AMSCO AP Human Geography Chapters 15-17

UNIT 6: Industrialization and Economic Development

Chapter 15 Industrialization and Economic Structure

Chapter 16 Economic Interdependence

Chapter 17 Measures of Development

Unit Overview

The hearth of the Industrial Revolution was Great Britain in the 18th century. As people learned to use water power and coal energy to manufacture goods, they saw large increases in agricultural productivity, population, and wealth. Industrialization has diffused throughout the world, reshaping all aspects of life.

Measures of Development

Since the start of the Industrial Revolution, people have developed statistical measures to describe changes in society. Some measure the total output of each country, the distribution of income, rates of childbirth, the number of people who can read, or rates of literacy, and the different opportunities available to males and females. Scholars such as W. W. Rostow and Immanuel Wallerstein used this information to create models or theories of spatial patterns of economic and social development in countries around the world.

Variations in Development

The diffusion of industrialization generally increased trade and interdependence, which improved the standard of living for most people. But as jobs moved from one place to another place, some people lost their jobs and an international division oflabor emerged. One cost was to the environment. In response to the depletion of natural resources, pollution, and the results of climate change, some people have advocated an evolved model that stresses sustainable development.

UNIT 6: INDUSTRIALIZATION AND ECONOMIC DEVELOPMENT 247

Industrialization and

Economic Structure

The political and economic consequences of the Renaissance had helped to spread European domination worldwide . . . . [T}he forces of industrialization helped to complete that process of world domination by dividing the world between the advanced industrialized nations (originally Europe and North America) and the underdeveloped, non-industrialized nations. - Richard T. LeGates and Frederic Stout, eds. The City Reader, 2000

Essential Question: How did the diffusion of industrialism affect people around the world?

The Growth and Diffusion of Industrialization The Industrial Revolution was a set of changes in technology that dramatically increased manufacturing productivity. It reshaped how people worked and behaved, where they lived, and how they related to each other spatially.

Diffusion of the Industrial Revolution

The start of the Industrial Revolution in the mid-1700s was like tossing a rock in a pond. It caused a large initial splash in England and then the ripples spread outwards. On a large scale, the first continents and countries affected were near England: France and the Netherlands. By the mid-1800s, industrialization had spread east to Germany and west to the United States. By the early 1900s, it had reached all of Europe, Japan, and parts of China and South America. Today, most of the world is industrialized.

On a smaller scale, within countries, the first factories were usually built near sources of power, such as rivers or coal deposits, and near transportation routes. With the development of electrical power and the construction of new roads, canals, and harbors, later factories were added in more diverse locations.

As the Industrial Revolution progressed, improvements in farm machinery and farming techniques, along with the enclosure movement, increased agricultural productivity. Machine power replaced human and animal power. Hence, many people in rural areas were no longer needed for their labor.

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These displaced farm workers moved to towns and cities, causing an explosion in urban populations everywhere industrialization occurred. As urban residents, they promoted the growth of industries in two crucial ways:

• As workers, they toiled in factories, running the machines that made textiles, steel, and other products.

• As consumers, they provided a market for the expanding quantities of food and manufactured goods.

Growth of Population and Cities

As the number ofindustries in factory cities increased and rural-urban migration continued, cities grew rapidly. London grew from one million people in 1800 to six million in 1900. Old systems for handling human waste, burying the dead, and cleaning up horse manure were overwhelmed. Since people burned wood and coal to heat their homes and run factories, air pollution increased to harmful, even deadly, levels. In some weeks, smog got so bad that it doubled the normal rate of death. Over time, people supported stronger government action to build sewers, regulate cemeteries, and so on, to protect public health.

Public health measures became increasingly important as cities became even more dense by expanding vertically. The development of elevators, stronger and more affordable steel, and techniques to construct stronger foundations combined to allow for taller buildings.

Cities also expanded horizontally. Improvements in intra-urban transportation, such as trains, cars, and trucks, allowed cities to spread out farther from the downtown core. People could live farther from their workplace and still commute to work easily. And food could be transported from the countryside into cities to feed a growing population.

