Unit 7: Economic Development

Industry

Any economic activity that uses machinery on a large scale to process raw materials into finished goods.

Raw materials

Substances that are used to make goods intended for sale to consumers.

Industrialization

The process by which the interaction of social and economic factors leads to the development of industries across a community, region, or country.

Industrial Revolution

The beginning of industrialization in Britain in the 18th century and spread to other countries in western Europe and North America in the 19th century.

Cottage industries

Members of families, spread out through rural areas, worked in their homes to make goods.

Second Industrial Revolution

Powered by electricity and the internal combustion engine. Factories were reconfigured to use the assembly line and integrated the use of interchangeable parts. The invention and increasing sophistication of machine tools.

Third Industrial Revolution

Began at the end of WWII and marked by reliance on electronics and information technology systems by automation of production processes.

Fourth Industrial Revolution

Characterized by advances in technology, its global impact, and the idea of sustainability.

Colonialism

The practice of acquiring territories and settling there to exert political, economic, and social control over the area.

Imperialism

The idea of growing a state or empire by exerting face over other nations to gain economic and political power without establishing settlements.

Economic sectors

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

Primary sectors

Associated with activities involving the extraction of natural resources from the Earth. Includes agriculture, mining, energy, forestry, and fisheries

Secondary sectors

Associated with the production of goods from the raw materials extracted or harvested in the primary sector. Includes metalworking, manufacturing, processing, construction, automobile production, aerospace engineering, food processing, etc.

Tertiary sectors

Called the service sector as it provides services rather than goods. Includes the transportation, wholesaling, and retailing of finished goods to consumers

Quaternary sectors

Portion of the Tertiary sector activities that requires workers to process and handle information and environmental technology. Includes work on information technology, government, libraries, education, scientific research, and cultural activities.

Quinary sector

Specialized subcategories of work that includes the top leaders in government, science, universities, nonprofit organizations, health care, and media. Individuals who work in these positions generally require high levels of education.

Postindustrial economy

An economic pattern is marked by extremely low primary sector development, relatively low secondary sector employment, and predominant tertiary sector employment with rising share of quaternary and quinary jobs.

Gross Domestic Product (GDP)

Total value of officially recorded goods and services by the citizens and corporations within a country’s borders in a given year. goods + services = ______

Dual economies

Two distinct divisions of economic activity across the economic sectors. Here a country may have a large population working in the traditional primary sector economy, often depending on subsistence agriculture. At the same time, another substantial share of workers participate in a more varied market-based economy with heavy emphasis on secondary sector jobs.

Least-cost theory

A model that geographers use to analyze spatial patterns in a secondary economic sector. Proposes that businesses locate their facilities in a particular place because that location minimizes the costs of production. Location will be chosen where the cost of moving raw materials to the manufacturing site is as low as possible.

Agglomeration

The advantage for companies in the same or similar industries in locating near each other in order to take advantage of specialized labor, materials, and services.

Break-of-bulk points

Locations where it is more economical to break raw materials into smaller units before shipping them farther. Often located where the mode of transportation changes.

Bulk-reducing industries

Raw materials cost more to transport than finished goods. With raw materials that lose weight through the manufacturing process, the best location for a factory to be is near the source.

Bulk-gaining industries

Raw materials cost less to transport than finished goods. If manufacturing results in a product that is more than the sum of its raw materials, the best location for a factory to be is near the market.

Industrial parks

A collection of manufacturing facilities.

Human Development

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

Gross National Product (GNP)

Total value of goods and services by the citizens and corporations of a country as well as foreign investments in a given year. domestic + international goods + services = ______

Gross National Income (GNI)

Most accurate measure of wealth, because it accounts for the impacts of trade. GDP + (exports-imports) = ______

Formal sector

The part of the economy that the government regulates. Under this sector, the government monitors, protects, monitors, and taxes.

Informal sector

Any part of a country’s economy that is outside government monitoring and regulation and is not taxed.

Human Development Index (HDI)

Scored between 0-1. Higher the value, higher the inequality and vice versa. Combines social + economic indicators. Includes Life expectancy, Mean and expected years of schooling, and GNI per capita.

Gender Development Index (GDI)

Calculates gender disparity in the three basic dimensions of human development

Gender Inequality Index (GII)

Scored between 0-1. Higher the value, higher the inequality and vice versa. More accurate because it includes social + Economic + political indicators. Includes

Women’s Empowerment

Includes women’s options and access to participate fully in the social and economic spheres of society.

Labor-market participation (LMP)

Measure an economy’s active labor force is calculated by taking the sum of all employed workers and dividing that number by the working-age population.

Microloans

Very small short-term loans with low interest intended to help people in need.

Rostow’s Stages of Economic Growth (know all 5 stages)

The five stages a country goes through as they develop economically.

Traditional Society/ Rostow’s First Stage

Political Power: Local or regional, based on ownership of land

Trade: Local

Setting: Rural

Culture: Family-based

Labor Market: Subsistence farming, primary sector, informal

Technology: Low, little science

Wealth: Limited, little ability to “move up”.

