Unit 7-1: Industry and Economic Development - AP Outline

Break-Of-Bulk Point

Location where transfer is possible from one mode of transportation to another (Seaports, airports, rail terminals, oil refineries)

Key Characteristics

• Facilitates efficient movement of goods from a large-capacity, long-distance carrier to smaller, local carriers

• Necessity for Transfer - different transportation nodes have distinct capacities and physical requirements and often need to be moved from one container/vehicle to another

• Cost and Efficiency - reducing overall transportation costs and improving logistical efficiency due to strategic location

• Location - typically at waterfronts or major intermodal freight terminals and railways junctions

Commodity Dependence

Country's over-reliance on the export of primary commodities (raw materials) for the majority of its export earnings (commodities constitute 60% or more of its total merchandise exports in value)

Mostly occurs in Less Developed Countries (LDCs) and are usually agricultural products, oil, or mineral exports

Implications for Development

• Vulnerability to Price Volatility - demand and price fluctuate

• Limited Economic Diversification - neglect other economic sectors

• Unequal Terms of Trade - export low-value, unprocessed goods, but import high-value, manufactured goods

Dependency Theory

Economic development of certain countries is achieved at the expense of and is contingent upon the exploitation of other countries

- Periphery is poor because it is economically dependent on the core in a disadvantageous relationship originally established under colonialism and imperialism

- Core countries (MDCs) exploited the periphery countries (LDCs)

Ecotourism

Tourism based in natural environments—often environments that are threatened by looming industrialization or development—that frequently helps to protect the environment in question while also providing jobs for the local population

Core Principles of Ecotourism

• Environmental Conservation - preserve natural areas and biodiversity

• Sustaining Local Communities - direct economic benefits to local population - creates jobs and maintains local culture

• Education and interpretation - educate the importance of conservation and the local ecosystem

Fertility Rate

Average number of children a woman is expected to have throughout her childbearing years (typically ages 15-49), assuming current age-specific birth rates remain constant

Factors Affecting Fertility Rates

• Less Developed Countries (LDCs), children may be an economic asset, providing labor for farming or supporting parents in old age.

• In More Developed Countries (MDCs), children are an economic liability due to the high cost of education, healthcare, and raising them

Formal Sector of the Economy

- Refers to the legal, regulated, and taxed part of a country's economic system

- Businesses, enterprises, and other economic activities that have government supervision, monitoring, and protection, and are also taxed

Characteristic	Description
Regulation & Legality	Officially registered with the government and operates within established laws, rules, and regulations (e.g., zoning, environmental standards).
Taxation	Businesses and workers report income and pay taxes (income tax, corporate tax, sales tax) to the government.
Labor Standards	Jobs are characterized by formal employment contracts, fixed working hours, and compliance with labor laws (e.g., minimum wage, safety standards).
Benefits & Security	Employees usually receive job security and social security benefits like health insurance, retirement plans, and paid leave.
Economic Measurement	Its output is included in official economic calculations such as Gross Domestic Product (GDP) and Gross National Income (GNI).

Gender Inequality Index (GII)

Composite measure developed by the United Nations Development Programme (UNDP) to quantify the loss of achievement within a country due to gender inequality

Takes into account factors such as reproductive health, empowerment, and labor market participation to assess gender disparities in a society.

Three Dimensions and Five Indicators

• Reproductive Health - Maternal Mortality Ratio and Adolescent Birth Rate

• Empowerment - Share of Parliamentary Seats Held by Women and Secondary and Higher Education Attainment

• Labor Market - Labor Force Participation Rate

Gross Domestic Product (GDP) Per Capita

- Total value of the output of goods and services produced in a country over a specific time period, regardless of the producer’s national origin

- Divide GDP by total population to get per capita

Gross National Income (GNI) Per Capita

- 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

- Per capita GNI measures average wealth NOT distribution (rich v. poor)

Gross National Product (GNP) Per Capita

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

Human Development Index (HDI)

- Statistical measure of human achievement that combines data on life expectancy at birth, education levels, and GNI per capita (PPP) population

- Indicator of level of development for each country combining three factors (economic, social, and demographic)

Dimension	Indicator	Represents
1. A Long and Healthy Life 🏥	Life Expectancy at Birth	Health and longevity of the population.
2. Access to Knowledge 📚	Expected Years of Schooling (for children) and Mean Years of Schooling (for adults aged 25+)	Educational attainment and opportunities.
3. A Decent Standard of Living 💵	Gross National Income (GNI) per Capita (adjusted for Purchasing Power Parity or PPP)	Economic resources and standard of living.

