U7: Industrial & Economic Development Patterns & Processes

Industrialization

The widespread development of industries, machine production, technology, and factories within a region.

The Industrial Revolution changed technology such that manufacturing productivity dramatically increased.

Industrialization leads to urbanization. Greater urbanization leads to increased government involvement in addressing issues such as sanitation and public health, resulting in areas becoming more developed.

Industrialization has led to a desire to control raw materials and markets. This has led to imperialism and territoriality where more industrial states control undeveloped states for their resources, contributing to a divide between industrialized and undeveloped states.

Cottage Industry

Small-scale manufacturing businesses owned and operated by an individual or a family often from their own home.

Cottage Industries were prevalent before the Industrial Revolution.

Footloose Industries

Industries that can be located anywhere without effect from factors of production.

E.g. Diamonds, computer chips, honey. (Small or non-perishable items)

Primary Sector

Industries that extract natural resources from the environment.

E.g. farming, mining, and fishing.

Primary sectors are prominent in less developed countries.

Secondary Sector

Industries that process raw materials, transforming them into finished, usable forms.

E.g. Manufacturing, building, textile.

As countries begin to develop and go through industrialization and urbanization, the secondary sectors of their economies increase.

Tertiary Sector

Industries that provide services to businesses and consumers, including all the different types of work necessary to transport and deliver goods and resources.

E.g. Marketing.

As countries deindustrialize, the tertiary sector of the economy increases.

Quaternary Sector

The portion of the economy dedicated to intellectual and information services.

E.g. Research, education

Quinary Sector

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

E.g. CEOs, governments

Offshoring

When a company moves their back office to other countries.

Break of Bulk Point

A location where cargo is transferred from one mode of transportation to another.

Least Cost Theory

Alfred Weber’s theory that transportation costs and labor costs play a strong role in determining the location of manufacturing facilities. Facilities tend to locate where costs are minimal and profits are maximal.

Bulk reducing industries tend to locate closer to where the resource is located while bulk gaining industries tend to locate closer to the market. This is because heavier items cost more to ship.

Over time, as transportation methods improved, transportation costs have been less of a concern for where facilities locate.

Periphery Country

Countries that have relatively little industrial development, simple production systems focused mostly on agriculture and raw materials, and low levels of consumption of manufactured goods.

Semi-Periphery Country

Countries whose economies have elements of both the core and the periphery.

Core Country

Countries that have the most advanced industrial and military technologies, complex manufacturing systems, external political power, and the highest levels of wealth and mass consumption.

As countries become more prosperous, citizens gain more and more disposable income which allows them to consume goods and services rapidly.

While consumption is skewed toward the developed world, its effects can be seen everywhere since the goods and services that are consumed in more developed countries are likely to have been extracted and processed in less developed countries.

Gross Domestic Product (GDP)

The total value of all goods and services produced within a country over a specific period, regardless of the producer’s national origin. (Based on location.)

Gross National Product (GNP)

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.

Gross National Income (GNI)

The 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 such as foreign investment and development aid.

Gender Inequality Index (GII)

A statistical measure of gender inequality that combines data on reproductive health, empowerment, and labor-market production.

Human Development Index (HDI)

A statistical measure of human achievement that combines data on life expectancy at birth, education levels, and gross national income per capita population.

Gender Parity

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

Formal Economy

The part of the economy that is officially recorded with the government.

E.g. Baking, healthcare, and education.

Informal Economy

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

E.g. drug trade, sex trade, home improvement, and car repairs.

Rostow’s Stages of Economic Growth

A model depicting how countries move from an underdeveloped society to one that is more developed. According to Rostow, for a country to become fully developed it must go through five stages:

1. Traditional Society

2. Preconditions to take-off

3. Take-off

4. Drive to maturity

5. Age of high mass consumption

Wallerstein’s World System Theory

Wallerstein’s theory of economic development that regards world history as moving through a series of socioeconomic systems, core, periphery, and semi-periphery, culminating in the modern world system by about the year 1900.

Dependency Theory

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

Commodity Dependence

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

Commodity Chain

A series of links connecting a commodity’s many places of production and distribution.

Supply Chain

A network between a company and its suppliers to produce and distribute a specific product to the final buyer.

