APHG Unit 7 - Industry and Economic Development

Industrial Revolution

the transition to new manufacturing processes in Great Britain, continental Europe, and the United States, that occurred during the period from around 1760 - 1840 ... that ultimately led to the mass production of goods in factories and led to major social, political, demographic, environmental, and economic changes.

Commodities

the term given to raw materials or primary agricultural products such as cotton, iron ore, coal, Petroleum, Oranges, Wood, Sugarcane.

manufactured goods or processed goods

A product that has been processed in a factory with machinery ... such as Textiles, Steel, Automobiles, Gasoline/Oil, Lumber, Rum, Orange Juice, Ethanol Gasoline.

Enclosure Movement (1750)

Wealthy land owners began to buy up (consolidate) the small farms and improved farming techniques resulting in HIGH FOOD PRODUCTION through mass production and the use of more machinery. Many small farmers were bought out and became tenant farmers or were forced to move to the city resulting in Urbanization (growth of city).

Steam Engine

A machine that was invented/improved upon by Jamses Watt which was able to burn coal and turn it into motion (high pressure steam) which helped to run factories, trains, and steamships/steamboats. This invention allowed factories to locate away from Rivers and locate in more optimal locations (near the city/population center).

fossil fuels

These fuel sources are extracted from the earth's crust and burned as fuel such as coal, oil, and natural gas. These sources of energy may be burned to provide heat for use directly, to power engines, or to generate electricity.

renewable energy

energy derived from natural sources that are replenished at a higher rate than they are consumed. Solar, Wind, and Hydroelectricity, for example, are such sources that are constantly being replenished.

primary sector of economy

involves the extraction of raw materials & resources (agriculture, mining, fishing, forestry).

secondary sector of the economy

the transformation of raw materials or agricultural products into a finished product through Manufacturing, Processing, Assembly (mostly in Factory System).

Tertiary sector of the economy

the services provided for people in exchange for payment (commerce to administration, transport, financial and real estate activities, business and personal services, education, health and social work

Quaternary Sector of the Economy

The portion of the economy concerned with industries involved in the collection, processing, and manipulation of information and capital (finance, administration, insurance, legal services)

Quinary Sector of the Economy

high level of Management or Political Positions ... with high influence and specialized knowledge skill (high-level managers in government or corporations, university president/chancellor)

Pre-Industrial Countries

Low End LDCs, Periphery Countries, Ethiopia, Uganda, Somalia, Niger, South Sudan (Africa), FOCUSED MORE ON AGRICULTURAL BASED JOBS (60-80%), Tradition Society, Countries that are in Stage 1 and 2 of the Rostow Model

Industrializing Countries

High End LDCs, Semi-Periphery Countries, China, India, Mexico, Brazil, Indonesia, Philippines, Vietnam, FOCUSED MORE ON FACTORY BASED JOBS, OUTSOURCING to LDCS due to Cheap Cost of Labor, Strongly Urbanizing, rural to urban migration, Countries that are in Stage 3 and 4 of the Rostow Model

Post Industrial Countries

MDCs, Core Countries, US, Japan, South Korea, Canada, Great Britain, Germany, France, Singapore, FOCUSED MORE TERTIARY/SERVICE BASED JOBS, Highly Urbanized, High Skilled LABOR FORCE, Also known as DE-INDUSTRIALIZED COUNTRIES, Countries that are in Stage 5 of the Rostow Model

De-Industrialization

The process of decreasing manufacturing or factory jobs in MDCs (core countries - US, Japan, Germany, Australia, Canada), however ... the core countries experience massive increases in factory production ... due to more efficient mechanization/ automation/robotics. MDCs experience a MAJOR SHIFT in employment from Secondary Jobs to SERVICE JOBS (with more high skilled labor force).

Formal sector of the economy

The part of the economy that is taxed and legally authorized by a government and is included in a governments GDP gross domestic product; as opposed to an informal economy. The taxes collected by the government aids in funding building/rebuilding infrastructure, education, Social Security (a federal system that provides retirement, disability, and survivors benefits), health insurance programs such as Medicare and Medicaid, defense and international security systems, safety net programs that provide aid, and interest on money the US government has borrowed from banks.

Informal sector of the economy

the part of the economy not taxed and and not authorized by the government, and is not iincluded in a governments GDP. It includes activities such as informal employment, the production and sale of goods and services through informal channels, and the exchange of goods and services outside of the formal market. Sometimes referred to as the shadow economy.

Ship

the mode of transportation that is can transport Bulk Cargo long distance at low cost (international).

Truck

the mode of transportation that is can transport smaller quantitites in a short amount of time, short distance, with high route flexibility, with medium cost of transportation.

Rail

the mode of transportation that can transport large quantities of Bulk Cargo long distance at low cost over land.

Truck - Smaller quantity, short distance/high route flexibility

Air

Mode of transportation that can transport Smaller quantities of goods, most expensive mode of transportation, but the quickest form of delivery.

