APHG Unit 5 - Industry and Economic Development

Affordability

The cost or price of something.

Alfred Weber's Least Cost Theory

The traditional theory of cost reduction in manufacturing where companies attempt to lower their overall costs of production by using the following cost factors in determining the location of the manufacturing/processing of a good: 1) transportation, 2) labor, 3) agglomeration impacts.

Break-of-Bulk points

Areas where bulk (transport) is divided into other means of transportation. For example: shipping containers are removed from a cargo ship at a shipyard and then placed upon another means of transportation to the interior of a country.

Commodity Theory

The theory that scarcity (limited supply) enhances the value or desirability of items that can be possessed, is useful to its possessor, and can be transferable from one person to another.

Comparative advantage

The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.

Complementary Comparative Advantage

A process where countries identify areas of comparative advantage over complementary areas of production so that both sides benefit economically via trade.

Core countries

Those countries that dominate economic, political, and cultural realms in the globalized world and exploit the semi-peripheral and peripheral.

Debt crisis

A situation where a government loses the ability to pay back its governmental debt.

Dependency Theory

The notion that resources flow from a periphery of poor and underdeveloped states to a core of wealthy states and, in extreme interpretations, that the core must institute policies to keep poor countries in poverty in order to continue the relationship.

Economies of Scale

The cost advantages gained by companies when production becomes more efficient. When more units of a good or service can be produced on a larger scale, with fewer input costs.

Ecotourism

Tourism directed towards exotic, often threatened, natural environments intended to support conservation efforts and observe wildlife.

European Union

A political and economic union of 28 member states primarily located within Europe with shared goals related to development, peace, etc.

Export processing zones

Areas within developing countries that offer incentives and a barrier-free environment to promote economic growth by attracting foreign investment for export-oriented production.

Fertility rates (TFR)

Total number of children born or likely to be born to a woman in her life time if she were subject to prevailing rate of age-specific fertility in the population.

Formal economy

All economic activities operating within the official legal framework that are paying taxes on all generated incomes.

Fossil fuels

A natural fuel such as coal or gas, formed in the geological past from the remains of living organisms.

Free Trade Agreements

Agreements between trading partners intended to reduce barriers to trade, such as tariffs, quotas, etc.

Gender empowerment measure (GEM)

An index designed to measure the extent of gender inequality across the globe's countries, based on women's relative economic income, participation in high-paying positions with economic power, and access to professional and parliamentary positions.

Gender Inequality Index (GII)

Measures gender inequalities in three aspects of human development - reproductive health, measured by maternal mortality ration and adolescent birth rates; empowerment, measured by proportion of parliamentary seats occupied by females and proportion of adult females and males aged 25 and older with some secondary education; and economic status, expressed as labor market participation.

Gross Domestic Product (GDP)

The total value of goods produces and services provided in a country during one year.

Gross National Income (GNI)

The sum of a country's GDP plus net income from abroad. Gives value of a country's economy regardless of whether the source of the value came from within the country (GDP) or receipts from overseas.

Gross National Product

(former term for GNI)

Growth poles

The concentration of highly innovative and technically advanced industries that stimulate development in linked businesses and industries. (for example, the growth of smart phones added to growth in industries that mine for precious ores/metals used in production of the phones)

High Technology Industries

Those industries that are typically at the forefront of advanced technologies, including those with many employees from the STEM fields.

Human Development Index (HDI)

A measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable, and having a decent standard of living. Health is measured through life expectancy, education by mean years of schooling for adults aged 25 and more and expected years of schooling for children of school entering age. The standard of living is measured using GNI per capita (per person).

Income distribution (GINI Coefficient)

Measures the inequality among values of a frequency (for example, levels of income).

Industrialization

The development of industries in a country or region on a wide scale.

Infant Mortality Rates (IMR)

The number of deaths occurring in the first year of life per 1000.

Informal economy (aka informal sector or black market)

Economic activities that are neither taxed nor monitored by any form of governance; typically makes up a large portion of developing countries economic activity.

International division of labor

The specialization of particular countries in distinct branches of production, whether this be in certain products, or in selected parts of the production process.

International Monetary Fund

An international organization 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.

Just-in-time delivery

A production strategy where materials are only ordered and received as they are needed in the production process in order to reduce costs by saving money on overhead inventory expenses (those costs not directly attributed to any specific business activity, product, or service - like the storage of bulk materials long term and the associated costs (utilities, infrastructure/rent) needed for storing such items).

