AP HUG Unit 7

Industrial Revolution

the rapid transformation of the economy through the introduction of machines, new power sources, and new chemical processes in Europe and the US between 1760 and 1830

textile

a fabric or cloth woven from the fibers of wool, cotton or flax

labor productivity

the average amount of goods or services produced per worker per unit of time

The start and diffusion of the Industrial Revolution

It started in Britain due to advances in agriculture that caused migration to cities, a good climate for wool(textile production), and its position as a world trade leader

Relied on running water and wood for fuel and caused mechanization(spinning Jenny) and transportation advances

Though they tried to keep their secrets, it ended up diffusing to Europe, the US, Japan, Russian and Ukraine

Fossil fuels

natural fuel derived from the fossilized remains of living organisms

What was the main control of manufacturing industries?

The weight of coal

EX steelmaking factories were close to coalfields rather than iron fields since coal was too heavy. For example, Pittsburg, Penssylvania relied on rivers to get iron

Crude oil

a yellowish-black liquid fossil fuel found in geologic deposits

Commercial farmers

farmers who raise crops and livestock to sell in the market at a profit rather than raising them for their own consumption

Wage labor

a socioeconomic relationship in which an employee pays a worker to complete a task, sometimes by the day or by the hour. Characteristic of capitalism

Working class

people in an industrial economy who depend on wage labor to obtain the necessities of life

Capitalist class

people who own the means of production and pay the wages of workers

Middle class

people who are either salaried professionals(lawyers, educators) or office wage workers(bank tellers, store clerks)
Developed later in the 19th century

Classes created by wage labor(no elaboration yet)

Working class; capitalist class

Labor unions

associations of workers in particular industries established to collectively bargain with capitalists

Mass production

The machine manufacture of large quantities of identical items

Uses the assembly line

Assembly line

a system of manufacturing in which parts and procedures are added one step at a time thorough a series of workstations until a finished product is assembled

Industrial Revolution effects on household

Men became associated with public life and women with domestic life. Thus, women were pushed out of political and economical life

Where did countries get raw resources for industrialization

IMPERIALISM/COLONIALISM
Britain: Egypt and Sudan for cotton

France: West Africa for cotton and vegetable oils

Belgium: equatorial Africa for rubber

Mass consumption

the purchase of large amounts of mass produced goods by large numbers to people

International division of labor

situation in which the labor forces of different countries and world regions play complementary roles in an interdependent global economy.

Colonies provided new markets, labor, raw materials, parts to supply trade ships, and profits for the mother country

Mother country provided manufactured goods are expensive prices

This blocked the diffusion of industrialization since the 2 countries were locked in an interdependent relationship

Economic sectors

Groupings of industries based on what is produced and the activities of the workforce

Primary sector

industries that extract natural resources from the environment

EX fishing, hunting, farming, quarrying

Secondary sector

industries that process the raw materials extracted by primary industries, transforming then into finished, usable forms

EX iron to steel; logs to lumber

Tertiary sector

service industry

EX store clerks, lawyers, teachers

Quaternary sector

intellectual and informational services like scientific research development

EX computer software development, biomedical research

Quinary sector

portion of the economy where the highest level management decisions are made in the areas of business, government, education, and science

EX Major CEO(Bezos)

Core-periphery model

Core Is the manufacturing(secondary sector) in the center of an area while the periphery is the primary sector, surrounding area were the natural resources to manufacture goods are extracted from

Applies globally too like Britain and India for cotton

Base industry

an industry of disproportionate economic importance and on whose existence other industries and employment sectors depend

semi-periphery

countries or regions whose economies have elements of both the core and periphery

Factors influencing manufacturing locations

energy(lowest possible cost)

material(bulk-increasing- near markets; or bulk-reducing-near materials)

labor(either low cost or highly skilled)

markets

transportation(international airports, ports, trains, etc.)