Colonialism, Imperialism, and the Industrial Revolution The Industrial Revolution built on the earlier rise of imperialism, a policy of extending a country's political and economic power. As countries such as Great Britain and France industrialized, they recognized the value of controlling trading posts and colonies around the world. Colonies provided several resources and other contributions to the economy:

• raw materials such as sugar, cotton, foodstuffs, lumber, and minerals for use in mills and factories

• labor to extract raw materials

• markets where manufacturers could sell finished products • ports where trading ships could stop to get resupplied

• profits to use for investing in new factories, canals, and railroads

By the early 1900s, several other European countries and the United States also had far-flung possessions. The development of imperialism made wealthy

INDUSTRIALIZATION AND ECONOMIC STRUCTURE 249

countries even wealthier, leading to a great divide between the advanced, industrialized states and the underdeveloped, nonindustrialized states.

Fordism and Post-Fordism

In the 19th century, production increased with the shift from a system of cottage industry, in which people would weave cloth and make products in their homes, to a system oflarge factories with machines powered by water or coal. But each product was often made individually. Early in the 20th century, Henry Ford took another big step in advancing productivity by developing the assembly line, in which an item moved from worker to worker, with each worker performing the same task repeatedly. The use of assembly lines allowed companies to produce more standardized products more rapidly and with less-skilled workers than ever before.

This system of mass production, known as Ford ism, soon became standard practice across industries. Capitalists copied his methods- as did communists. Ford became a cult hero in Russia because it was through economic efficiency that Russian workers realized they might become productive enough to achieve the goals of communism. As consumers, people appreciated that the cost of goods plummeted. However, as workers, people resented how dull and repetitive the assembly line made work.

Ford ism quickly changed manufacturing. One issue was the lack of variety. Every product was identical to every other product. Since not every consumer wanted a black car identical to their neighbor's black car, companies gradually modified the assembly line process to produce more varied products. These changes added time and cost to the process.

In recent years, with the use of computers and increased automation, every product coming off the assembly line can be different. In modern factories, the substitution principle, in which businesses seek to maximize profit by substituting one factor of production for another, has been applied to a significant percentage of the labor force. Through mechanization, also known as automation, companies have replaced workers with machines. For example, U.S. industrial output doubled between 1984 and 2015-but industrial employment declined by one-third.

Although expensive to install, the machines often save a company money over the long term. They can work 24 hours a day without breaks or vacations, and they produce consistent, high-quality work. The workers who don't lose their jobs are often trained to do more than one job, so they can rotate among a few different workstations during a day. These changes in the production process constitute the basis of the post-Ford ism system.

Economic Sectors

Some economists analyze a country's workforce by dividing it into three sectors according to how closely people work with natural resources. The following chart shows these three sectors for United States history.

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THE THREE ECONOMIC SECTORS IN THE UNITED STATES

Sector Task Examples Economic Role

The composition of a country's economy changes over time. When the United States was formed, nearly everyone farmed or did other work in the primary sector. Today, in the United States and other developed countries, the primary sector usually employs less than 5 percent of the labor force. In a least-developed country, the figure is over 70 percent.

LABOR FORCE BY SECTOR IN TWO COUNTRIES

United States, a highly developed country Ethiopia, a less developed country

.. Primary Secondary C:J Tertiary

The tertiary sector is also known as the service sector because it consists of providing services to people and businesses. It includes people involved in retail sales, automotive repair, plumbing, the restaurant industries, and accounting. In developed countries, where manufacturing is on the decline, the tertiary sector is expanding and dominating the labor force.

Refining the Tertiary Sector

In recent decades, the tertiary sector has gotten so large that economists have begun to divide it into smaller segments:

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• The quaternary sector is the knowledge-based sector that includes research and development, business consulting, financial services, education, public administration, and software development.

• The quinary sector consists of the highest levels of decision-making and includes the top officials in various levels of government and business. A decision made by a country's president or senior advisors or by corporate executives can affect millions of people.

Changing Employment Sectors and Economic Development As countries industrialized, the primary sector shrank and the secondary sector grew. As part of this shift, countries became wealthier because wages in the secondary sector were higher than those in the primary sector.