Labor-market participation rate

Calculated as the labor force divided by the total working-age population (15-64 years of age) and one of many indicators of the health of the overall economy of a country.

Literacy rates

Percentage of a population aged 15 years and over who can both read and write with understanding a short simple statement on his/her everyday life.

Manufacturing (Secondary sector)

The production of products for use or sale using labor and machines, tools, chemicals, and biological processing, or formulation.

Markets

A place where two or more parties can come together to facilitate the exchange of goods and services.

MERCOSUR

The Southern Common Market (official title), a South American trading bloc including Bolivia, Chile, Colombia, Ecuador, Guyana, Peru, and Suriname whose purpose is to promote free trade and the fluid movement of goods and services, people, and currency.

Microloans (small scale finance)

Loans issued by individuals rather than banks or credit unions that are often given to those in developing countries, where standard financial institutions are unavailable, to help them start small businesses.

Multiplier effect

The disproportionate rise in final income that results from an injection of spending into the economy.

Neoliberal policies

Economic policies of laissez-faire economic liberalism (limited government intervention) and free market capitalism that is resurgent in the 20th century. Policy examples would be privatization, austerity, deregulation, free trade, and reductions in government spending to increase the role of the private sector in the economy.

OPEC

The Organization of the Petroleum Exporting Countries is a supranational organization including Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, among others. Its objectives are to coordinate and unify petroleum policies among member countries in order to secure fair and stable prices for petroleum producers.

Outsourcing

The business practice of hiring a party outside a company to provide services and create goods that traditionally were performed in house by the company's own employees and staff; in more recent decades, outsourcing has become increasingly international in scale.

Periphery countries

Those countries that are exploited and dominated by the economic, political, and cultural policies of core countries and whose low-cost raw materials (labor and natural resources) are exported to core and semi-peripheral countries.

Post-Fordist methods

Production techniques that came after Ford that include small batch production, economies of scope (variety over volume), specialized products and jobs, information technologies, the rise of white collar services, and feminization of the work force.

Primary sector

Includes all activities and industries involved in the extraction of natural resources: agriculture, fishing, mining, forestry, etc.

Public transportation projects

Transit systems designed to provide reduced cost of movement and include buses, trains, subways, etc. Government projects typically seek to improve movement between regions of heavy traffic.

Quaternary sector

The knowledge-based part of the economy that includes sectors like information technology, media, and research and development.

Quinary sector

Sectors of the economy that involve complex decision making and the advancement of human capacities such as business executives, government officials, research scientists, etc.

Renewable energy

Flows of energy involving natural phenomenon such a sunlight (photovoltaics), wind, rain, tides, waves, and geothermal heat, among others for electricity generation, air and water heating/cooling, transportation, and rural energy services.

Reproductive health

A state of complete physical, mental, and social well-being in all matters relating to the reproductive system and to its functions and processes.

Rostow's Stages of Economic Growth (Rostow's Modernization Model)

A theory of economic development that states that countries pass through five stages of economic development: traditional economies, pre-conditions for takeoff, takeoff, drive to maturity, and the age of high mass consumption.

Secondary sector (manufacturing)

The production of products for use or sale using labor and machines, tools, chemicals, and biological processing, or formulation.

Semi-periphery countries

Countries that are exploited by core countries for economic resources and that exploit peripheral countries.

Special Economic Zones

Regions intended to facilitate rapid economic growth by levaraging tax incentives to attract foreign investment and technological advancement.

Tariffs

A tax placed upon imported goods designed to make consumers less likely to purchase them as they are more expensive than domestically produced goods.

Tertiary sector

The sector of the economy concerned with services offering intangible goods like entertainment, retail, insurance, tourism, etc.

UN Sustainable Development Goals

Targets and blueprints for achieving development and addressing global challenges related to poverty, inequality, climate, environmental degradation, prosperity, and peace and justice.

Wallerstein's World System Theory

A development theory that uses multiple disciplines and macro-scale approach to emphasis a world-system as the primary unit of social analysis and posits that international divisions of labor has divided the world into core, semi-peripheral, and peripheral countries and that relationships between the three are based in exploitation and power.

World Trade Organization

Deals with global rules of trade between nations and has a main function to ensure that trade flows as smoothly, predictably, and freely as possible.

Horizontal Integration

Absorption into a single firm of several firms involved in the same level of production and sharing resources at that level.

Vertical Integration

Practice where a single entity controls the forward and backward links of the supply or production process, from the raw materials to distribution.

Footloose Industry

An 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.