Break of bulk point

a location where cargo is transferred from one mode of transportation to the other

shipping containers

standardized, stack-able, inter-modal metal boxes used to transport goods by ship, railroad, or truck

EX ports

Containerization

the system of inter-modal freight transport using shipping containers

Least cost theory

Alfred weber’s theory that transportation costs and labor costs play a strong role in determining the location of manufacturing facilities. It takes into account the location of raw materials and the location of the market

Transportation: maximize

Labor costs: minimize

Agglomeration: maximize

Drawbacks of the least cost theory

Assume:

plane is isotropic

labor is immobile

raw materials only found in a fixed location

1 market at a fixed location

Transportation costs are directly related to distance traveled and weight

Economic factors are the only influences(in reality, there are emotional factors)

Rostows Stages of Economic Growth

Has linear progress line an airplane where all countries will eventually get to the 5th stage

Traditional Society: subsistence, barter ag; Medieval Europe

Transitional Stage: specialization, start to secondary sector, surpluses, infrastructure; Afghanistsan

Take off: industrialization, investment, regional growth, political change; India, Philippines, Vietnam

Drive to Maturity: diversification, innovation, less reliance on import, pop growth begins to decline; Brazil, Russsia, China

Age of high mass consumption: consumber durable goods flourish; service sector; Japan, South Korea, Europe, Us, canada

Drawbacks of rostow’s theory of economic growth

Economies of different countries are not independent; there are obstacles because other countries suppress industrialization; based on capitalist, democratic countries; doesn’t take into account culture, climate, landforms, natural resources, relative location, sustainability, and the legacy of colonialism

World systems theory

Wallersteins’ theory of economic development that regards history as moving through a series of socioeconomic systems, culminating in the modern world system by 1900

Uses the core-semi-periphery-periphery model where countries depend on each other but in unequal relationships

Suggests that over time, regions have been incorporated into the world economy through imperialism and colonialism

Drawbacks of the world systems theory

No culture; outdated because most countries are post industrial; doesn’t recognize NGOs(non governmental organizations)

dependency theory

theory that the periphery is poor because it was economically dependent on the core in a disadvantageous relationship originally established under colonialism and imperialism

Originally developed from South America

Suggests that the periphery should delink, but this is hard in the modern interdependent world economy

drawbacks of the dependency theory

too little attention to social and cultural variations; delinking is increasingly difficult in the interdependent world economy

commodity dependence

occurs when commodities account for more than 60% of the value of a country’s total exports

usually in developing countries since it shows underdevelopment since the global economy is unpredictable and there’s a trend of commodity values decrease

Gross national product(GDP)

The total value of all the goods and services made by a country’s residents and businesses in a specific time period, regardless of the country or location in which they were made

Does not count value produced within a country by foreign residents/businesses

EX Canadian residents with a business in France improve the Canadian GNP

Gross domestic product(GDP)

total value of all goods and services produced within a country over a specific time period, regardless of the producer’s national orgin

May be inaccurate if the population is large/small. Should be counted by per capita

gross national income(GNI)

total income of a country’s residents and businesses, including investment income, regardless of where it was earned, as well as money received from abroad(like foreign investment and development aid)

GDP per capita

a country’s GDP/total pop

purchasing power parity(PPP)

measures how much a common basket of goods costs locally in the currency of each country being compared

gender inequality index(GII)

a statistical, composite measure of gender inequality that combines data on reproductive health, empowerment, and labor market participation. so it uses both qualitative and quantitative

Health: maternal mortality rate; adolescent birth rate

Empowerment: female/male pop in 2nd edu/parliament seats

Labor market: fem/male labor participation

Drawbacks of the GII

does not show local government participation or non government life; quality of jobs; unpaid domestic labor

So it neglects the breadth of gender inequality

Human development index

a statistical measure of human achievement that combines data on life expectancy at birth, education levels, and GNI per capita populaiton

Usually correlates with income levels.

Highest in western Europe(Sweden, Norway, etc.)

informal sector

the part of the economy that is not officially recorded, monitored, or taxed by the government

babysitting; yard work; flea market; drugs)

A lot of women participate in the informal sector in developing countries because of gender discrimination that results in a lack of education and formal job training

formal sector

part of the economy officially recorded by the government

income distribution

how a country’s GDP is distributed among the individuals in its population

Usually no middle class in developing countries

Other measures of economic development

• access to healthcare: availability and affordability

• fossil fuel vs renewable energy use: countries without a domestic supply have to import fossil fuels. But if they use renewable energy, that can stimulate economic growth and decrease their need to import fuels

• life expectancy

• literacy rate

• fertility rate

• infant mortality rate

  • education for all: gender and minority equality

gini coefficient(Gini index)`

measures income distribution within a population

0-1 scores; the higher the score, the higher the income inequality

Income inequality is higher in LDCs

economic growth leads to what for women?

