Studied by 6 peopleRostow’s Stages of Economic Growth
a modernization theory that focuses on the shift from traditional to modern forms of society
Stage: Traditional
Characteristics
Depends upon primary sector activities (farming, fishing, hunting) for subsistence
Uses limited technology
Carries out local or regional trading
Enjoys limited socioeconomic activity
Examples
English colonies in North America in the 17th century
Medieval Europe
No entire country in this stage today
Stage: Preconditions for Takeoff
Characteristics
Improves infrastructure
Improves farming techniques and shfts toward commercial agriculture
Exports agricultural and raw materials (international trade)
Diffuses technology more widely
Starts individual socioeconomic mobility
Examples
US in early 19th century
Nigeria today
Afghanistan today
Stage: Take-off
Characteristics
Develops major technological innovations
Starts industrialization and primary sector begins to shrink
Spreads entrepreneurial mentality
Begins to urbanize
Initiates self-sustaining growth
Examples
US mid-19th century
Japan, late 19th century
Bangladesh today
Stage: Drive to Maturity
Characteristics
Creates new industries while strengthening existing ones
Improves energy, transportation, and communications systems
Sees economic growth greater than population growth
Invests in social infrastructure
Examples
US late 19th century
Germany, early 20th century
Brazil today
Stage: High Mass Consumption
Characteristics
Spends money on non essential goods (consumerism)
Purchases of high order goods become common
Desires to have a more egalitarian society
Supports a strong tertiary sector
Examples
US early 1920s to present
Japan, mid-1950s to present
Criticisms of Rostow’s Model
Limited Examples - The model was based on American and European examples, so it did not fit countries of non-Western cultures or non capitalist economies
Role of Exploitation - Rostow’s model led to poorer countries getting trapped in a state of dependency upon wealthier countries
Bias Toward Progress - The model suggested linear change, always in the direction of progress. However, developing countries often need the assistance, money, and technology of developed countries to develop. And in some cases, countries might regress in economic development
Lack of Variation - In his model, Rostow suggested all countries have the potential to develop, but there are significant differences among countries, such as physical size, population, natural resources, relative location, political systems, and climate, that affect their ability to develop
Lack of Sustainability - The model assumed that everyone could eventually lead a life of high mass consumption but failed to consider sustainable development or the carrying capacity of the earth.
Need for Poorer Countries - Rostow’s model failed to recognize that most of the countries which reached the stage of high mass consumption did so by exploiting the resources of lesser-developed countries. Countries that were still developing would have difficulty finding other countries to exploit
Narrow Focus - The model focused on domestic economies and did not directly address interaction between countries, specifically globalization.
World System Theory (Core-Periphery)
includes both political and economic elements that have significant geographic impacts
Dependency Model
meaning that countries do not exist in isolation but are part of an intertwined world system in which all countries are dependent on each other
World System Theory - Core
Characteristics
Includes the economically advantaged countries of the world
Includes the headquarters of most large multinational companies and banks
Focuses on higher-skill, capital-intensive production
Promotes capital accumulation
Dominates semiperiphery and periphery economically and politically
Locates factories and service centers in semiperiphery and periphery countries
Benefits greatly from international trade
Examples
US
UK
Japan
Australia
Germany
World System Theory - Semi Periphery
Characteristics
Includes most middle-income countries, sometimes called emerging economies
Provides the core with manufactured goods and services that the core formerly provided for itself
Shares characteristics of both core and periphery
Examples
China
Mexico
Brazil
India
South Africa
World System Theory - Periphery
Characteristics
Includes the least-developed countries
Maintains many jobs in low-skill, labor-intensive production and extraction
Provides the core and semi periphery with inexpensive raw materials and labor
Receives jobs but few profits from manufacturing
Attracts jobs by having weak laws protecting workers and the environment
Examples
Afghanistan
Zimbabwe
Bolivia
Kenya
Laos
Criticisms of Wallerstein’s Model
Little Emphasis on Culture - It focused heavily on economic influence, investments and purchases of raw materials, but it paid little attention to the pervasive influence of culture, movies, music, and television
Emphasis on Industry - It was based on industrial production, but many countries have postindustrial economies based on providing services
Lack of Explanation - It is of limited practical use, suggesting that countries can change their status, but it does not explain how
Limited Roles - It focused too much on the role of countries, governments, and corporations. As a result, it failed to recognize the role of organizations such as UN agencies and private, nonprofit charitable NGO
Commodities
raw material such as coffee, cocoa, and oil, that have not undergone any processing
Commodity Dependence
when more than 60% of its exports are raw materials
Trade
occurs when one party desires a good or service that it does not have or cannot produce and another party has the desired good or service with which it is willing to part
Barter
a system of exchange in which no money changes hands
Comparative Advantage
the ability to produce a good or service at a lower cost than others
Complementarity
when a country has the income, goods, or services that the other country desires
Free Trade
laws that reduced barriers to trade
Neoliberal Policies
a set of reforms that reduced government regulations and taxation
Policies decreasing trade
In recent years, trade barriers have often reflected political and economic decisions. Since 2016, the UN has used economic sanctions more than 30 times, mostly to pressure countries to reduce human rights abuses. In 2018, the US government increased tariffs on many Chinese-made goods sold in the US. By making these goods more expensive for US consumers, the government hoped Americans would buy more US made goods and China would relax its barriers on US imports
Government efforts to promote economic growth (5)
Tax Breaks
A tax holiday (a temporary exemption from some taxes)
A tax break for money invested in research and development
Loans
Forgivable loans (part or all of the loan doesn’t have to be repaid)
Money to borrow at below-normal interest rates
Direct Assistance
Land or building use free of charge
Infrastructure such as roads and sewers paid for by the government
A subsidy for each full-time job created
Changes in Regulations
Legislation that weakens unions
Legislation that reduces environmental rules
Tariffs
Taxes imposed on imported products make these products less attractive and domestically produced goods more attractive
Trading Blocs
groups of countries that agree to a common set of trade rules
Mercosur
Southern Common Market, includes several South American countries
World Trade Organization (WTO)
global organization created in 1995 to monitor the rules of international trade y providing a forum for negotiating trade deals, settling disputes between its members, supporting the needs of developing countries, and helping companies follow similar international trade policies
Impacts of economic interdependence
Increased interdependence has strengthened the links among the countries economies. Growth in one country can result in new economic opportunities in other countries.