Income Distribution

Refers to how a nation's total income (or earnings) is divided among its population. It describes the patterns of how wealth and earnings are allocated across different social classes, households, or individuals within a country or a region

Vital for assessing a country's economic development and the level of social equity. While a high GDP per capita suggests high overall wealth, the income distribution reveals whether that wealth is shared broadly or concentrated among a small percentage of the population

Infant Mortality Rate

Measures the number of deaths of infants under one year of age for every 1,000 live births in a given year

IMR is considered the single most important measure of a country's health and socio-economic development. A low IMR (closer to 0) is characteristic of More Developed Countries (MDCs), while a high IMR is characteristic of Less Developed Countries (LDCs)

Informal Sector of the Economy

Refers to economic activities that are not regulated or protected by the government. These activities are typically untaxed, unmonitored, and not included in a country's official economic statistics, like Gross Domestic Product (GDP) or Gross National Income (GNI)- Any part of a country's economy that is outside of government monitoring or regulation

Characteristic	Description
Regulation & Taxation	Unregulated by government agencies; businesses and workers do not pay taxes (or pay very few).
Employment Security	Jobs lack formal contracts, job security, benefits (like health insurance or pensions), and legal protection.
Scale of Operation	Usually involves small-scale, family-owned, or individual enterprises with low capital investment and low barriers to entry.
Economic Measurement	Not included in official government statistics like GDP or GNI, leading to the underestimation of a country's true economic activity.
Examples of Work	Street vending, roadside food stands, unauthorized taxi services, casual construction labor, shoe shining, and unauthorized waste picking.

Least Cost Theory

- Theory developed to try to describe the industrial location of certain industries in terms of minimization of three basic expenses:  relative transportation costs, labor costs, and agglomeration costs

Transportation Costs

• Firms aim to minimize the cost of moving raw materials to the factory and finished goods to the market. Transportation cost is primarily determined by weight and distance

Labor Costs

• Industries may choose to locate farther away from the least-cost transportation point if the savings in cheaper labor are enough to offset the added transportation costs

Agglomeration and Deglomeration

• Agglomeration: The clustering of industries in one area. This can reduce costs through shared services (e.g., specialized repairs, banking, infrastructure), shared skilled labor pools, and increased efficiency.

• Deglomeration: The movement of industries away from an area due to the negative effects of excessive clustering, such as traffic congestion, higher land rents, or intense competition. Deglomeration occurs when these added costs outweigh the benefits of agglomeration

Literacy Rate

Key social indicator of development in AP Human Geography. It is defined as the percentage of a population (usually aged 15 and older) who can read and write a short, simple statement about their everyday life

• More Developed Countries (MDCs): Generally have literacy rates approaching 99-100%. This reflects high investment in universal and compulsory education

• Less Developed Countries (LDCs): Tend to have lower literacy rates, often due to factors like poverty, conflict, limited infrastructure, and a lack of resources dedicated to education

Microloans

Very small, short-term loan given to individuals or small groups, typically in developing countries, who lack access to traditional banking services due to having no collateral or credit history

Purpose and Impact of Microloans

• Empowering the Poor and the Informal Sector and Income Generation

• Promoting Gender Parity

Challenges and Criticism

• Risk of Indebtedness

• High Interest Rates

• Modest Impact

Primary Economic Sector

- Direct extraction or harvesting of natural resources from the earth - source of raw materials for all other sectors of the economy

• Example of Activities  - Agriculture, mining, fishing/aquaculture, forestry/logging, quarrying, hunting and gathering

• Role in Economic Development

  • LDCs (periphery) - Large portion of the economy and employs high percentage of the workforce

  • MDCs - Lower percentage of workforce as tech/mech improves

Quaternary Economic Sector

Specialized sub-division of the Tertiary Sector (Service Sector). Specifically concerned with information, knowledge-based processing, research, and high-level technical services

Characteristics of Quaternary

• Skill level - Highly skilled, specialized and technically educated

Examples of Quaternary Activities

• Information Technology (IT), Finance and Consulting, Research and Development, Government/Education, Media

Role In Economic Development

• Largest in core countries (post-industrial)

• Drives innovation and is source of highest-paying, value-added jobs in the global economy

Quinary Economic Sector

Highest and most specialized sub-division of the Service Sector (Tertiary) - involve high-level decision-making and top-executive functions that affect the entire economy and society

- CEO/CFO, owners, high government officials, directors of NGOs

- Largest in core countries (post-industrial)

Renewable Energy

Refers to energy resources that are naturally replenished on a human timescale, making them sustainable for long-term use. Study of renewable energy is crucial for understanding a country's shift toward sustainability, energy security, and reduced environmental impact

• Solar, wind, hydroelectric, geothermal, and biomass

Secondary Economic Sector

Processing, transforming, and manufacturing of raw materials into finished or semi-finished goods - adds significant value to the raw materials extracted in the primary sector

