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Industrial Revolution
the term used for the transformation from an agricultural society to an industrial society as a result of new technologies and facilitated by the availability of natural resources (resulting in factories, mass-produced goods, and assembly lines that replaced handmade goods)
industrialization:
process that occurs when countries evolve from primarily agricultural producing basic, primary goods to one based on mechanized mass manufacturing of goods (craftsmen are replaced by assembly lines)
spread of industrialization:
caused food supplies to increase and populations to grow
created new industrial jobs in the cities
changed social class structures
caused investors in industry to seek out more raw materials and new markets
contributed to the rise of colonialism and imperialism
primary sector:
economic activity that involves extracting (raw materials) or harvesting (food) products
e.g. gathering industries (renewable resources): agriculture, forestry, hunting and gathering, fishing, grazing
e.g. extractive industries (nonrenewable resources): mining, quarrying
secondary sector:
economic activity that processes raw materials and transforms them into finished goods
e.g. manufacturing industries
tertiary sector:
economic activity that provides services
e.g. health, legal, education, restaurants, stores
quaternary sector:
economic activity that involves collecting, processing & manipulation of information & capital
e.g. finance, insurance, computer services
quinary sector:
economic activity consisting of high-level decision making and advancement of human capacities
e.g. scientific research, higher education, government
core:
countries where economic power (wealth, innovation, technology) is concentrated that control and benefit from the global market on which periphery and semi-periphery countries depend
e.g. U.S., Western European countries, Canada, Australia, Japan
semi-periphery:
countries that are industrializing that exert more power in the world economy than the periphery, but are dominated to some degree by the core
e.g. newly industrialized countries such as Brazil, Russia, India, China, South Africa, Turkey
periphery:
countries with low levels of economic productivity and a disproportionately small share of the world’s wealth with weaker state institutions, lower standards of living and are often dependent on the core
e.g. Sub-Saharan African countries (except South Africa), parts of South America and Asia
labor:
availability/cost
land costs:
availability/cost
resources:
availability/cost
markets:
facilitate trade (the exchange of goods/services)
transportation:
proximity to shipping and markets
shipping container:
container with strength suitable to withstand shipment, storage and handling
intermodal container:
large standardized shipping container that can be used across different modes of transportation (ship-rail-truck)
intermodal connections:
places where two or more modes of transportation meet (air, road, rail, ship)break of bulk point:
break of bulk point:
the transfer of transported cargo from one kind of carrier to another
e.g. port: from ship to truck
Least Cost Theory:
Alfred Weber
• theory that describes the optimal location of an industry in relation to costs of transport, labor, and relative advantages of agglomeration
• an industry is located where it can minimize its costs, and therefore maximize its profits
agglomeration:
the clustering of businesses that can benefit from close proximity because they share skilled-labor
e.g. auto industry in Michigan technology industry in northern California insurance industry in Connecticut
footloose industries:
industry in which the location is not impacted by the cost of transporting either raw materials or finished products
e.g. software, insurance, semiconductors, computer chips, e-commerce
development:
a change in the economic and social level of a country through industrialization, urbanization, and standard of living
LDC (less developed country):
countries with low levels of industrialization, urbanization and low standards of living that are mainly focused on primary activities, predominantly agriculture
NIC (newly industrialized country):
less developed countries with growing industrial economies and a developing trade status in the global market place (BRICs: Brazil, Russia, India, China, South Africa)
MDC (more developed country):
countries with highly developed economies, high levels of industrialization, urbanization, advanced technological infrastructure and high standards of living
post-industrial society:
a society in which the economy has transitioned from a manufacturing-based economy to a service-based economy
GDP (gross domestic product):
measurement of the total value of goods and services produced within the borders of a country during a specific time period, usually one year
GNP (gross national product):
measurement of the total value of goods and services produced within the borders of a country plus the net income from companies that are located outside the country and foreign investments during a specific time period, usually one year
GNI per capita (gross national income per capita):
measurement of the total value of goods and services produced within the borders of a country plus the net income from companies that are located outside the country and foreign investments, but minus dividend payments and indirect business taxes during a specific time period, usually one year, divided by the population
economic sectors of the economy:
the percent of economic activities that a country relies on
-periphery countries tend to have a larger percentage engaged in primary activities
-semi-periphery countries are transitioning from primary activities to secondary activities
-core countries tend to have a larger percentage engaged in tertiary, quarternary, and/or quinary activities
formal and informal economic activity:
the percent of taxed and non-taxed economic activity within a country
e.g. semi-periphery and periphery countries tend to have a larger percentage engaged in the non-taxed economy
Gini coefficient:
measurement of income distribution within a population
e.g. percent of income inequality vs income equality
use of fossil fuels and renewable energy:
