Unit 7: Economic Development Concepts

This set of flashcards covers essential economic development concepts, definitions, and examples based on comprehensive lecture notes.

Break-of-bulk point

A place where cargo is unloaded from one form of transportation and then sent out loaded onto a different form of transport to other locations.

Bulk-gaining industry

An industrial activity in which the made product gains volume or weight during production.

Bulk-reducing industry

An industrial activity in which the made product loses volume or weight during production.

Comparative advantage

An economic concept stating that a country should specialize in certain products for export when they have an advantage in producing those products.

Development

Refers to the transition from an agricultural economy to an industry-based economy with rising living standards.

Fair trade

A movement encouraging multinational corporations to pay living wages to workers in lesser-developed countries.

Fordist production

A mass production system based on assembly line production with low-skilled workers using specialized tools.

Foreign direct investment (FDI)

Investment from a company or private investors from one country into businesses or infrastructure in another country.

Gender Empowerment Measure (GEM)

An index created by the UN to measure inequality between men and women in income, job participation, and political representation.

Gross Domestic Product (GDP)

The total monetary value of all goods and services produced in a year in an area.

Gross National Income (GNI)

Measures the total income of citizens of a country, including income from overseas.

Human Development Index (HDI)

A statistical index created by the UN measuring standard of living, health, and education.

Informal economy

The part of an economy that is neither taxed nor monitored by government regulations.

Just-in-time delivery

A business strategy for maintaining just the right amount of inventory to avoid excess storage costs.

Literacy Rate

The percentage of people in an area that can read and write.

Maquiladora

A factory in Mexico owned by a foreign company that creates products to export.

Outsourcing

When part of a company's operations is transferred to an outside company, often in a different country.

Post-Fordist production

Production methods that are decentralized and flexible, differing from traditional assembly line manufacturing.

Right-to-work state

States in the USA whose laws prevent unions from requiring people to join the union for employment.

Standard of living

The level of earnings, income, or wealth available to a person or community.

Core (World Systems Theory)

Wealthy countries with significant influence on the global economy.

Periphery

Least developed countries that provide raw materials and labor to core countries.

Semi-periphery

Countries that are middle-ground between core and periphery, with developing economies.

Gender Inequality Index (GII)

A measurement tool by the UN focusing on health, empowerment, and jobs to gauge gender equality.

Nonrenewable energy

Energy from sources that are depleted when used, such as fossil fuels.

Renewable energy

Energy from sources that are not depleted when used, such as wind or solar power.

Dependency Theory

The idea that political and economic relations limit the development of certain regions.

Microloans

Small loans offered at low interest to help small businesses and farmers improve productivity.

Complementarity

A situation where two countries have economies that benefit each other due to their different strengths.

Free trade agreement

A treaty eliminating tariffs on goods between countries to encourage trade.

International Monetary Fund (IMF)

An organization promoting global economic stability and growth for lesser-developed countries.

World Trade Organization (WTO)

An organization aimed at helping countries agree on trade rules.

Agglomeration

The clustering of economic activities in a particular area that provides benefits.

Deindustrialization

The decline of a country's manufacturing sector, often due to outsourcing.

Export processing zone

Regions of lesser-developed countries providing tax breaks to attract export-driven production.

Special economic zone

An area with different laws to attract foreign direct investment.

Sustainable development

Economic development conducted without rapid depletion of natural resources.

Global Financial Crisis

A significant period of economic difficulty experienced worldwide.

Economies of scale

Cost savings achieved by increasing production, leading to a lower average cost per unit.

Transnational Corporation

A company that operates in multiple countries, conducting research, and selling products globally.

Gender-related Development Index (GDI)

A statistical index that is based on HDI. It measures differences in life expectancy,education, and incomes for men and women.

This is one of several measurements that hope to reveal gender based inequality differences between countries.

Industrialization

The process by which an economy is transformed from primarily agricultural to one based around manufacturing jobs and industries.