Higher girls education rates and higher job opportunities in the formal sector

this leads to more involvement in public life and increased geographic mobility

Geographic mobility

one’s relative ability to move through space; measure of individual liberty and privilege

Appliances did what for women?

Historically, appliances in the home and electricity allowed women to spend less time doing domestic labor and more time at paid jobs

Gender empowerment measure(GEM)

measure of gender equality that includes the proportion of seats held by women in national parliaments, the percentage of women in economic decision making positions and women’s versus men’s share of earned income

gender parity

a way of documenting progress toward gender equality using measures such as relative access to education, average incomes for women vs men, and workforce participation

Trend with GDP in LDCs and MDCs

Low GDP per capita: high women participation in agriculture

Highest and lowest GDP per capita: highest owmen in workforce

Developing(middle GDP): lowest female particpation(domestic labor)

Glass Ceiling

Women in developing countries rarely obtain upper level jobs

Better in MDCs but it still exists

Industrialization in developing countries womens’ roles

New factory jobs are seen as women’s work

This maintains the existing gender disparities(low wages; repressive working conditions; minimal job security)

“male” vs “female” jobs pay

Male jobs pay more and women in those jobs still get paid less

20-32% less

But western europe is closest to gender parity; north africa and middle east it the farthest

Microlaosn

a very small loan to people with little income or collaterla intended to help them establish or expand a small business; typically given out wo women since they will provide for their family and are less likely to default. Repayment is very high

Given in developing countries(esp south america and south asia) and may help them improve their standard of living. Can even be used for children education to get a better job in the future

BUT can cause them to fail if they can’t repay the loan and they sink more into debt

Grameen bank is a NGO that does this

Transportation costs terminal and line

Terminal costs: the costs of specialized infrastrucutre where goods/people are unloaded, loaded and transferred; airports, tram rails, ports

Line costs: costs during transit; “line” haul costs; trucks have a high line cost because of fuel to good ratio

Mercantalism

a theory stating that each country strives to export more than it imports in order to accumulate wealth

Prevailing theory of trade in the 16th century; colonialism

Protectionism

trade rules that restrict imports in order to protect domestic industries

Absolute advantage

a nation’s ability to produce a good or service more efficiently than another nation

Comparative advantage

a country’s ability to produce one product much more efficiently than it can produce other products within its economy

export their surplus production

Import goods in which they don’t have comparative advantage

complementarity

a measure of how well one country’s export profile matches another countrys import profile

high: basis for successful trade

Transnational corporation(TNC)

a firm with power to coordinate and control operations in more than 1 country, even if it does not own those operations

competitive advantage

a firms’ relative ability to outperform other TNCs in its industry

They try to maintain this through constant innovation and upgrading

International trade today is mostly what?

Between and especially within TNCs

Highest world trade

China: goods

US: services

Developed has higher annual growth rates in trade(Asia is the highest)

Free-trade agreement

a treaty between 2 or more countries that reduces tariffs adn promotes foreign investment

tariff

a tax on imported goods and services

customs unions

a free trade agreement among 2 or more member countries, combined with a single, common exernal trade policy for non members

Encourages free trade at a regional scale within teh union

Has protectionist measures gainst competing imports from nonmembers

EX European Union customs union(EUCU) and Mercosur(Southern Common market)

Organization of the Petroluem Exporting Countries(OPEC)

an intergovernmental organization created to coordinate and unify petroleum policies among member countries
members in Africa, South America, and the Middle East

Trade Embargo

an official ban on trade with a specific country or a specific good

financial market

marketplace where financial instrumenst are traded; stock markets, bond markets, and foriegn exchange markets