In addition to higher wages, the secondary sector jobs also had a greater multiplier effect, a term for the potential of a job to produce additional jobs. For example, when a tire manufacturer expanded a plant and created

100 new jobs in a community, the new workers would have more money to spend on food, clothes, movies, and other items from nearby businesses. These businesses would prosper and sometimes add more staff.

However, the multiplier effect also works in reverse. In recent decades, the shrinkage of the secondary sector workforce in the United States and other developed countries has caused many other businesses to suffer as well. In addition, the opening of a new store can have a negative effect on other stores in the region. A large retail store opening in a community might employ hundreds of people- but smaller stores nearby might close or lay off employees.

Governments in developed countries often attempt to replace manufacturing !

jobs lost because of deindustrialization and automation with new quaternary jobs. Both types of jobs pay higher-than-average wages and both can generate additional jobs. Cities such as Denver, Pittsburgh, and Austin are using quaternary jobs to drive their rapidly growing economies. With research and high-tech jobs flowing into the cities, other sectors of the economy are benefiting, especially entertainment, tourism, and education. This quaternary sector growth also boosts the secondary sector because it requires construction and improved infrastructure. One challenge of shifting from manufacturing to quaternary jobs is that many of the displaced workers do not possess the skills required for the new jobs.

Theories on Industrial Location

Geographers have developed many models explaining the geographic distribution of economic activities. By focusing on the key factors in a process, a model is useful for making predictions about how a change in one factor affects the entire process. In 1909, the German economist Alfred Weber developed an influential theory, known as the least cost theory, to explain the key decisions made by businesses about where to locate factories.

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Least cost theory attempts to predict the location of a manufacturing site relative to the location of the resources needed to produce the product and where the final product will be sold (market). Weber's theory focused on three key variables: transportation, labor, and agglomeration.

The Importance of Weight

One major factor in the cost of obtaining raw materials and shipping finished products is weight. The heavier an item, the higher the cost of transporting it. Copper ore is very heavy, but most of the ore is waste that is discarded in the refining process. Hence, transporting copper ore is expensive, but transporting refined copper is not. This is known as a bulk-reducing industry, a weight-losing industry, a raw material-oriented industry, or a raw material-dependent industry. In bulk-reducing industries, companies try to locate processing plants near the source of raw materials.

Products that are heaviest when finished are in a bulk-gaining industry or weight-gaining industry, a market-oriented industry, or a market dependent industry. Consider soft drinks. The heaviest component of the product is water. Since water is widely available, companies try to add it as close to the market as possible, rather than pay to ship the weight of the water. For example, soft drinks are often sold to restaurants as thick syrup, and then water is added at the restaurant. In bulk-gaining industries, companies try to locate factories near the market.

The Importance of Energy

The history of manufacturing demonstrates the importance of a source of power. The type of power influenced where factories were established: • Water power was not mobile, so early mills and factories were located on streams and rivers.

• Coal could be transported, so companies had wider options about where to locate factories. However, coal is bulky and expensive to transport. It was so important to early manufacturing that industrial plants, even iron mills that relied on a bulky raw material such as iron ore, were still located near coalfields.

• With the development of electricity in the late 19th century, power became even more mobile. It could move through wires. Hence the location of energy sources became less important.

The aluminum industry is one type of industry that is still an energy oriented or energy-dependent industry. Even though the aluminum industry requires raw materials such as minerals, the energy demands are so high that factories are built in close proximity to major sources of abundant, cheap power. China and Canada are major producers of aluminum, but Iceland's production is on the rise because it bas abundant and cheap geothermal energy.

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Weber's Least Cost Model

Rather than simply studying each industry to see how companies located factories, Weber developed a general theory. He argued that factory owners balance three factors in deciding where to open a factory: transport costs (getting raw materials to a factory and getting finished products to the market), labor costs (the wages and salaries of employees), and agglomeration economies (the spatial grouping of businesses in order to share costs, as when several factories share the cost of building an access road to connect with a public highway). According to Weber's model, companies should minimize transport and labor cost and maximize agglomeration economies.

The Locational Triangle One way to show Weber's model is to use a locational triangle. In this situation, the market for a good is at one location and the resources needed to make the good are obtained at two other locations. These three points make up the points of a triangle.