Break of Bulk Point

a location, usually on a port city, where it is easy to transfer CARGO CONTAINERS between different modes of transportation (rail, truck, ship, plane). Usually these locations are on the coast which creates easy access to global trade and many LDC countries will use these locations to establish free trade zones are strongly connected to these locations where EPZs and SEZs (Factory Sites that eliminate tariffs) will located.

Containerization

this process was established in 1950 which uses Cargo Containers because they are Intermodal (or easily transferable between different modes of transportation (truck, ship, rail, or plane).

Agribusiness (commodity chain)

also known as vertical integration due to the process of MNCs connecting and controlling the different steps of taking an agricultural product from growing the seeds to harvesting the product to manufacturing the product to the distribution of the product to the sell of the product to consumers.

Alfred Weber's Least Cost Theory

a model that determines where a manufacturing site will locate. In the Model there are two points for raw materials and one point for the market, and the factory site will bd decided on the cost of transportation, labor, or and agglomeration.

Bulk Reducing Industries

when Manufacturing companies choose to locate their factory ... NEAR the raw materials because the product or inputs weighs MORE/TAKE UP MORE SPACE than the final product and therefore transportation costs are cheaper

... when transporting shorter distances between the raw material and the factory. (Examples are Steel, Copper, Ethanol, Orange Juice).

Bulk Gaining Industries

when Manufacturing companies choose to locate their factories ... NEAR the market because the product or inputs weigh LESS/TAKE UP LESS SPACE than the final product and therefore transportation costs are cheaper ... when transporting heavy finished goods from the factory to the market. (Automobiles, Soda or Beer Manufacturing)

Agglomeration

the process in which companies (in similar industries) ... tend to cluster (or locate) near each other in order to take advantage of specialized labor, materials, and services by sharing materials, talent, or costs (auto alley, industrial areas, medical city, silicon valley, textile factory)

Right to work State

The term that refers to state laws that prohibit union security agreements between employers and labor unions which require employees who are not union members to contribute to the costs of union representation. Usually this results in the inability for unions to strike for better working conditions and wages resulting in weaker labor unions.

GDP (Gross Domestic Product)

the total value of the goods and services produced by a country's citizens and companies within the country in a year ... does not take into account the informal economy.

GNI (Gross National Income)

per capita (or per person), the total value of goods and services globally produced by a country in a year divided by the country's population. GNI is calculated by earned income rather than production output.

HDI (Human Development Index)

The United Nations created a measure of the general standard of living (from 0.0 - 1.0) that shows the level of development for each country in the world based on the function of GNI, Life Expectancy Rate, and year of education.

GEM (Gender Empowerment Measure)

Compares the ability of women and men to participate in economic and political decision making.

GII (Gender Inequality Index)

An indicator constructed by the U.N. to measure the extent of each country's gender inequality in terms of reproductive health, empowerment, and the labor market.

GDI (Gender Development Index)

Compares the level of development of women with that of both sexes.

Microloans

Many traditional societies in the South

Asia, Middle East, and Africa have used non-governmental organizations to help empower women to build businesses outside the home. Many women in these countries do not have access to traditional loans and can look to Grameen Bank to improve the economic conditions for women by giving women more moneyfor education, food, and family plan. This process is powerful in increase equality for women in LDCs ... from which many traditional values are holding back women's economic ablilities.

Rostow's Stages of Development

A model of economic development that describes a country's progression which occurs in five stages transforming them from least-developed to most-developed countries.

Stage 1 of Rostow's Model

A traditional society has not yet started a process of development. It contains a very high percentage of people engaged in agriculture and a high percentage of national wealth allocated to what Rostow called "nonproductive" activities, such as the military and religion

Stage 2 of Rostow's Model

Preconditions for takeoff: the country is still focused on subsistence agriculture, however the country starts to invest in important infrastructure (dams, export oriented ports, roads, railways, bridges) ... which can increase the production and exportation of agricultural crops resulting in increased national economy.

Stage 3 of the Rostow's Model

The country experiences massive amounts of rural to urban migration patterns which enter the city looking for economic opportunities resulting in EARLY INDUSTRIAL GROWTH. This Stage is called TAKE OFF .... and is generated in a limited number of economic activities, such as textiles or food products. These few takeoff industries achieve technical advances and become productive, whereas other sectors of the economy remain dominated by traditional practices.

Stage 4 of Rostow's Model

When a country increases its Industrial development into multiple industries like textiles, steel, electronics, cars, appliances. This stage is called Drive to Maturity with more

Modern technology that diffuses to a wide variety of industries. These countries experience rapid industrial growth comparable to the growth of the takeoff industries. Workers become more skilled and specialized.

Stage 5 of the Rostow's Model

The economy shifts from production of heavy industries (steel or energy) with the help of automation and robotics to consumer goods (cars, phones, electronics). Many Factory jobs are OUTSOURCED to LDCs that have an abundance of cheap labor. Therefore, the majority of the countries population are employed in Tertiary/Service Sector Jobs. This shift is often referred to as POST INDUSTRIAL SOCIETIES/DEINDUSTRIALIZATION.

