also explains the political and economic relationships between richer and poorer countries

Commodity dependence

When a country’s economy is reliant in the export of 1 or 2 resources

Comparative advantage

The ability to produce a good or service at a lower cost than others

Complementarity

When a country has the income, goods or services that another country desires

Neoliberalism

the belief that open markets and free trade across the globe will lead to economic development everywhere and also result in less political conflict or more democracy

Free trade

laws that encourage trade

How can government policies impact trade?

Policies can either encourage or discourage trade. Tariffs can be put in place to decrease dependent on foreign goods or to influence another country

Trading bloc

A group of countries that agree to acommon set trade rules

IFI

International financial institution - assists struggling countries with financing and provide professional development advice

IMF

An IFI with 190 member states that aids countries in need of financial assistance and promotes economic stability and provides loans.

Outsourcing

contracting work to non company employees or other companies

trans/multinational companies

Businesses that operate in multiple countries