As Weber realized, transportation costs are important to manufacturers. So whether a raw material loses weight during processing influences where a factory should be. If neither raw material used in production loses weight during processing, then the company gets no advantage from locating the factory near either location. The manufacturing could take place at the location of the market.

If only one raw material loses weight when processed, then the company can save money by moving production close to the location for that raw material. It does not need to pay the cost of shipping the full weight of the material when only part of it is needed.

In most cases, both raw materials lose weight as they are processed. When this happens, then the manufacturing site (D) will be somewhere between the locations of the two raw materials (A and B). The intermediate location will be closer to the one that loses the greater percentage of its weight. The finished product would then be shipped directly from the processing facility (D) to the market (M).

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Sometimes the cost savings from either cheaper labor or from agglomeration economies could be greater than the savings derived from locating at the cheapest spot relative to transport costs. In these cases, Weber recognized that business owners should choose to locate where the cheaper labor or benefits from the agglomeration economies existed.

Applying Weber's Theory Models are simplified versions of a complex process. But they are very useful for making predictions, understanding how changes in one factor affect changes in other decisions. Applying a model usefully requires recognizing how it differs from reality.

COMPARING WEBER'S THEORY AND REALITY

Additional Models Other geographers have used different assumptions than Weber did. For example, Weber emphasized minimizing costs while August

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Losch argued that higher expenses for transportation, labor, or raw materials were justifiable if they resulted in higher profits.

Another model is Harold Hotelling's linear city model which explains the behavior of two competing shops. The classic example is that if two food vendors want to locate their carts on a beach, they should locate next to each other in order to split the market and maximize revenue and market share.

Other Considerations and Factors One refinement to Weber's theory, and to most theories, is that not all industries make decisions the same way. For example, the cost of raw materials is more influential for a steel plant than it is for a factory making high-end clothing. It is useful to think of a hierarchy of locational factors as shown in the chart below-the most important factors used to pick a general region or state and secondary factors used to narrow down the location to a particular county. Finally, another group of factors may be used to determine the exact site of the factory.

FACTORS IN LOCATING A MANUFACTURING FACILITY

Scale Example Factors

Weber's model discussed labor but in a very simple way. It did not differentiate among different types of labor. But some industries require people with very specific skills. High-tech companies want people trained in the computer or engineering fields. Consequently, they often locate close to major

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training institutions, such as colleges or universities. These industries are known as labor-oriented industries or labor-dependent industries. While geographers debate how to refine models such as Weber's and recognize the value of different assumptions, they recognize the value of models. They provide the most useful way to recognize patterns in making decisions. Most importantly, they help people make predictions. Weber's model and other models inspired by it remain valuable tools for understanding the spatial distribution of factories, offices, and all types of business that employ workers.

Other Locational Issues

Weber's theory also addressed other issues. Because cars are considered a "bulk-gaining product," car assembly plants have traditionally been located close to where the greatest numbers of customers live. This remains true in the United States: most car assembly plants are located in the eastern third of the country. Older plants are centered in northern states- Michigan and Ohio. Newer plants, often owned by foreign car companies, are located farther south. These states are attractive to companies because they offer lower costs because of weaker labor unions, generous state incentives, and a growing population of consumers.

Significance of Other Factories In some cases, the location decision for a factory is dependent upon the location of other factories, a condition referred to as locational interdependence. Being near similar factories allows the businesses to make use of the same services, such as transportation firms or accounting firms that might specialize in servicing their industry. It also allows firms to keep an eye on their competition and to occasionally hire away talented young employees trained by someone else.

In addition, the finished product from one factory could be an input at another factory. In this case, it is somewhat of a market-dependent situation. For example, an auto assembly plant is the market for the output from an auto parts factory. Consequently, the location of the parts factory is very dependent upon the location of the assembly plants.

Auto assembly plants make use of just-in-time delivery, a system in which the inputs needed in the assembly process arrive at the assembly plant very close to when they are needed. Using this system reduces expensive storage costs and avoids tying up money in inventory-but at the risk of running short. It works only if a factory has confidence in its suppliers, its communications and transportation systems, and its ability to predict its need accurately. Suppliers also need to consider transportation costs and the time it takes to get their parts to the assembly plant.