International Monetary Fund (IMF)
created in 1945 to aid countries caught in need of financial assistance
Outsourcing
contracting work to non company employees or other companies
Offshoring
when tertiary and quaternary sector companies move their back offices to other countries
New International Division of Labor
a changed system of employment in the various economic sectors in the world
Basic vs. Non-Basic Economic Activity
Actions that create new wealth for a region vs. actions that do not generate new money for an area
Transnational/Multinational Corporations
businesses that operate in multiple countries
Export Processing Zones (EPZ)
special manufacturing zones
Special Economic Zones (SEZ)
special manufacturing zones in China
Maquiladoras
special manufacturing zones in Mexico
Free-trade Zones
special manufacturing zones in Singapore
Postindustrial Economy
an economy that no longer employs large numbers or people in factories but has people who provide services and process information
Assembly Line
in which an item is moved from worker to worker, with each repeatedly performing the same task
Fordism
system of mass production that changed manufacturing and became standard practice across industries
Substitute Principle
in which businesses maximize profits by substituting one factor of production for another, has been applied to the labor force
Post-Fordist
when automation forced many workers to be unemployed, the remaining workers are often trained to do more than one job, so they can rotate among a few different workstations during a day, reducing the risk of injuries
Economies of scale
allows business owners to increase output with improved efficiency
Just-in-Time Delivery
a system in which the inputs in the assembly process arrive at the assembly location when they are needed
Locational Interdependence
the location decision for one factory is dependent upon the location of other related factories
Technopole
a hub for information-based industry and high-tech manufacturing
Growth Poles (Growth Centers)
the concentration of high-value economic development in the growth pole attracts even more economic development
Spin-off Benefits (Spread Effects)
positive economic outcomes beyond the growth pole
Backwash Effects
negative effects on one region that result from economic growth in another region
Corporate Parks (Business Parks)
where office building congregate and can take advantage of agglomeration economies
Sustainability
using the earth’s resources without doing permanent damage to the environment
Sustainable Development
the goal is to address problems caused by depletion of natural reasons, mass consumption of goods, pollution of air and water, and the impact of climate change
Ecological Footprint
impact on the environment
Causes of pollution
Pollution contaminates air and water with smoke, chemicals, and waste products. It has numerous causes:
Some, such as volcanic eruptions, are natural events that humans do not influence
Some are a mixture of natural events and human actions. For example, dust storms occur naturally in some dry regions. However, they are more likely to occur after farmers have removed the deep rooted natural vegetation that holds soil in place
Some are completely the result of human actions. For example, people pollute the air when they burn wood, coal, or oil. They pollute water when they dump waste from industries and allow farm chemicals to flow into rivers or lakes
Impact of pollution
Pollution has large impacts on plants, animals, and humans. According to the Global Alliance on Health and Pollution, in 2015, pollution caused 16% of deaths worldwide.
Efforts to control pollution
One reason pollution is difficult to control is because it spreads so easily. Often, the person or business causing the pollution is not the one who suffers its effects. The solution was to force every company to reduce emissions. Under pressure from organized citizens, the federal government passed stricter laws on air pollution.
Climate change
Human actions are a major cause of climate change and the rise in temperature contributed to more frequent wildfires, hurricanes, floods, and droughts.
Diseases once confined to areas around the equator could spread to new areas
Ocean levels could rise as glaciers melt, which will threaten the homes and safety of the 40% of the global population that lives near coasts
Refugee crises could become more common as more frequent floods and droughts cause millions of people to move in search of food, water, and safety
At the current rate of greenhouse gas emissions, temperatures could be 3.2 celsius warmer by the end of this century. Countries believe that increase could be as low as 1.5 celsius if countries reduce emissions to levels based on international agreements
Ecotourism
travel to a region by people who are interested in its distinctive and unusual ecosystem
Sustainable Development Goals (SDGs)
17 new goals that replaced MDGs but with more awareness of environmental challenges and ways to overcome them
Argentina and South Korea - changing economies
A century ago, Argentina was a much wealthier nation than Korea (the country was not divided between North and South Korea then). Its industrial growth created significant pull factors, and migrants poured in from Europe, particularly Italy. Korea was a heavily agricultural country, and its income per worker ranked it toward the bottom quarter of all countries.
Argentina has suffered massive inflation, military dictatorship, and heavy foreign debt. Argentina also had a huge debt with poor development plans resulting in a collapsed economy. Today it is a semipheral state that relies on agricultural exports. In contrast, Korea has been a success story of modern economic development, like many countries in East Asia. Through a combination of intense education, heavy government subsidies, tough trade restrictions, and strong corporations, Korea focused on making the products it exported. Today, Korea is a high-tech industrialized and exports, mostly manufactured goods, account for nearly half of its GDP.
Note 
Flashcard (68)