Unit 7 Industrialization and Economic Development Notes

Unit 7: Industrialization and Economic Development

Industrialization Overview: * Hearth: Great Britain served as the heart of the $18^{\text{th}}$ -century Industrial Revolution. * Energy Shift: Transitioned from manual labor to water power and coal energy for manufacturing. * Impacts: Increased agricultural productivity, population growth, and wealth accumulation. * Diffusion: Industrialization spread globally over the last two centuries, increasing trade and interdependence while creating an international division of labor. * Spatial Patterns: Scholars use statistical information to create models and theories regarding the distribution of economic and social development.

The Industrial Revolution

Core Concepts: * Industry: The process of using machines and large-scale processes to convert raw materials into manufactured goods. * Raw Materials: Basic substances like minerals and crops needed for manufacturing. * Cottage Industries: Small, home-based businesses prevalent before the $18^{\text{th}}$ century. They were labor-intensive, used simple tools (spinning wheels, looms), and served local markets. * Industrial Revolution Changes: Series of technological advances in the mid- $1700\text{s}$ that replaced labor-intensive production with capital-intensive factory production using water or steam power.
Diffusion Stages: * $1700\text{s}$ : Moved from Great Britain to France and the Netherlands. * Mid- $1800\text{s}$ : Spread east to Germany and west to the United States. * Early $1900\text{s}$ : Reached Japan, parts of China, and South America.
Locational Factors (Original): * Energy Resources: Rivers for waterpower or coal deposits. * Raw Materials: Proximity to minerals/agricultural products. * Transportation: Access to roads, rivers, canals, and ports.
Social and Urban Impact: * Urbanization: Industrialization promoted the growth of cities. London grew from $1,000,000$ people in $1800$ to $6,000,000$ in $1900$ . * Urban Problems: Overwhelmed waste systems, rampant disease, and deadly air pollution (smog levels that doubled death rates). * Class Structure: Dramatic expansion of the middle class (managers, accountants, lawyers). The working class faced dangerous conditions and crowded living in polluted areas.
Infrastructure Advances: * Horizontal Growth: Improved intra-urban transport (trains, cars) allowed cities to spread. * Vertical Growth: Elevators and stronger steel enabled taller buildings and denser populations.

Economic Sectors and Patterns

Primary Sector: Focusing on extracting natural resources (farming, mining, fishing). Dominated the U.S. economy until the late $1800\text{s}$ ; now less than $5.0\%$ .
Secondary Sector: Manufacturing and building. Significant growth in the U.S. from the $1840\text{s}$ to the $1960\text{s}$ .
Tertiary Sector: Providing services (retail, medicine, housekeeping). Most people in the current U.S. labor force work in this sector.
Quaternary Sector: Managing and processing information (financial analysis, software development, data science). Requires high education level and offers high wages.
Quinary Sector: Creating information and making high-level decisions (research, top corporate/government managers).
The Multiplier Effect: * The potential of a job to produce additional jobs. The secondary sector has the highest multiplier effect. * Every $\$1.00$ of demand for manufactured goods generates $\$1.92$ of demand for other services. * In comparison, retail generates $\$0.54$ and wholesale generates $\$0.58$ .
Weber's Least Cost Theory: * Three Factors: Minimizing transportation costs, minimizing labor costs, and maximizing agglomeration economies (spatial grouping of businesses to share costs). * Bulk-Reducing Industry: Raw materials lose weight during processing (e.g., copper, lumber). Factories locate near sources to save on shipping heavy materials. * Bulk-Gaining Industry: Products become heavier/bulkier during production (e.g., soft drinks where water is added). Factories locate near the market. * Energy Orientation: Aluminum production is energy-oriented (uses bauxite) and locates near low-cost electricity (e.g., Iceland's geothermal power).
Transportation Comparison: * Airplane: High speed, low capacity, high cost. * Ocean Ship: Slow speed, large capacity, low cost. * Containerization: System using standardized, intermodal shipping units to reduce break-of-bulk costs (procedure of transferring cargo between modes).

Measures of Development

Economic Measures: * GNP/GNI: Value of goods/services produced by a country's citizens globally. Includes remittances and foreign profits. * GDP: Value of goods/services produced within a country's borders in a year, regardless of the nationality of the producer. * Purchasing Power Parity (PPP): Adjusts for cost-of-living differences. Example: A collection of goods costing $\$1,000$ in the U.S. cost $\$590$ in the Czech Republic and $\$1,620$ in Switzerland in $2016$ .
Social Measures: * Gini Coefficient: Measures income inequality on a scale of $0$ (total equality) to $1$ (total inequality). * Human Development Index (HDI): Combines GNI per capita with life expectancy and education (expected vs. average years of schooling). * Literacy Rate: Exceeded $90.0\%$ globally in $2015$ ( $99.0\%$ in developed countries).
Gender and Development: * Gender Inequality Index (GII): Measures reproductive health (maternal mortality, adolescent fertility), empowerment (parliamentary seats, secondary education), and labor participation. * Scores: Switzerland ( $0.025$ ), USA ( $0.204$ ), Yemen ( $0.795$ ) in $2019$ . * Gender Wage Gap: In the U.S., men typically make $17.5\%$ more than women for comparable work.