Significance of Government Government policies can often influence location decisions. Many governments offer a variety of incentives to get companies to locate their factories in specific areas:

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• At the international level, trade agreements such as NAFTA or the European Union can change the rules of how business is conducted and thereby change locational factors.

• At the national or regional level, governments hope to attract industries to encourage economic growth. Many businesses prefer to do business in the United States rather than in Russia because U.S. procedures are more predictable and transparent.

• At the local scale, communities commonly provide incentives such as tax breaks and low-interest loans to attract companies.

Tertiary and Quaternary Considerations

For face-to-face retail businesses or services, such as a grocery store or a physical therapy center, being conveniently located close to a large customer base or market is crucial. However, if the retail business is virtual, then proximity to the customers is not especially important as long as there is an efficient and affordable delivery system available. Bookstores were once mostly small, intimate, neighborhood businesses. Most of these went out of business as they were replaced by outlets of large bookstore chains. Then many of these chain stores went out of business, replaced by online sellers.

Flexible Locations If the service is an informational type of service, such as a call center, there is far greater flexibility in locational requirements. An office can be set up anyplace with good communication systems. All the business needs to be successful is a group of trained people who can speak the language of their customers, computers, and good phone and Internet links.

Over the past two decades, hundreds of call centers serving U.S. customers have set up in rural areas of the United States, Canada, India, and the Philippines to take advantage of high unemployment and low wages. Towns and cities trying to generate economic development opportunities often recruit these types of businesses, since the locational demands are minimal. However, because of these minimal demands, these businesses are footloose, meaning they can pack up and leave for a new location quickly and easily.

Prestige and Location Sometimes companies have different locational needs for different parts of the business. A corporation might want its main office for its top executives to have a high profile to signal its power. So the company might choose a location on the upper floors of a large building in the downtown of a city. Such a location also allows the executives to easily interact with executives from other nearby business institutions. These types of spaces, known as front offices, are very expensive, and therefore businesses do not want to occupy more space than necessary.

A corporation might decide that the rest of its employees do not need to be in high-profile locations. They could be located in much cheaper office spaces,

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known as back offices. Since the back office workers are able to communicate with their customers and the head office through the computer and phone systems, they can be located anywhere these technologies are available.

Some companies move their back offices to other countries, a process known as offshoring. Companies will locate services in other countries if the costs of doing business are lower and worth the risk of moving some operations overseas. Many software and manufacturing companies in the United States and Europe locate facilities in India and China to take advantage of the highly skilled but lower-cost labor.

Outsourcing In order to lower costs or just focus on their core business, many companies outsource a variety of business functions. Outsourcing is contracting work out to noncompany employees or other companies. The contracting company might be less expensive because it specializes in the work and does it more efficiently or because it hires workers for lower wages or benefits. Companies often outsource work on their taxes and payroll.

Sometimes companies will both offshore and outsource. An excellent example is how Boeing developed and built a new airplane, the 787 Dreamliner. The planes were designed by Boeing in Seattle, the nose section was outsourced to a company in Kansas, wing tips were made in South Korea by Korean Air, wings were assembled by Boeing in Canada, and final assembly was done by Boeing outside of Seattle. The final product demonstrated outsourcing, offshoring, globalization, and the international division of labor.

EMPLOYMENT CHANGES FOR U.S. MULTINATIONAL COMPANIES

Industry Change in Number of Change in Foreign-Based U.S.-Based Employees, Employees of U.S.-Based

1999 to 2008 Corporations, 1999 to

2008

Manufacturing Nonmanufacturing All Industries

Source: Adapted from David Altig, "ls Offshoring Behind U.S. Employment's Current Problems?" Data from Bureau of Economic Analysis.

GEOGRAPHIC PERSPECTIVES: NEIGHBORHOODS FOR NEW CLASSES

Prior to the Industrial Revolution that began in the mid-18th century, most people in European societies were poor farmers who lived in rural communities. A few were wealthy nobles who lived on estates or in the centers of cities. With industrialization, the number of people who belonged to neither of these classes expanded dramatically.

