HG Unit 2 - Economic Development & Globalization

absolute advantage

the ability to produce MORE QUANTITY of a given product using a given amount of resources

comparative advantage

the ability to produce a good at a LOWER OPPORTUNITY COST than another producer or country

opportunity cost

whatever must be given up to obtain some item

specialization

A focus on a particular activity or area of study

Production possibilities curve

the maximum number of two different goods an economy can make when it uses all its resources and technology efficiently

HUMAN DEVELOPMENT INDEX (HDI)

a measure of living conditions using factors such as life expectancy, education, and income

MORE DEVELOPED COUNTRIES

Country that is highly industrialized and has a high per capita GDP.

Less developed countries (LDC)

countries at a relatively low level of economic development

PRIMARY SECTOR ECONOMIC ACTIVITY

EXTRACTING and HARVESTING RAW MATERIALS directly from the Earth

SECONDARY SECTOR ECONOMIC ACTIVITY

Activities that add value to raw materials through some form of MANUFACTURING, CONSTRUCTING, or PROCESSING.

TERTIARY SECTOR ECONOMIC ACTIVITY

SERVICE-RELATED industries such as warehousing, retail stores, personal services (hairdresser, manicurist), commercial services (accounting, advertising, entertainment)

ECONOMIC BARRIERS

SOCIAL, POLITICAL, and ECONOMIC hurdles or obstacles that slowdown a country's ability to be more economically developed. Example, poverty poses the greatest risk to health, which causes workers to be less productive

ROSTOW'S 5-STAGE MODEL

All countries develop in a five-stage process. Development cycle initiated by investment in a takeoff industry that allows the country to grow a comparative advantage, sparks greater economic gain that eventually diffuses throughout the country's economy.

WORLD SYSTEM THEORY

categorizes countries into CORE, PERIPHERY, and SEMI-PERIPHERY and emphasizes the inequalities of the division of labor at the global level

Core Countries

INDUSTRIALIZED former colonial states that dominate the world economic system

Periphery Countries

the LEAST DEVELOPED and least powerful nations; often exploited by the core countries as sources of raw materials, cheap labor, and markets

Semi-Periphery Countries

the INDUSTRIALIZING, mostly capitalist countries which are positioned between the periphery and core countries

Rostow's stage 1

TRADITIONAL SOCIETY, characterized by a pre-industrial, subsistence-based agricultural economy

Rostow's stage 2

PRECONDITIONS FOR TAKEOFF: An elite group/ leadership initiates development through investment in innovative activities, there is a shift to the MANUFACTURING Sector, trade relations with other nations develop, and more technical knowledge is learned that improves the economy

Rostow's Stage 3:

TAKEOFF stage with MANUFACTURING jobs expanding

Rostow's Stage 4

DRIVE TO MATURITY: Increased manufacturing SPECIALIZATION and INTEGRATION into the GLOBAL ECONOMY, technical achievements diffuse throughout the country, advancements are seen in many sectors of the economy, workers become increasingly skilled and educated, and fewer people are engaged in traditional activities

Rostow's Stage 5

AGE OF MASS CONSUMPTION: ADVANCED SECTORS of the economy emerge (Tertiary, Quaternary, and Quinary), HIGHLY SPECIALIZED production dominate the economy, technical knowledge and education levels are high, and agriculture is mechanized and employs a small labor force.

infrastructure

Fundamental facilities and systems serving a country, city, or area, as transportation and communication systems, power plants, and schools

deindustrialization

process by which INDUSTRIAL JOBS MOVED to other regions with cheaper labor, leaving the newly deindustrialized region to switch to a service economy and to work through a period of high unemployment

post-industrialization

the SHIFT FROM an industrial economy dominated by manufacturing jobs to an economy dominated by SERVICE-ORIENTED information-intensive occupations.

property rights

the ability of an individual to OWN and exercise control over scarce resources

Gross Domestic Product (GDP)

The TOTAL MARKET VALUE of all the FINAL goods and services produced in a nation in a given year

Inflation

a general INCREASE in prices and fall in the purchasing value of money.

deflation

a DECREASE in the general level of prices

Purchasing power parity

a measure of the price of specific goods in different countries

subsidy

government payment to encourage or protect a certain economic activity

quota

a limited or fixed number or amount of people or things, in particular.

market economy

Economic decisions are made by individuals and private enterprises or the open market.

command economy

An economic system in which the government controls a country's economy.

Scarcity

Limited quantities of resources to meet unlimited wants

net export

total exports minus total imports

trade deficit

situation in which a country imports more than it exports

Outsourcing

Hiring workers in other countries to do a set of jobs

Reshoring

moves foreign production and jobs back to domestic locations

GDP per capita

Gross domestic product divided by the number of people in the population.