Weber's least cost theory

Factory owners consider shipping/transport costs when finding the location of an industrial factory

:

If resource/materials are very bulky and heavy for your product (like iron ore to make steel),then you should locate near the resource.

If your finished product is bulky and hard to ship(like furniture, or an automobile), then you will locate near the market where the good will besold.

Industrialists try to find the sweet spot where total transport costs are minimized, depending on resources and products.

Remember, this theory is a simplified model.

It doesn't consider everything, like government policies or environmental regulations. In fact, it basically assumed that labor costs were the same everywhere to make the model work,which is definitely not the case.

Formal economy

Basically the "official" part of the economy.

Key features include:

Registered Businesses:

Companies (in theory)pay taxes and follow government regulations.

Employee Rights:

Workers have contracts with specific hours, pay, and sometimes benefits, like health insurance.

Job Security:

There are often laws in place to protect workers from being abused, fired unfairly, etc.

Gross National Product (GNP)

See description of GNI. There are small differences between terms, but not necessary to know for this class. Basically the same measurement.

European Union (EU)

a supranational organization in Europe that allows for free trade, freedom of movement between members states, and a common currency (the Euro)

Mercosur (or Southern Common Market)

An economic supranational organization dedicated to improving trade between its members in South America

Neoliberal policies

These are policies that promote 'liberalization' of the global economy: this means reducing or eliminating trade barriers like tariffs,encouraging free trade across national borders.

Organization of Petroleum Exporting Countries (OPEC)

A supranational organization of countries (mainly in Southwest Asia and Africa with Venezuela) dedicated to controlling the supply of oil and influencing oil prices.

Tariff

A tax a country puts on goods that were created in an outside country encouraging people to buy locally produced goods

Free trade zone

Regions in LDCs where tariffs are waived by governments wanting to encourage MultiNational Corporations to invest in their countries.

This can overlap with 'export processing zones'.

Growth Pole

A specific region or industry that is booming economically. It attracts workers, but also additional businesses. It generates a lot of economic growth.

Picture a node of economic activity (a tech company, or an automobile assembly plant) that radiates economic growth outward, attracting related businesses (more tech companies and investment banks, or automobile parts manufacturers)

International division of labor

Refers to the fact that the different jobs/activities required to producing one product (iPhone, Honda Civic, Nike hoodie,etc.) often occur internationally, not all in one place.

This feature of the global economy has accelerated in the last 70 years(telecommunications, shipping, GPS, and other tech advances). There has been a shift in manufacturing away from the wealthiest economies, where most multi-national corporations are from, to developing countries -where labor costs are lower and environmental regulations are less strict.

Multiplier Effects

When investments in a foundational (or basic)economic activity (like a factory, or tech industry) generates income in an area by producing exports and providing jobs. This then boosts spending and consumption in the area as employees earn income. Employees spend in the area, which produces more economic activity in other businesses (like car dealerships,restaurants, salons, insurance companies, etc.).

The idea is that certain economic investments in productive industries amplify incomes and

increase spending. This creates much more economic activity in an area than the initial investment.

Ecotourism

Tourism directed toward natural environments (often threatened) intended to support conservation efforts.

Instead of cutting down the forests to make them produce money, you can keep them pristine and build some airbnbs/hotels/restaurants nearby that attract tourists to see the beautiful sights and smell the clean air. (A different way for the forest to make money).

Mass consumption

Pattern of social and economic life in which an area's inhabitants purchase vast quantities of products or services. (Amazon Basics)

A society that reaches a level of development to afford to engage in this at a large scale may produce few of the items that it consumes, but will also have significant influence over the global economy that produces the goods it consumes.

Natural resource depletion

When raw materials are consumed much faster than they can be replenished. Relates to overconsumption and can lead to environmental degradation and scarcity.