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Middle Class

Many of the jobs that expanded, such as factory managers, business owners, and professionals, made people wealthier than farmers but not as wealthy as nobles. Hence the people in these expanding categories became known as the middle class. They lived and worked mostly in urban areas, but in widely scattered locations. Some could afford to live in the center of the city. Others lived in new areas built on the outskirts of an urban area. And some lived above their shops, wherever they were located. The spatial distribution of the middle class made building a sense of unity in the new class difficult.

Working Class

The other type of job that greatly expanded in numbers was working in factories. People doing these jobs became known as the working class. They found housing in urban neighborhoods outside the central business districts. The spatial dimensions of their lives- toiling together in Large groups in factories and living near each other in distinctive neighborhoods- created strong social bonds among them. These bonds led them to form labor unions, which gave them power to push for higher wages and better working conditions.

KEY TERMS

Industrial Revolution imperialism

assembly line

Ford ism

substitution principle post-Ford ism

primary sector

secondary sector tertiary sector

quaternary sector quinary sector

multiplier effect

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MULTIPLE-CHOICE QUESTIONS

Question 1 refers to the photo below.

1. This image represents the concept of

(A) an agglomeration economy

(B) outsourcing

(C) the primary sector

(D) just-in-time delivery

(E) the substitution principle

2. The shift of manufacturing within the United States to the South can be explained by all of the following traits of the South EXCEPT (A) lower wages

(B) increased population

(C) more government regulations

(D) more land available for development

(E) greater accessibility to numerous highways

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3. Which is the best example of a footloose activity? (A) a steel mill

(B) an auto assembly plant

(C) a university

(D) a real estate office

(E) an aluminum smelter

Question 4 refers to the following diagram.

IMPACT OF AUTO ASSEMBLY JOBS

Auto Jobs All Jobs

..

Source: Adapted from kcworkforce.com, based on data from EMS! and WANTED Analytics.

4. The diagram shows the concept of the

(A) add-on effect

(B) multiplier effect

(C) primary sector

(D) secondary sector

(E) substitution principle

5. Which person is more likely to work in a front office than a back office?

(A) a customer-service representative who handles phone calls (B) the chief executive for a large corporation

(C) an assembly worker in the auto industry

(D) an accountant who handles a company's payroll (E) a writer who works on marketing materials

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6. Silicon Valley in Northern California is famous as the home to many businesses that produce high-tech products or serve high-tech companies. This demonstrates the principle of

(A) outsourcing

(B) post-Fordism

(C) market dependence

(D) back office processing

(E) agglomeration economies

7. Fishing, farming, forestry, and mining are considered part of which economic sector?

(A) primary

(B) secondary

(C) tertiary

(D) quaternary

(E) quinary

Question 8 refers to the following diagram.

8. Which reason explains why, according to Weberian analysis, an automobile assembly plant is most likely to be located at an intermediate location approximately at D?

(A) Automobiles are a weight-gain industry made of multiple parts. (B) Cars are expensive to import because of high tariffs.

(C) The weight-loss element of cars requires a location near a resource. (D) Environmental regulations require cars to be assembled near cities. (E) Labor costs are usually lower in high population areas.

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FREE-RESPONSE QUESTION

1. Some segments of the U.S. technology industry heavily use offshoring for tasks such as programming and technology support.

A. What does ojfshoring mean?

B. Explain the relationship between the front office and the back office that exists in technology businesses that use offshoring.

C. Give and explain three reasons why India might be a preferred destination for U.S. technology industry offshoring.

THINK AS A GEOGRAPHER: INDUSTRIAL GROWTH AT DIFFERENT SCALES

One way to understand the process of industrialization at different scales is to analyze the opening or closing of a factory. At the local, national, and global scales, starting up a new factory or shutting down an existing one will have economic, social, political, and environmental effects. The chart below lists some of these.

Make a list of the additional effects at the local, national, and global scales for the closing or opening of an aircraft factory.

IMPACT OF AN AIRCRAFT FACTORY

Event Effect Additional Effects

Aircraft Factory Closes

Aircraft Factory Opens

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Economic Interdependence

Globalization, the increasing integration and interdependence of domestic and overseas markets, has three sides: the

good side, the bad side, and the ugly side.