Major ones in ASia, Europe and north america

1980s latin america debt crisis

OPEC’s 1973 oil embargo raised oil prices and gave OPEC countries great porfits. They invested thier surplus cash into international banks and lowered the cost of international credit. Latin american countries borrowed freely, which put them in a debt crisist aht spread panic worldwide. So the IMF forced them to abandon ISI and use free trade

debt crisis

when a government’s debts exceeds its tax revenue to the point where it cannot meets it loan payments

global financial crisis of 2007-8

Banks offered more mortgages to people with few financial resource.s They bundled all home loans together, both safe and risky loans, and sold them to investors to earn income as the debts were repaid. The easy mortgage terms caused an excess of property buyers, which drove up home prices. But, when homes became ovevalued, mortgage holders didn’t pay what they owed since it was more than the house was worth. Major investment banks with the financial products failed, leading to a global financial criss. It was the worst global economic downturn in 80 years

Governments had to invest trillions of dollars to help the failing banks

Import substitution industrialization(ISI)

an economic development policy intended to replace imported goods with domestically produced goods as a way to spur industiralization and reduce dependenc eon other nations

neoliberal policies

policies that prioiritize free trade, capitalism, reduced government spending, privitization, and deregulation

Boost economic efficiency and individual freedom

Fordism

the economic and social arranagement based on the mass consumption fo standardized goods, high labor union membership rates, stable adn full time manufacturing employment, adn hig fh factory wages that enable mass consumption

Brought higher standards of living for workers and greatly expanded the middle class

Corporate disinvestment

a process in which companies stop investing in factory construction, equipment, and improvement and begin selling off assets, such as machinery, buildings, and land

offshoring

the relocation of manufacturing and support services from one country to another

Usually relocates to NICs, newly developed countries where the cost of doing business is lower

outsourcing

the transfer of parts of a firms’ internal operations to a third party; a different corporation is contracted with work for the company because they specialized in that part of labor or have cheaper labor

de industrialization

the decline, and sometimes complete disappearance of employment in the manufacturing sector in the core’s industrial centers

Causes brownfields

Doesn’t particularly mean a decrease in manufacturing output since labor just becomes more productive

Special Economic Zones(SEZ): specific areas within a country’s borders where business and trade laws are different from those in the rest of the country

Mostly set up in developing countries

EX China has many set up near ports

Export processing zone(EPZ): industrial zone with special incentives to attract foreign investment to places where imported materials undergo processing or assembly before being re-exported

The goods shiped are exempt from tariffs and other taxes and there are rarely labor unions

Want to attract foreign investment

Free trade zone(FTZ)

specially designated duty free area that provides warehousing, storage, adn distribution facilities for goods intended for trade or reexport

Focused where international trade is like seaports, international airports, land border crossings

Focus on manufacturing, labor intensive goods

Rampant informal economies

New internal division of labor + example

the spatial shift of manufacturing from developed countries to developing countries, including the global scaling of labor markets and industrial sites

Developed countries rapidly add quaternary sectors, especially R and D

Developing countries: manufacture what was once in the MDC. Export those goods

Example: Iphone

Research and evelopment in California

Minerals from sub saharan africa

manufactured in china

Exported to dev world for sale

Post fordism

the shifts from manufacturing centers to spatially dispersed production sites, from standardized mass production to specialized batch production and from a permanent workforce to temporary and contract workers

Characterized by flexibility in production sites, markets, workforce, and goods produced

Needs skilled labor

Just in time manufacturing(JIT)

the production of small batchces of goods as needed by customer demand

high technology industry

on industry that develops and use the most advanced technologies avilable and has the highest levels of research and development

Aerospace, computers, pharmaceuticals

Quaternary

Market capitalization

investors valuation of companies in dollar terms

Highest used to be oil and gas

now high tech industries

agglomeration economies

occurs when firms cluster spatially in order to take advantage of geographic concentrations of skilled labor and industry suppliers, specialized infrastructure, and ease of face to face contct with industr participants

Comonly near metropolitan areas

Needed for high tech; ie Silicon valley

Multiplier effects

the creatin of new businesses and jobs in other industries as the result of investment in a different industry

1 highly skilled tech job creates 2.5 other non tradable sector jobs