Wallerstein's World Systems Analysis

This economic theory focuses on the dependency theory, in which countries do not exist in isolation, however they are connected in the world system in which all countries are dependent on each other. This theory explains how colonialism and neo-colonialism are the causes for the inequalities in the world economy. This model divides the world into three regions - core, semi-periphery, and periphery countries.

Core Countries

A name given to an industrialized, former colonial states that dominate the world economic system in which the countries receives cheap labor and raw materials from the semi-periphery and periphery and the core countries sending high quality technologies and investment to fund infrastructure projects in the semi-periphery and periphery.

semi-periphery countries

a name given to the countries that are caught in between the Core and the Periphery. These countries are exploited by the core, but also have some attributes of the core countries that receive cheap labor and raw materials from the periphery.

periphery countries

a name given to the least developed and least powerful nations; often exploited by the core countries and semi-periphery countries as a source for raw materials, cheap labor, and markets.

Commodity Dependence

When more than 60 percent of a country's total exports are made up of commodities (raw materials and agricultural products). Many countries that experience this issue have low levels of economic development.

Comparative Advantage

the ability of a country to produce a good at a lower opportunity cost than another country.

Complementarity

When two countries specializes/link up in trading in commodities or manufactured goods that is demanded/desired by the other country or has a comparative advantage.

Neo-liberalism

A set of economic reforms that reduce governmental regulations and taxation ... these are trade policies that calls for free markets, balanced budgets, privatization, free trade, and minimal government intervention in the economy.

FDI (Foreign Direct Investment)

Investment made by a foreign company in the economy of another country.

WTO (World Trade Organization)

Supranational Organization with 164 countries ... to promote governments with the forum to negotiate trade agreements, settle disputes, and oversee trade rules. It is desiegned to remove obstacles to trade and ensure that rules are transparent and predictable.

New International Division of Labor

the change in employment from the national scale to the global scale ... in various economic sectors ... as MNCs begin to outsource/offshore many of its jobs to foreign countries to take advantage of cheap labor, less restrictive environmental laws, and free trade policies ... resulting in Semi-periphery countries shifting from primary employment to secondary employment, while core countries shift from secondary employment to tertiary employment.

Fordist Approach to Manufacturing

In the early 20th century, the assembly line allowed companies to rapidly produce more standardized products with less skilled workers.

The workers were EASILY REPLACEABLE because they were doing a simple REPETITVE TASK

The ultimate goal of this approach was increase mass production of ONE SPECIFIC ITEM ... using cheap low skilled labor.

Post-Fordist Approach to Manufacturing

In the late 20th Century, factories began to use MORE AUTOMATION AND ROBOTICS by replacing workers with machines, which increased assembly line production greatly. This caused higher rates of unemployment in the secondary sector, However, the automation has led to the remaining factory workers to be more flexible and more skilled as they need to do more than one job as they rotate around different workstations.

Just-in-time delivery

when materials are delivered to the factory on a scheduled basis so that the material can be quick assembled onto the final product. This allows for the factory to

be more efficient because the factory does not have to create

these items and they do not have to store them on site. Examples - Seats, engines, transmissions are materials for a car b/c they take

up valuable space in a warehouse and are quickly assembled.

EPZs (Export Processing Zones)

A free trade zone or free trade zones around the world where goods may be landed, handled, manufactured or reconfigured, and re-exported without having to pay an additional cost of export tariffs. These locations are sites where multinational corporations will choose to locate their manufacturing to take advantage of (1) low cost labor and (2) the less environmental restrictions on pollution ... Nike, Hanes, Sony, iPhone will choose these locations to have their products manufactured .... In several LDCs - like ... China, Indonesia, Philippines, Mexico.

SEZs (Special Economic Zones)

These are EPZs (Export Processing Zones) that have become more commonly used in CHINA. This was part of a national policy, in 1979, to create a more open, market-oriented economy in China promoting a change from Communist/Socialist economic system to Capitalistic/Free Market economy). These free trade zones in China became know as "Islands of Capitalism" within Communist China.

These free trade zones in China were used to attract foreign investment with a variety of incentives including limiting tax/tariffs, exemption from customs duties on imported and exported goods, and reduced rates on the lease of land/buildings. Regions offering special tax breaks (no tariffs), less environmental restrictions, and other incentives that allow for free trade.

Other Asian Countries and Latin American Countries are planning to create new SEZs in the Future.

SEZs are MUCH LARGER than EPZs ... this has helped to develop China ... with focusing on their large WORKING CLASS ... with more FDI

Brownfields

contaminated industrial or commercial sites that may require environmental cleanup before they can be redeveloped or expanded

SDGs (Sustainable Development Goals)

The United Nations created a set of 17 interrelated goals to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. This initiative was started in 2015-2030 to help address the global concerns for the environmental sustainability.

Global Supply Chain

The world's economy is highly

Complementarity

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

Offshoring

when MNCs or large corporations send jobs from Core Countries (US, Germany, UK) to Semi-periphery countries (China, Mexico, Indonesia) because the MNCs can save on costs and profit more by taking advantage of the lower cost of labor in other nations.