Examples: Medieval Europe, no country is currently here

Preconditions for Takeoff/ Rostow’s Second Stage

Political Power: Leadership begin to invest in the country

Trade: Small-scale international trade begins to develop

Setting: Beginning of urbanization

Labor Market: Shift to secondary, beginning of industrialization

Technology: Transportation systems develop, mechanized farming

Wealth: Increased investment in business & infrastructure

Example: Nigeria & Afghanistan

Takeoff/ Rostow’s Third Stage

Trade: Major export industry, increased international trade

Setting: Urbanization, Labor Market; Full industrialization and high output capabilities,

Technology: Advancements in technology

Wealth: Businesses are making money -> shift to patterns of consumption

Examples: NICS (Newly Industrialized Countries) Philippines, India, Vietnam

Drive to maturity / Rostow’s Fourth Stage

Population: Growth declines

Labor Market: Specialization of industry, workers become skilled & widespread education,

Technology: High levels of power consumption, improved transportation & communication systems

Wealth: Investment in social infrastructure such as schools, hospitals, etc

Examples: Brazil, Russia, China

High Mass Consumption/ Rostow's Fifth Stage

Population: Continues to decline or goes into the negative

Labor Market: Mostly tertiary sector; highly skilled & highly educated workforce

Technology: High levels of power consumption, improved transportation & communication systems

Wealth: People spend $$ on nonessential goods

Examples: Japan, South Korea, Eastern Europe, The US, Canada

Dependency Theory

holds that most LDCs (including all NICs) are highly dependent on foreign-owned factories, foreign direct investment, and technology from MDCs to provide employment opportunities and infrastructure

Commodity Dependence

When more than 60% of a country's exports and economic health are tied to one or two resources such as oil, timber, or plantation crops.

Comparative Advantage

The relative cost advantages of producing certain goods and services for trade.

Complementarity

Mutually beneficial trade relationships between two countries that results when they have different comparative advantages.

Neoliberalism

The belief that open markets and free trade across the globe will lead to economic development everywhere, lessen tensions between countries by fostering support for common values and spread democracy and human rights.

Deindustrialization

shifting away from manufacturing as the main source of economic production

Growth poles

Places of economic activity clustered around 1 of more high-growth industries that stimulate economic growth by capitalizing on some special asset.

International Monetary Fund (IMF)

Provides no-interest loans to low-income countries and offers financial assistance to member countries to help stabilize the world economy.

World Bank

Provides funding and technical assistance to countries in the periphery to develop infrastructure including systems for safe drinking water, improved sanitation, new schools, and expanded transportation and communication networks.

Just-in-time delivery

Materials are delivered when they are needed for short-term production, so that companies can avoid paying to store extra inventory at their facilities.

Fordism

A system of manufacturing focused on automation, standardization, economies of scale, and a division of labor in which each worker has just one task. Machines replaced several workers in the secondary sector, enabling large-scale mass production.

Post-Fordism

A system of production that relies on automation through the use of robots and computer systems and is centered on low-volume manufacturing and flexible systems that allow for quick responses to change in the market.

Offshore sourcing

When companies are increasingly moving production to places outside the country in which they are headquartered.

International division of labor

Colonies or other countries in peripheral regions specialized in producing the raw materials required by more developed economies, and then served as markets for the manufactured goods produced by core countries.

Multiplier effect

Opportunities that can potentially develop from an economic change

Special Economic Zones (SEZs)

type of export processing zone, defined as port locations where foreign firms are given special tax privileges to incentivize trade

Export processing zones (EPZs)

The purpose is to attract multinational organizations to invest in labor-intensive assembly and manufacturing in the host country. The manufacturing of exports is done without tariffs.

Free trade zones (FTZs)

Provide customs-related advantages and exemptions from tariffs and taxes. This enables quicker turnaround of ships, planes, or other means of transportation engaged in international trade, which enables ports to function more easily as points along the way of a larger transportation system.

Ecotourism

a type of tourism that focuses on experiencing natural areas while minimizing the negative impact on the environment.

United Nations Sustainable Development Goals

Goals intended to reduce the inequalities among countries in the core, periphery, and semi-periphery and to achieve a more sustainable future for all.

UN Goal 1

No poverty

UN Goal 2

Zero hunger

UN Goal 3

Good Health and Well-being

UN Goal 4

Quality Education

UN Goal 5

Gender Equality

UN Goal 6

Clean Water and Sanitation

UN Goal 7

Affordable and Clean Energy

UN Goal 8

Decent Work and Economic Growth

UN Goal 9

Industry, Innovation, and Infrastructure

UN Goal 10

Reduced Inequalities

UN Goal 11

Sustainable Cities and Communities

UN Goal 12

Responsible Consumption and Production

UN Goal 13

Climate Action

UN Goal 14

Life Below Water

UN Goal 15

Life On Land

UN Goal 16

Peace, Justice, and Strong Institutions

UN Goal 17

Partnerships For The Goal