Economic Sectors and Patterns

The world economy can be separated into distinct categories called sectors

• Primary production is the most basic economic activity that deals with the extraction of natural raw materials from the earth.

  • Ex: Agriculture, mining, energy, forestry & fisheries

• Secondary production deals with the processing of the raw materials that are from the primary activities & making them into finished goods/products.

  • Ex: include MANUFACTURING!!!!!!

• Tertiary production includes the retailing and transportation of the finished goods to the people who buy them or consumers.

  • Most tertiary activities are the sale of goods that fall into more specialized quaternary & quinary activities

• Quaternary production includes standard business services for research and administration

  • Ex: finance, insurance, marketing, and wholesaling.

• Quinary production is the highest level that includes consumer services that consist of the highest level of decision making and large-scale research

  • Ex: high-paying & high-role jobs like government officials, CEOs, healthcare & higher education leaders

In world trade, core (MDCs, First World) countries have the advantage in trade over to LDC, such as semi-periphery (NIC, 2nd world) & periphery (3rd World) countries.

• Deindustrialization is a process happening in many core countries to have a service (vs manufacturing) based economy since they can get cheap raw materials from the periphery countries

  • These resources can be processed & manufactured in periphery or semi- periphery countries

  • Then exported to core countries for cheaper wages & overall costs for the core countries

Alfred Weber least cost theory explain the key decisions made by businesses about where to locate factories

• Attempt to predict the location of manufacturing site relative to the location of resources need for production

Weber’s key variables are transportation, labor & agglomeration

Considers two main inputs:

• Distance of transportation to market

• Weight of goods being transported

Measures of Development

Human Development Index (HDI): social welfare index measure:

• life expectancy

• Years of schooling

• Standard of Living or GNI per capita

  • measures total value of goods & service produced within a country together with the balance of income & payments from/or to other countries

HDI can...

• measure differences within a country as well as between countries

• highlight where poverty is worst, within & between countries

• measure of how far a country has developed and whether there are improvements

• help a country set goals to improve life quality, healthcare and education

Women and Economic Development

Women and Income Inequality:

• In almost all countries in the world (besides in North America & Australia), women work more hours than men & still make less money per hour

  • Although there are more women in the workforce

  • Woman do not have equity in wages or employment opportunities

Effects of Employment for Women:

• When women can get jobs, they receive healthcare & higher education

  • Receive specialized ways to work and start a family to improve their status in society

• As countries develop economically, women can have more rights which allows for more education & less “traditional” roles in homes

  • Their role in society can change & improve with an education

  • Can earn a better job, make money & live without dependency on men

U.N. thinks that correcting gender inequality is so important that they made it No, 5 on their 19 goals for sustainable development:

• Understanding that a countries improve economically, roles the women play in society change dramatically

Microloans are small credit or loans given to people in developing countries to start small businesses and help improve the economy.

• In Bangladesh, for example, the Grameen Bank gives microloans to women to start personal small businesses & provide for their families

  • Allowing women to move out of poverty

The U.N. developed a mandate called the Millennium Development Goals that were created in 2015 with eight goals in mind.

• One of these goals is to promote gender equality & empower women through the provision of better women’s health care

  • Other goals include eradication of hunger, basic universal education & an end to abject poverty

Theories of Development

Rostow's Stages of Development:

• Rostow’s Stages of Development is a model that analyzes the 5 steps that it takes to move from an agricultural society to a service-based economy

  • Main assumption in creating the model was that each country had comparative advantage

• Critics of this model state that it does not account for colonial legacy or government corruption in developing countries

Rostow’s Stages of Development Are:

• Traditional Society

  • Economy is focused on primary production & has little technical knowledge

• Preconditions to Takeoff

  • Country’s leadership begins to invest in infrastructure with some technical knowledge to stimulate the economy

• Takeoff

  • Economy shifts to industrialization & some labor shifts to factories with new urban infrastructure

• Drive to Maturity

  • Technical advancements power a country where workers mostly get skill-based education.

• High Mass Consumption

  • Technical knowledge and education levels are high & industrial trade economy develops

Wallerstein's World Systems Theory:

Wallerstein’s World Systems Theory attempts to explain the relationship between the core & periphery countries.

• The image basically shows how the core benefits from the periphery & semi-periphery

  • Also shows how the semi-periphery can benefit from the periphery while still benefiting the core

Dependency Theory:

Dependency Theory holds that Less Developed Countries (LDCs) are highly dependent on foreign factories & technologies from More Developed Countries (MDCs) to provide employment and infrastructure.

• LDCs in this theory get stuck in the continuous cycle of dependency on the MDCs which never allow their economies to fully develop