Theories of Development

Rostow's Stages of Economic Growth: * Stage 1: Traditional Society: Primary sector, subsistence farming, limited technology. * Stage 2: Preconditions for Take-off: Improving infrastructure and farming techniques; shifting toward commercial agriculture. * Stage 3: Take-off: Major technological innovations; rapid urbanization; primary sector shrinks. * Stage 4: Drive to Maturity: Economic growth exceeds population growth; investment in social infrastructure (schools/hospitals). * Stage 5: High Mass Consumption: Consumerism; high-order goods; dominance of the tertiary sector.
Wallerstein's World Systems Theory (Core-Periphery Model): * Core: Highly industrialized, wealthy, capital-intensive (U.S., Japan, Germany). * Semiperiphery: Emerging economies, manufacturing centers (China, India, Mexico, Brazil). * Periphery: Heavily reliant on raw materials and low-skill, labor-intensive production (Afghanistan, Kenya, Bolivia).
Commodity Dependence: Occurs when more than $60.0\%$ of a country's exports are raw materials. CDCs are vulnerable to price fluctuations (e.g., oil dropping from $\$109$ to $\$41$ per barrel between $2012$ and $2020$ ).

Trade and the World Economy

Terms of Trade: * Comparative Advantage: Ability to produce a good at a lower cost (e.g., China's lower manufacturing wages). * Complementarity: When two countries satisfy each other's needs (e.g., Canada importing coffee and Costa Rica importing maple syrup).
Economic Trends: * Free Trade/Neoliberalism: Policies reducing government regulation and barriers; promoted by leaders like Reagan and Thatcher in the $1980\text{s}$ . * Supranational Trading Blocs: USMCA, OPEC, Mercosur, and the European Union (EU). * Global Organizations: World Trade Organization (WTO) monitoring global rules; International Monetary Fund (IMF) providing financial assistance to struggling nations (e.g., $\$57$ billion to Argentina in $2018$ ).
Globalization Impact: Trade accounted for $27.0\%$ of global GDP in $1970$ and grew to $60.0\%$ by $2019$ .

Changing Global Economy and Sustainability

Corporate Strategies: * Outsourcing: Contracting work to noncompany employees or other companies to reduce costs. * Offshoring: Moving back offices or manufacturing to other countries with lower business costs. * Export Processing Zones (EPZs): Special areas like SEZs in China or Maquiladoras in Mexico offering tax breaks and fewer regulations to attract MNCs. By $2015$ , $130$ countries had $4,500$ EPZs employing $68,000,000$ people.
Industrial Systems: * Fordism: System of mass production using assembly lines. * Post-Fordism: Flexible production involving automation and the substitution principle (replacing workers with machines). * Just-in-Time Delivery: Inputs arrive at the assembly location exactly when needed to minimize storage costs.
Technological Landscapes: * Technopoles: Hubs for high-tech manufacturing/info industry (e.g., Silicon Valley, Research Triangle). * Brownfields: Abandoned industrial sites typical of the Rust Belt (Northeast/Great Lakes region).
Sustainability and Environment: * Ecological Footprint: Land needed to support a person's consumption. U.S. average is $20.0$ acres per person compared to the world average of $6.4$ acres. * Pollution Costs: Estimated at $\$4.6$ trillion annually ( $6.0\%$ of global output). Responsible for $16.0\%$ of deaths worldwide in $2015$ . * Clean Air Act (1970): U.S. legislation reducing six major air pollutants by over $70.0\%$ . * Sustainable Development Goals (SDGs): $17$ UN goals for $2016\text{--}2030$ , focusing on poverty, gender equality, and climate action.

Questions & Discussion

Defining Development Review: * Q: Which countries align with the global economic core based on HDI data? * A: Japan (Life expectancy: $83.5$ years, Income per capita: $\$36,927$ ) and the United States (Life expectancy: $79.1$ years, Income per capita: $\$52,946$ ). * Q: Identify a country in the global economic periphery. * A: Haiti (Life expectancy: $62.8$ years, Income per capita: $\$1,668$ ).
Multiple-Choice Review: * Q: The two areas with the largest degree of gender inequality globally are? * A: Economy and politics (based on World Economic Forum data). * Q: What is the best example of a footloose activity? * A: A call center, because it can be easily relocated to any place with good communication systems.