3.8: economic development

economic development

• measured by a variety of objective and subjective factors aligned with a country’s economic input and output, as well as figures such as median income
• gross national income (GNI): the value of the output of goods and services produced in a country in a year
  • includes money that enters and leaves the country
  • purchasing power parity (PPP): an adjustment made to the GNI that accounts for differences between countries regarding the cost and relative cost of goods produced in/exported to them
• gross domestic product (GDP): the value of the output of goods and services produced in a country in a year
  • excludes money that enters/leaves the country
• productivity: the value of a particular product compared to the amount of labor needed to make it
  • value added: the gross value of a product minus the costs of raw materials and energy used to produce it
• economic sectors
  • primary sector: activities that directly extract materials from the Earth through agriculture and mining, fishing, and forestry
  • secondary sector: manufacturers that process, transform, and assemble raw materials into useful products, as well as industries that fabricate manufactured goods into finished consumer goods
  • tertiary sector: the provision of goods and services to people in exchange for payment, such as retailing, banking, law, education, and governance
  • quaternary sector: an economic sector devoted to research and development to increase productivity in other sectors
• types of industries and models of dependency
  • commodity dependence: when a country relies primarily on one commodity to drive its economy and economic development
  • cottage industry: a home-based manufacturing system
  • often based around subsistence economies
  • enterprise zone: an economically distressed area of a state or city in which businesses can take advantage of a wide variety of government-instated economic incentives
  • brownfield: the site of an abandoned factory
  • prevalent in the midwestern US, namely in areas like Michigan who were heavily industrialized but have experienced mass job loss abroad
  • export-processing zone (EPZ): a physical space within a country where special regulations benefit foreign-controlled businesses
  • eg. maquiladoras, SEZs
  • technopole: a hub for information-based industry or high-tech manufacturing
  • eg. Silicon Valley, CA → largely spearheaded by Stanford University (educational hub)
• forms of power
  • animate power: power supplied by animals or human strength/physical exertion
  • biomass fuel: fuels such as wood, plant material, and animal waste that is used to supplement animate power
  • fossil fuel: a nonrenewable energy source formed from the residue of plants and animals (organic matter) buried millions of years ago

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figures and theories on labor

• the new international division of labor: a system of employment in the various economic sectors spread throughout the world

  • core countries have greater quaternary sectors (research and development)
  • eg. Germany, the United States
  • middle-income countries manufacture goods
  • eg. China, Mexico, Indonesia
  • less-developed countries have large primary sectors, mainly export minerals/resources for production

• labor flexibility: the degree to which employment is based on market mechanisms of supply and demand rather than on government regulation

• skilled labor: labor provided by workers with specialized training and skills

• fordism

  • fordism: early 20th-century system of mass production in which an item being produced moves from worker to worker, with each worker performing the same task repeatedly
  • post-fordism — the reduction of workers in factories, largely due to mechanization/automation and the small number of workers who work this type of system who are trained to do more than one job so they can rotate through different stations throughout the day

• female labor force participation rate: the percentage of women holding full-time jobs outside the home

• extraneous effects and benefits of labor and productivity

  • spin-off benefit: a positive outcome in addition to the main outcome (generally of economic growth pole policies)
  • backwash effects: possible downsides of growth poles

• business models and agreements of note

  • cooperative store/co-op: a member-owned, member-governed business that operates for the benefits of its members according to common principles

  • often prioritize eco-friendliness and environmental sustainability, fair trade, fair working conditions over profit (unlike many traditional businesses)

  • fair trade: international trade that provides greater equity to workers, small businesses, and consumers

  • emphasizes equity, again countering traditional business practices centering profit maximization at all costs

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economic theories

• absolute advantage: the ability of an individual, organization, or country to produce a particular good at a lower absolute/gross cost than another person or country

• comparative advantage: the ability of an individual, organization, or country to produce a particular good at a lower opportunity cost/with more efficiency than another person or country

• complementarity: the measurement used to determine the degree of compatibility between two potential trade partners

  • whether imports = exports, comparing absolute and comparative advantages

• emerging economic practices

  • mainly present in MDCs
  • single-market manufacturer: makes one good to send to other countries
  • generally specialized, eg. auto upholstery
  • just-in-time delivery: the shipment of parts and materials to arrive at a factory moments before they are needed
  • maximizing efficiency but increasing risk
  • break of bulk point: a location at which transfer is possible from one mode of transportation to another
  • utilized by many wide-scale commercial shipping/transport operations

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