-Panos Mourdoukoutas, "The Good, the Bad, and the Ugly Side of

Globalization," Forbes, 2011

Essential Question: How has growing economic interdependence changed spatial relationships among people in the world?

Few, if any, places in the world are independent any longer. Vast improvements in transportation and communications over the past few decades have linked people throughout the world. The political, cultural, and economic processes of each region are linked with those of other regions, resulting in a degree of global interdependence not seen before. But, as Panos Mourdoukoutas indicated, not everyone has been pleased with the results.

Trade and Interdependence

The Internet and worldwide TV coverage have increased what people can easily know about the resources and products available for trade in other regions. This, combined with improved transportation, has caused international trade to increase significantly.

Complementarity and Comparative Advantage Trade occurs when one party desires a good or service that it does not have or cannot produce as efficiently as someone else can, and another party has the desired good or service and is willing to part with it. Trade sometimes occurs through barter, a system of exchange in which no money changes hands. This is most common between individuals. In the movie To Kill a Mockingbird, the main character, a lawyer, provides legal services to a poor farmer in exchange for bags of food. However, trade usually occurs with an exchange of money or credit.

Parties tend to trade goods or services in which each has a comparative advantage in producing. For example, climate and soil give farmers in Florida an advantage over farmers in Maine in growing oranges. But Maine farmers have an advantage in growing potatoes.

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Trade between parties is even more attractive when complementarity exists-when both parties have goods or services that the other party desires. Sometimes complementarity does not exist, and the trade is heavily weighted in one direction. For example, the United States wants far more products made in China than China wants products made in the United States. This can create tension. In particular, the country with the trade deficit might see the relationship as favoring the other side.

International Trade and Trading Blocs

Globalization has resulted in increased international trade. Larger and faster ships, improvements to major canals such as the Panama and Suez Canals, new port facilities capable of handling larger ships, and increases in air cargo all made the transport of goods faster and less expensive. In the United States, trade increased from 5 percent of the total economy in 1960 to 13 percent in 2015. In China, over this period, it went from 4 percent to 22 percent.

Because of the increasing importance of trade, countries have strengthened their relationships with their most important trading partners. This has resulted in the formation of trading blocs, groups of countries that agree to a common set of trade rules. One of these is the North American Free Trade Agreement (NAFTA) between Canada, the United States, and Mexico, which took effect in i994.

These agreements encourage and ease trade restrictions. The creation of the European Union (EU) has also allowed for the easy movement of goods among the member states. Members of these supranational organizations have much greater access to each other's markets. Not only can goods move more easily between the member countries, but people, services, and capital can also usually move more easily among the member states than they could prior to the agreements.

Manufacturing in NICs

One aspect of globalization has been that companies have moved industrial production from highly developed countries to developing countries. The speed of phone and Internet communications means that decision makers of transnational corporations can easily maintain contact with the management of new processing plants in the developing world. The ease of transportation results in frequent travel between the head offices and the factories in the newly industrialized countries (NICs). The manufactured goods can also be easily shipped to markets in developed countries and the rest of the world.

Consumption Patterns

As countries become more prosperous, citizens consume goods and services increasingly rapidly. Many of the consumers in these countries have a high level of disposable income and, consequently, purchase a great deal. Most residents of developing countries do not have the same level of disposable income and

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thus purchase only necessities. One of the wealthiest countries on Earth, the United States, consumes about one-fifth of all resources, although it includes only about one-twentieth of all people. Maps and charts of consumption, such as the one below, show the overwhelming significance of the developed world.

While the spatial pattern of consumption is strongly skewed towards the developed world, the environmental impact of the consumption is spread more broadly. Many natural resources used to manufacture goods are extracted and processed in the developing world and then consumed in the developed world. Consequently, problems with mining and manufacturing plague poor countries, but problems with use are more often found in wealthy countries.

Not only do citizens of developed countries consume many more resources on a daily basis than do citizens of developing countries, they also live considerably longer. As a result, over a person's lifetime, the imbalance in resource use is even larger than it seems at first glance. For example, at current rates of consumption, in its lifetime a baby born in the United States will consume more than 200 times the energy resources as will a baby born in Bangladesh.

