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

- Measure of the average number of children a woman gives birth to during her reproductive years (15-49)

- MDCs have lower; LDCs have higher

Formal Sector of the Economy

- Part of the economy that is officially recorded with the government

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

Gender Inequality Index (GII)

- Statistical measure of gender inequality that combines data on reproductive health, empowerment and labor-market participation

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)

Income Distribution

- How a country’s total GDP is distributed among the individuals in its population

- Used to assess economic inequality within countries

Infant Mortality Rate

- Number of infant deaths per 1,000 live births

- Key demographic indicator used to assess social, economic, and other conditions

Informal Sector of the Economy

- Part of any economy that is not officially recorded, monitored, or taxed by the government

- Any part of a country's economy that is outside of government monitoring or regulation

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

Literacy Rate

- Percentage of adults in a given country or region who can read and write

Microloans

- Very small loan to people with little income or collateral intended to help them establish or expand a small business

- Women in developing countries are the “poorest of the poor” and policies needed to break the bonds of poverty

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

- Energy derived from natural sources that are constantly replenished at a rate faster than they are consumed

- Sunlight, wind, water, 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

- Economic sectors are part of the global economy where different types of work are undertaken

- Primary, secondary, tertiary, quaternary, quinary

Shipping Container

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

- Loading/unloading done more efficiently 

- Dramatically lowered the cost of global shipping

Sustainable Development

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

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