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economic sectors
five categories that divide the types of economic activities based on what is produced and the activities of the workforce; primary, secondary, tertiary, quaternary, quinary
primary production
jobs that directly extract materials from the earth; ex. agriculture, mining, timber
secondary production
manufacturers that process raw materials into finished consumer goods
manufacturing
the process of transforming raw materials into finished goods on a large scale through various production methods and techniques
tertiary production
provision of goods and services to people; ex. bankers, lawyers
quaternary production
jobs involving innovation and invention; research and developing new things; ex. scientist
quinary production
jobs involving decision making at the highest level; highly educated and experienced workforce; ex. ceo of a big global company
commodity chains
a linked system of processes that gather resources, convert them into goods, package them for distribution, disperse them, and sell them on the market
commodity-dependent country
a country that produces a single commodity accounting for more than 60% of its exports
nonrenewable products
a natural resource that cannot be readily replaced by natural means at a pace quick enough to keep up with consumption
renewable products
a natural resource that can be readily replaced quickly enough to keep up with consumption
value-added processing
processing a good and adding something to it to raise the value
perishable goods
goods that will perish easily/quickly if not given to consumers quickly enough; ex. milk, cheese, bread
low-benefit services
sectors where the labor force tends to be hourly employees who receive few if any additional benefits, like paid vacations or health insurance
high-benefit services
sectors where the labor force receives many benefits
service firms
businesses that provide services primarily to individual consumers, including retail services and education, health, and leisure services
deindustrialization
decline or disappearance of employment in manufacturing sectors in core centers
foreign competition
competition from businesses globally
off-shore locations
locations of a corporation that are not in the home country
investment value
the value of the property to a particular investor
uneven development
when different parts of a country are unevenly developed
industrialized economies
an economy focused on the production of goods intended for the market
service-based economies
an economy focused on bringing services to consumers
economic restructuring
the process in which economies move from an industrial base, especially around heavy industry and factories, into a service sector
free-market reforms
changes in economic policy that promote open trade, private businesses, and land ownership
resource-based economies
an economy whose gross national product or gross domestic product to a large extent comes from natural resources
new industrialized countries (NICs)
economies have made a shift toward manufacturing; rapid population growth (between stages 2 and 3); urbanization; gaining capital from TNCs
foreign aid
aid (such as economic or military assistance) provided to one nation by another
foreign direct investment (FDI)
investment made by a foreign company in the economy of another country
microloans
small loans that have created opportunities for people to create small business and improve standards of living
world bank
international bank that lends loans to poorer countries for projects to help them develop; similar to international monetary fund
comparative advantages
a country’s ability to produce one product more efficiently than other products
off-shoring
relocation of manufacturing and support services from one country to another
asian tigers
south korea, singapore, taiwan, and hong kong each followed the international trade path by producing manufactured goods with low labor costs and selling to developed countries
economic indicators
indicators of a country’s development, including GDP, GNP, GNI, etc.
gross domestic product (gdp)
the value of goods and services produced in a country, no matter who makes it; ex. a french person with a business in the US will count
gross national product (gnp)
the value of all goods and services made by a country’s residents, regardless of location; ex. a US citizen who owns a business in france will count
trade surplus
a country exports more goods than it imports
trade deficit
a country’s imports account for more than its exports
human development index (hdi)
created by the un, it takes decent standard of living, long and healthy life, and access to knowledge into account when determining a country’s level of development; scale of 0-1, 1 being the highest level of development
income disparity
the unequal distribution of wealth or income among individuals within a population or a specific area
agglomeration
occur 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 contact with industry participants; mostly found in metropolitan areas
dependency theory
theory stating the periphery is underdeveloped because of its dependency on the core, causing an unfair relationship
export-processing zones (EPZs)
industrial zone with special incentives to attract foreign investment to places where imported materials undergo processing or assembly before being re-exported
fordism (mass production)
a type of production that involves assembly lines, where workers are assigned one task to perform repeatedly; characterized by a permanent workforce year-round, high wages, and encouragement of labor unions
import substitution
government policy of encouraging local manufacturers to produce goods that would replace imports
localization economies
occur when an increase in the size of an industry in a city leads to an increase in productivity of a particular activity
least-cost theory
the selection of a factory location has to do with minimization of land, labor, resource, and transportation costs; weight-losing bulk will locate near the inputs, while weight-gaining bulk will locate near the market
maquiladoras
foreign-run factories running in northern Mexico border communities that were created by nafta and led to an increased population, better paying jobs, and better lives
post-fordism
flexible production where workers are organized into teams that perform a variety of tasks
rostow’s model of economic development
describes five stages of development that each country will eventually go through; traditional, preconditions for takeoff, takeoff, drive to maturity, and age of mass consumption
transnational corporations (TNCs)
a company that conducts research, operates factories, and sells products in many countries, not just where its headquarters or shareholders are located
world systems theory
regions are incorporated into the world economy through imperialism, creating interdependent but uneven relationships between core countries and former colonies
purchasing power parity (PPP)
an adjustment made to the gni to account for differences among countries in the cost of goods
gross national income (gni)
the total income of a country’s residents and business, including investment income as well as money received from abroad, such as direct foreign investment and development aid
footloose industry
an industry that can be located anywhere; ex. telemarketing