Unit 7 Vocab

1. Break-of-Bulk Point

Definition: A location where goods are transferred from one mode of transportation to another, reducing transportation costs.
Explanation: At these points, large shipments are divided into smaller loads for final delivery. It often occurs at ports or rail yards.
Example: The Port of Rotterdam in the Netherlands, where cargo is unloaded from ships and loaded onto trucks or trains.

2. Comparative Advantage

Definition: The ability of a country or company to produce a good or service at a lower opportunity cost than others.
Explanation: Nations specialize in producing goods they can make efficiently and trade for others.
Example: Brazil has a comparative advantage in coffee production due to its climate and soil.

3. Complementarity

Definition: When two regions, through trade, can specifically satisfy each other's demands.
Explanation: One area’s surplus complements the other’s needs, facilitating economic exchange.
Example: Oil from the Middle East meets the energy needs of industrialized countries.

4. Ecotourism

Definition: Responsible travel to natural areas that conserves the environment and benefits local communities.
Explanation: It promotes sustainable travel, environmental awareness, and cultural respect.
Example: Visiting Costa Rica’s national parks while supporting conservation efforts.

5. Economic Sectors

Definition: Categories of economic activity based on the type of work: primary, secondary, tertiary, quaternary, and quinary.
Explanation: These sectors illustrate a country’s level of economic development.
Example: A country transitioning from primary to secondary and tertiary activities is industrializing.

6. Primary Sector

Definition: Economic activities involving the extraction of natural resources.
Example: Farming, mining, fishing, and forestry.

7. Secondary Sector

Definition: Economic activities focused on manufacturing and processing raw materials into finished goods.
Example: Car manufacturing and construction.

8. Tertiary Sector

Definition: Economic activities that provide services rather than goods.
Example: Retail, healthcare, and education.

9. Quaternary Sector

Definition: Economic activities related to knowledge, information, and research.
Example: Software development, consulting, and financial planning.

10. Quinary Sector

Definition: Economic activities involving high-level decision-making and advanced services.
Example: Top executives, government officials, and research scientists.

11. Export Processing Zones (EPZs)

Definition: Areas within developing countries offering incentives for foreign companies to manufacture and export goods.
Explanation: These zones promote industrialization by providing tax breaks and reduced regulations.
Example: Maquiladoras in Mexico along the U.S. border.

12. Free Trade Zones (FTZs)

Definition: Designated areas where goods can be imported, handled, and exported without customs regulations.
Explanation: These zones encourage trade by reducing or eliminating tariffs.
Example: Jebel Ali Free Zone in Dubai, UAE.

13. Gender Inequality Index (GII)

Definition: A measure by the UN that reflects gender disparities in reproductive health, empowerment, and economic status.
Explanation: A higher GII indicates more inequality.
Example: Countries with low GII values, like Norway, have high gender equality.

14. Gross Domestic Product (GDP)

Definition: The total value of all goods and services produced within a country’s borders in a given year.
Explanation: It measures a country’s economic performance and standard of living.
Example: The GDP of the United States is among the highest in the world.

15. Gross National Income (GNI)

Definition: The total income earned by a country’s residents, including income from abroad.
Explanation: It reflects the economic strength of a country’s citizens.
Example: Luxembourg has a high GNI per capita due to its financial sector.

16. Gross National Product (GNP)

Definition: The total value of goods and services produced by a country’s citizens, including income from abroad.
Explanation: It measures economic output, including overseas earnings.
Example: If a U.S. company operates in Canada, the income contributes to the U.S. GNP.

17. Human Development Index (HDI)

Definition: A composite index measuring a country’s average achievements in health, education, and income.
Explanation: HDI ranges from 0 to 1, with higher values indicating better human development.
Example: Norway consistently ranks high on the HDI due to its quality of life.

1. Least Cost Theory

Definition: A theory developed by Alfred Weber that explains the location of industries based on minimizing three key costs: transportation, labor, and agglomeration.
Explanation: According to Weber, industries are located where transportation costs are lowest for both raw materials and finished products, labor costs are minimized, and agglomeration (clustering of businesses) can reduce production costs.
Example: A car manufacturing plant might be located near steel producers and have access to cheap labor to reduce overall costs.

2. Microloans

Definition: Small loans given to individuals or small businesses who typically lack access to conventional banking services.
Explanation: These loans are often used to help entrepreneurs in developing countries start or expand small businesses. They are a tool to reduce poverty and promote economic growth.
Example: A $200 microloan might enable a farmer in Kenya to purchase seeds and tools, increasing their agricultural productivity.

3. NAFTA/USMCA (North American Free Trade Agreement/United States-Mexico-Canada Agreement)

Definition: Trade agreements that establish a trilateral trade bloc between the United States, Canada, and Mexico. NAFTA was replaced by USMCA in 2020.
Explanation: These agreements reduce or eliminate tariffs on most products traded between the three countries, aiming to encourage cross-border trade and investment.
Example: A car manufacturer might source parts from all three countries to reduce production costs and maximize efficiency.

4. Outsourcing

Definition: The practice of hiring external firms or individuals to perform tasks that were traditionally handled internally.
Explanation: Companies outsource to reduce costs, access specialized skills, or focus on core business functions.
Example: An American tech company outsourcing customer support to call centers in India.

5. Rostow’s Stages of Economic Growth

Definition: A model of economic development that outlines five stages a country passes through as it modernizes and industrializes.
Stages:

1. Traditional Society

2. Preconditions for Take-off

3. Take-off

4. Drive to Maturity

5. Age of High Mass Consumption
Example: The United States in the 19th century was in the "Take-off" stage during the Industrial Revolution.

6. Special Economic Zones (SEZs)

Definition: Designated areas in countries with economic regulations that differ from the rest of the country.
Explanation: These zones are created to attract foreign investment, boost trade, and promote economic growth by offering tax breaks and reduced regulations.
Example: Shenzhen, China, which transformed from a small town to a global manufacturing hub.

7. Wallerstein’s World System Theory

Definition: A theory by Immanuel Wallerstein that divides the world into a three-tier structure: core, semi-periphery, and periphery.
Explanation: Core countries dominate and exploit peripheral countries for labor and raw materials, while semi-periphery countries share characteristics of both.
Example:

• Core: United States, Germany

• Semi-periphery: India, Brazil

• Periphery: Haiti, Chad

8. Core

Definition: Economically dominant countries with high levels of industrialization and infrastructure.
Example: Japan, France, and the United States.

9. Periphery

Definition: Less developed countries with low levels of industrialization and weak economies.
Example: Bangladesh and Ethiopia.

10. Semi-Periphery

Definition: Countries that are industrializing and have aspects of both core and periphery.
Example: Mexico and South Africa.

11. Weber’s Model

Definition: A model by Alfred Weber that predicts the optimal location of manufacturing plants based on minimizing transportation, labor, and agglomeration costs.
Explanation: The model assumes that industries will choose locations that minimize the cost of moving raw materials and finished products while taking into account labor costs and clustering benefits.
Example: A textile factory might be located near cotton fields and urban areas to minimize both raw material and distribution costs.