percent from which a country obtains its energy source
fertility rate:
the average number of children a woman will have during her childbearing years (15-49)
infant mortality rate:
number of deaths under one year of age per 1,000 live births during a given year
access to health care:
refers to the ease with which an individual can obtain needed medical services
literacy rate:
percent of population who can read and write
gender inequality:
acknowledges that gender affects an individual’s lived experiences; gender inequality is experienced across different cultures; tradition and culture pose obstacles to women’s economic development, especially in less developed countries
GII (gender inequality index):
measurement that evaluates women’s status in a country based on participation in economic, political, and labor-market participation, as well as reproductive health issues, indices of empowerment, and labor-market participation
HDI (human development index):
measurement used by the United Nations to calculate development in terms of human welfare (using both economic and social indicators)
gender parity:
measurement of the relative access to education of males and females
e.g. ratio of females to males enrolled in a given stage of education (primary, secondary)
objective of gender equality:
a society in which women and men enjoy the same opportunities, rights, and obligations in all spheres of life and is linked to sustainable development
role of women:
changes as countries develop economically
rise of women in the workforce:
although more women are in the workforce, they do not have equity in wages or employment opportunities
microloan:
low interest loans usually for smaller sums of money to provide extremely poor people the opportunity to open a small local business and is often targeted to women in less developed countries to lift them out of poverty and is helping to improve standards of living
Rostow’s Stages of Economic Growth:
theory that assumes all countries are capable of development along the same trajectory which encompasses five stages of linear development towards self-sustained economic growth and high levels of mass consumption
traditional society: stage in which the dominant activity in a society is subsistence farming and the social structure is rigid and unchanging and resistant to technology
2. transitional stage: pre-conditions for take-off; progressive leadership moves the country toward greater flexibility, openness and diversification
3. take-off stage: industrialization occurs and sustained growth takes hold, urbanization and technological breakthroughs occur
4. drive to maturity stage: technologies spread, industrial specialization occurs and international trade expands; population growth decreases
5. high mass consumption stage: service sector increases; widespread production of goods and services and mass consumption
Wallerstein’s World Systems Theory (Core-Periphery Model):
model that describes how economic power is distributed between dominant regions and less powerful regions and proposes that less developed countries are defined by their dependence on a developed core
core: countries where economic power (wealth, innovation, technology) is concentrated that control and benefit from the global market on which periphery and semi-periphery countries depend
semi-periphery: countries that are industrializing that exert more power in the world economy than the periphery, but are dominated to some degree by the core
periphery: countries with low levels of economic productivity and a disproportionately small share of the world’s wealth with weaker state institutions, lower standards of living and are often dependent on the core
Dependency Theory:
theory that maintains that less developed countries are kept in a position of dependency due to the existing economic and political power structures sustained by more developed countries; the concentration of wealth in more developed countries makes it difficult for less developed countries to compete and improve their situation
commodity dependence:
the extent to which a country is dependent on primary commodities for export; dependency on primary commodities can leave a country vulnerable to unpredictable price fluctuations and can significantly reduce national revenue
e.g. Haiti relies on cocoa, mango, coffee, bananas, vetiver oil
neo-colonialism:
theory that proposes that countries which may be free from political colonial control, continue to remain economically dependent on rich, industrialized countries
comparative advantage:
advantages to locations that combine lower operating costs (labor, taxes, relaxation of envrionmental regulations) resulting in trade/sale opportunities that produce goods/services for a lower price
e.g. oil producing nations have a comparative advantage when making products that require oil such as chemicals
complementary advantage:
advantages created when producing goods that are consumed together
e.g. cars and gas
e.g. printer and ink cartridges
-if the price of one goes up, the demand for both goods fall
-if the price of one goes down, people will buy more of it and they will usually buy more of the other also
neoliberal policies:
characterized by free market trade agreements, deregulation of financial markets, individualism, and the shift away from state welfare provision have created new organizations, spatial connections, and trade relationships that foster greater globalization
free trade agreements:
treaty between two or more countries to establish a free trade zone where goods and services can be conducted across common borders, without tariffs but labor or capital may not move freely
European Union (EU):
originally began as an economic union and has evolved into a political organization encompassing security, human rights, climate, environment, health and political issues; the EU is based on the rule of law; founded on treaties, voluntarily and democratically agreed upon
WTO (World Trade Organization):
global international organization dealing with the rules of trade between nations; negotiates the bulk of the world’s trade agreements that are signed and ratified by their legislatures
Mercosur:
an economic union creating a common market for the free movement of goods, services, and factors of production between countries in South America compromising Argentina, Brazil, Paraguay, Uruguay and Venezuela, with associate countries of Chile, Bolivia, Colombia, Ecuador, Peru, Guyana, and Suriname
OPEC:
an economic union of oil producing countries that coordinates and unifies the policies of member countries to ensure the stabilization of oil markets in order to secure an efficient supply of oil (Saudi Arabia, U.A.E., Iran, Iraq, Kuwait, Libya, Nigeria, Venezuela, Gabon, Ecuador, Angola, Algeria, Congo, Equatorial Guinea)
tariffs:
a tax imposed by a government on goods imported from other countries that serves to increase the price and make imports less desirable/less competitive compared to domestic goods
global financial crisis:
period of extreme stress in global financial markets and banking systems (2007-2009) caused by deregulation in the financial industry that led to the Great Recession
debt crisis:
situation in which a country is unable to pay back its government debt caused when spending exceeds revenues for a prolonged period of time
international lending agencies:
institutions that specialize in providing loans, grants, and financial expertise to less developed countries that focuses on poverty reduction, stimulating growth, building infrastructure, encouraging foreign investment, and fighting corruption
International Monetary Fund:
an organization of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world
microlending:
the lending of small amounts of money at low interest to the poor, particularly women, in less developed countries to encourage development of small businesses with the goal of improved standards of living
outsourcing:
when a company sends goods/services out for external production, typically where labor is cheaper to achieve comparative advantages have led to a decline in jobs in core regions and an increase in jobs in newly industrialized countries
e.g. assembly of low skill goods in China , customer service/product support in India
NGOs (nongovernmental organizations):
international organizations that are not run by state or local governments and are influential in international initiatives on economic, social, and environmental issues and usually try to improve conditions in the most impoverished regions of LDCs (periphery OF the periphery)
e.g. Save the Children, National Council on Aging, IB (International Baccalaureate)
manufacturing zones:
created by the growth of industry in countries outside of the core where governments create favorable investment and trading conditions to attract export-oriented industries
Special Economic Zones:
designated area that has economic laws that are more free-market-oriented than a country's typical national laws
e.g. Shenzhen, China
free trade zone:
designated area where goods may be landed, stored, handled, manufactured, reconfigured, and re-exported under specific customs regulations and generally not subject to customs duty
export processing zone:
designated area generally in developing countries by their governments that offer exemptions from certain taxes and business regulations to promote industrial and commercial exports
international division of labor:
refers to the shift in the core to service industries and an associated shift to manufacturing in the semi-periphery and periphery as companies search for the cheapest locations to take advantage of low-cost labor to manufacture and assemble components which has been facilitated by improvements in transportation/communication technology
post-Fordist methods of production:
flexible production that is no longer centralized in one manufacturing facility and takes advantage of outsourcing or just-in-time delivery and is reliant on advanced technology
multiplier effect:
happens when an increase in spending produces and increase in national income and consumption is greater than the initial amount spent
e.g. a new factory will increase employment, which will stimulate employment in other businesses
economies of scale:
cost advantages gained by an increased level of production
e.g. a large-scale (Walmart, Costco) business can afford to invest in technology that improves stock control, which increases revenue, that can be used to make further improvements
agglomeration:
cost savings that occur when firms are located near other to take advantage of shared labor or transportation costs resulting in economies of scale
just-in-time delivery:
system of production that is centered around using modern transportation to only order parts as needed and not by keeping large stockpiles in warehouses as in traditional mass production, the goal is to reduce costs by saving money on overhead inventory
emergence of service sectors:
the shift from a manufacturing based economy to a service based economy as a country develops
high technology industries:
an industry (chemicals, aircraft) that uses advanced methods and modern equipment or is devoted to research, development, and sale of high-technology products (e.g. computers, semiconductors)
high technology corridor:
area that is devoted to research, development, and sale of high-technology products
e.g. Silicon Valley in California
growth poles:
concentration of highly innovative and technically advanced industries that stimulate economic development in linked businesses and industries
problems stemming from industrialization:
natural resource depletion, mass consumption, the effects of pollution, and the impact of climate change
sustainable development:
development that addresses issues of natural resource depletion, mass consumption, costs and effects of pollution, the impact of climate change, as well as issues of human health, well-being, and social and economic equity
ecotourism:
tourism based in natural environments that are often threatened by looming development and helps to protect the environment in questions while also providing jobs for the local population
Sustainable Development Goals (Global Goals):
a universal call to action by the U.N. to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity; progress in development is measured through activities such as microloans (lending to small scale borrowers) and public transportation projects (infrastructure)
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