Deindustrialization

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

Neoliberal Policies

A range of pro-market and anti-government positions on the economy, such as reducing government ownership and regulation, promoting privatization and lowering barriers to trade.

World Trade Organization (WTO)

An international organization that regulates trade among 184 member states, providing a framework for negotiating trade agreements and resolving trade disputes.

Trade Blocs

Collections of countries who have agreed to a set of trade regulations.

E.g. USCMA, EU

Mercosur

Spanish acronym for the Southern Common Market, a South American customs union that includes Argentina, Brasil, Paraguay, and Uruguay as its full members.

Organization of the Petroleum Exporting Countries (OPEC)

An intergovernmental organization created to coordinate and unify petroleum policies among member countries.

Globalization

The increasing interconnections of different parts of the world through processes of economic, environmental, political, cultural, and technological exchange.

Increased interdependency links the economies of countries such that economic growth or decline in one country results in economic growth or decline in other countries.

Tariffs

Taxes on imported goods and services.

International Money Fund (IMF)

International organization that seeks to foster global monetary cooperation, achieve financial stability, facilitate international trade, and promote sustainable economic growth.

Microlending/Microloans

The lending of money in small amounts to impoverished individuals and groups who are unable to obtain loans from mainstream banks to help them establish or expand small businesses.

Grameen Bank was the first microloan institution. Their mission was to provide comprehensive financial services to empower the poor to realize their potential and to break out of the cycle of poverty.

Outsourcing

The transfer of part of a firm’s internal operations to an area or country outside of where a company is located.

Free-Trade Zone

Area that provides warehousing, storage, and distribution facilities for goods intended for trade or reexport.

Free-Trade Zones are typically located around airports or seaports.

Special Economic Zone

An area within a country where business and trade laws are different from those in the rest of the country to attract foreign investment.

Export-Processing Zone

Industrial zone with special incentives to attract foreign investment to places where imported materials undergo processing or assembly before being re-exported.

Fordism

A manufacturing system that uses a more efficient and standardized assembly line that requires less skill.

Post-Fordist Methods

A manufacturing system reliant mainly on machines to reduce human error and work longer hours of production.

Post-Fordism leads to shifts from manufacturing centers to spatially dispersed production sites, from standardized mass production to specialized batch production, and from a permanent workforce to temporary contract workers.

Multiplier Effect

The potential of jobs to create additional job opportunities.

For instance, if a factory moves to town, more jobs will be available. Since there will be more workers to fill in for these jobs with money to spend, more businesses may develop in order to profit off of the factory workers and provide them with services.

Agglomeration

Occurs where firms cluster spatially in order to share costs, gain more profits, and take advantage of geographic concentrations of skilled labor, industry suppliers, and specialized infrastructure.

Hoteling’s Model

A model that suggests competitors, in trying to maximize sales will seek to constrain each other’s territory as much as possible, leading to them locating adjacent to each other in the middle of their collective customer base.

Growth Poles

Concentrations of highly innovative and technically advanced industries that are nodes for lesser businesses.

Location Interdependance

The idea that the location decision for a factory is dependent upon the location of other factories because being near similar factories allows businesses to make use of the same services.

Economies of Scale

Cost advantages that can come with a larger scale of operations.

Just-In-Time Delivery

An industry and supply chain management approach which aims to increase efficiency by reducing inventory through the production of small batches of goods as needed by consumer demand.

One downfall of Just-In-Time Delivery is that its success can be hindered by machinery breakdowns and supply failure.

UN’s Sustainable Development Goals

The United Nation’s 17 goals for achieving a more sustainable future which addresses issues relating to climate change, poverty, inequality, environmental degradation, peace and justice.

Ecotourism

Travel to natural areas of ecological value in support of conservation efforts and socially just economic development.

Sustainable Development

Development that meets present consumption needs without compromising the ability of future generations to meet their consumption needs.

Bulk-Gaining Industry

An industry in which the final product has more weight than the raw materials.

Bulk-Reducing Industry

An industry in which the final product has less weight that the raw materials.

Bid-Rent Theory

Explains how the demand for and price of land decreases as its distance from the central business district increases.

Central Place Theory

Walter Christaller’s theory that cities are economic centers whose purpose is to distribute goods and services to people who are willing to travel certain distances to acquire them.