Wallerstein's World Systems Theory

The world economy has one market and a global division of labor. Although the world has multiple states, almost everything takes place within the context of the world economy. The world economy has a three-tier structure.(Peripheral, Semi-peripheral, Core). Countries have distinct and unequal roles in the world economy.

UN Sustainable Development Goals (SDGs)

A collection of 17 global goals set by the United Nations to mobilize efforts to end all forms of poverty, fight inequalities and tackle climate change, while ensuring that no one is left behind.

Rostow's Stages of Development

A theory of development that proposes a linear path of progress for countries in economic development, through 5 stages.

Also called: Modernization Theory.

More Below:

1. 'Traditional Society': subsistence farming, pre-industrial production. Surplus wealth supports the military and religious class.

2. 'Transition': Elite (local or foreign) invests in primary industrial activity (mining, improved agriculture, railroads, etc.)

3. 'Take Off': Rapid economic growth in a new manufacturing industry (commonly textiles). While the rest of the country stays traditional, industrial city centers rapidly transform.

4.'Drive to Maturity': Industrial tech from the booming industry diffuses to more and more industries in the country, causing rapid industrialization. Society urbanizes and workers become more skilled in modern industry.

5.'High Mass Consumption': Industrial sector specializes in high-value goods, may other industrial sector jobs decline. Services expand to dominate the economy. People purchase in mass to meet needs and many new wants.

Theory comes from American Walter Rostow's

The Stages of Economic Growth: A Non-Communist Manifesto (1960).

Commodity dependence

Economic dependence on exports of usually one or two agricultural and mineral raw materials.When prices for those primary commodities inthe world market go up or down, the country is significantly impacted.

Industrial Revolution

A series of improvements in industrial technology that transformed the process of manufacturing goods. (Started around 1800 in England)

This is a historical term, but it also relates to the process of industrialization, which is still in various stages around the world.

Economic Sectors

"sections" of an economy. The three sectors are the primary, secondary, and tertiary sectors.Tertiary is often expanded to also include quaternary and quinary sectors.

Trade bloc

a group of countries that work together to promote trade with one another (BRICS, ASEAN,etc.)

Newly industrialized countries (NICs)

Countries that are undergoing or have recently undergone rapid industrialization and economic grown. (BRICS, MINT, etc.)

BRICS countries

Brazil, Russia, India, China, South Africa: Rapidly growing economies listed by Fidelity bank as important countries to invest in. These countries also hold meetings and strategize together for mutually beneficial industrial growth.

MINT countries

Mexico, Indonesia, Nigeria, Turkey -- countries listed by Fidelity (investment bank) as important growth countries for investment opportunities.

Asian Tigers/Dragons

Group of 'new' (last 50 years) industrial countries comprising Taiwan, South Korea, Hong Kong,and Singapore. Specialized in electronics manufacturing, received ample Foreign Direct Investment from Western 'core' countries.Economies exploded with growth.

Basic Industries

Industries that sell their products or services primarily to consumers outside the settlement (city, town, community).

These are the foundational businesses of the economy. They bring profits in from selling to outside consumers/businesses. Intel or Micron in Folsom are strong examples - these companies do business around the world and bring money into Folsom in the form of employee income. That income then gets spentand circulates in the local community,supporting many other businesses (which is an example of the multiplier effect!)

Non-basic Industries

Industries that sell their products primarily to consumers in the settlement (city, town,community).

These are not the foundational elements of the local economy - they serve the needs of local consumers (haircuts, groceries, movie theaters).These businesses need the other businesses that bring money into the community in order to support local incomes so that they can thrive.

Silicon Valley

Example of high skill and capital agglomeration(economic activities that have a tightly clustered distribution): a region in California south of San Francisco that is noted for its concentration of high-technology industries, location near topuniversities, etc.

Research Triangle

Example of high skilled agglomeration (economic activities that have a tightly clustered distribution): Raleigh, Durham, and Chapel Hill are called the Research Triangle in North Carolina, because of the several universities andmany research organizations located there.