Characteristics of Secondary

• Manufacturing, processing, assembly, construction

Role in Economic Development

• Mainly in developing (semi-periphery) countries 

Sectoral Structure of an Economy

Refers to the way a country's workforce and output are divided into different categories of economic activity. This structure is a primary indicator of a country's level of development, as economies typically shift from being dominated by raw material extraction to high-level services as they industrialize and modernize

- Primary, secondary, tertiary, quaternary, quinary

Shipping Container

- Standardized, stackable, intermodal boxes used to transport goods by ship, railroad, or truck

1. Intermodal Transportation

• Definition: The ability to move goods using multiple modes of transport (ship, rail, and truck) without ever having to unpack and repack the cargo.

• Effect: A container loaded at a factory in China can be moved by truck to a port, loaded onto a ship, transferred to a train in a US port, and finally delivered by truck to a warehouse in the Midwest—all without handling the individual items inside. This created unprecedented efficiency.

2. Reduced Costs and Time

• Reduced Labor: Before containers, break-bulk cargo (individual boxes, bags, and barrels) was loaded and unloaded manually by large teams of dockworkers, a slow and expensive process. Containers are handled mechanically by specialized cranes.

• Economies of Scale: Standardization allowed for the development of massive container ships capable of carrying tens of thousands of containers (measured in TEUs—Twenty-foot Equivalent Units). This lowered the cost of shipping per unit of cargo, often by over 90% compared to break-bulk methods.

3. Fueling Globalization

• The dramatic reduction in transportation costs made it economically viable for companies to geographically separate different stages of production.

• This led to the expansion of global supply chains, where raw materials might be sourced in one country, manufactured in a Newly Industrialized Country (NIC) to take advantage of cheaper labor costs, and then sold in Core countries (MDCs).

Sustainable Development

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

Pillar	Focus	Goal in Development
Environmental	Preserving and managing natural resources, reducing pollution.	Protecting biodiversity, reducing carbon emissions, investing in renewable energy, and managing water resources.
Economic	Ensuring efficient use of resources and long-term economic prosperity.	Promoting local economic activity, fostering innovation, shifting from unsustainable practices, and reducing income inequality.
Social	Ensuring human well-being, equity, and cultural preservation.	Improving education and healthcare access, ensuring gender equality, and alleviating poverty.

Tertiary Economic Sector

Involves activities that provide services rather than producing tangible goods - provides services to consumers, businesses, or government (providing utility rather than a physical product)

Examples of Tertiary Activities

• Commercial/Retail - retail stores, restaurants

• Professional Services - banking, finance, real estate, accounting, legal services

• Personal Services - healthcare, education, entertainment, tourism

• Public Services - government administration, defense, police, fire

• Transportation - airlines, trucking, telecommunications, postal/delivery services

Role in Economic Development

• MDCs - accounts for largest percentage of the Gross Domestic Product (GDP) and employs the majority of the workforce

• LDCs - will have some basic services, but mostly focused on primary/secondary

Base (Basic) Industry

Refers to an enterprise that brings money into a city or community by exporting its goods or services primarily to consumers outside the settlement

• Role: These industries are considered city-forming because they generate the primary wealth (outside money) that flows into the local economy, allowing the city to grow.

• Examples: A car manufacturing plant (selling cars nationwide/globally), a university (attracting students who pay tuition and live locally), corporate headquarters (earning revenue globally), or a tourist resort (attracting outside visitors).

Non-Base (Basic) Industry

Refers to enterprises that provide goods and services primarily to people and businesses within the local community

• Role: These industries are considered city-serving because they recycle the money brought in by the base industries. They grow in response to the needs of the basic workers and their families

• Examples: A local dry cleaner, a grocery store, a local hair salon, or a small city hospital (serving only local residents)

Multiplier Effect

Process by which an initial change in base industry employment generates a larger cumulative change in total employment for the community.

• When a new base industry job is created (e.g., a new factory worker is hired), this worker and their family move into the community and spend their income locally.

• This spending supports the creation of new non-basic jobs (e.g., a new teacher, a new retail clerk, a new restaurant worker) to meet the increased demand for local goods and services.

Bulk-Gaining Industry

Type of industry where the final manufactured product weighs more or has a greater volume than the raw materials used to create it and is typically located close to the market to minimize transportation costs. Examples include beverage production, automobile manufacturing, and processed food industries

Bulk-Reducing Industry

Type of industry where the final product weighs less or has a smaller volume than the raw materials used, often situated near the source of raw materials to reduce transportation costs. Examples include mining, lumber processing, and steel manufacturingis designed to minimize transportation costs by being located near raw material sources