ENERGY CONSUMPTION AROUND THE WORLD

Energy Consumption per Person per Year

Morethan250 -150to249 r-!75to149 r--iunder74

million BTUs million BTUs L......__j million BTUs L____J million BTUs

BTUs. or British Thermal Units, is a widely used measure of energy. -

One million BTUs equals about eight gallons of gasoline.

Source: World Bank, 2013.

The Impact of Global Financial Crises

Increased interdependency links the economies of countries, for both better and worse. Growth in one country can result in new economic opportunities in other countries. For example, as China has gotten wealthier, it bas purchased more grains and meat from U.S. farmers.

ECONOMIC INTERDEPENDENCE 267

But an economic downturn in one country can lead to economic challenges elsewhere. When the price of oil dropped in mid-2014, consumers everywhere enjoyed lower gas prices, and manufacturers could produce goods at lower costs. However, economies in all oil-producing regions suffered. The effects were far-reaching and often acutely damaging:

• Oil companies lost revenue. For example, Royal Dutch Shell, based in the Netherlands, saw its earnings fall 80 percent from 2014 ($19 billion) to 2015 ($3.84 billion).

• Worldwide, about 250,000 workers lost their jobs. These included people in the field extracting oil but also workers for tanker firms or in ports around the world who were no longer needed by their companies.

• Governments in oil-dependent countries, such as Venezuela, lost tax revenue, forcing them to lay off public employees and reduce public services.

• Coal companies that could not compete with lower-cost oil reduced production, leading them to lay off workers.

• Energy industry investors saw significant losses as well. Share prices of energy companies plummeted alongside oil prices. In the second half of 2014, the 24 energy producers in the Fortune 500 lost a staggering $263 billion in market value.

The Changing Global Economy

Over the past several decades, automation has reduced the need for labor in manufacturing industries. At the same time, the spatial distribution of manufacturing is shifting. At the global scale, many companies have moved manufacturing plants from highly developed countries such as the United States to less-developed countries such as Indonesia and Vietnam. At the regional scale, factories in the United States have moved from the Northeast and Midwest to the Southeast and Southwest.

Outsourcing and Economic Restructuring

As part of globalization, transnational corporations, companies that operate in more than one country, have shifted manufacturing jobs away from the highly developed countries to the less-developed countries in order to increase profits. Corporations desire to pay lower wages-and a recognition that firms they compete with wil I also be attempting to pay lower wages-is an important factor. As a result, there is constant downward pressure on wages. Workers always face the possibility oflosing their jobs to automation or to lower-wage workers in another country.

While workers may suffer from lower wages, consumers can benefit. When companies produce goods at lower cost, some of the savings might be passed along to consumers in the form of lower prices.

268 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMENT~ EXAM

MANUFACTURING COSTS IN SELECTED COUNTRIES

$70 _{.l!l Cf)}

^{ig ~ $60} ()Cl

;;: 0 $50

~ cri _{c\3 :::i $40}

~ ·: $30 _{ca :::>}

^{gi ~ $20} 1 ~ $10

^$0 #> ~~

o~ ~ _{~ '?-'5 >:-"\ ~0"'} ⁰ cP ^{1--~'lf 0"-'lf ~<:<o -..,,,0~} 00 I:> ·>:-<$ ~·

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Source: Adapted from businessinsider.corn. Data from 2012.

Companies may also save money by taking advantage of weaker laws protecting worker safety and the environment in newly industrializing countries, and they may receive government incentives such as tax breaks to relocate there. However, transportation costs are likely to increase because the main markets for manufactured products usually remain in wealthier countries. Globalization has created a new international division of labor, a system of employment in the various economic sectors spread throughout the world:

• Core countries such as the United States and Germany have rapidly increasing quaternary sectors that emphasize research and development. • Middle income countries such as China, Mexico, and Indonesia usually manufacture goods that are developed in the highly developed countries. • The least developed countries have large primary sectors and may export minerals and resources used in the production process.

Weak laws also affect non-industrial sectors. The Cayman Islands in the Caribbean Sea made itself a global center for the investment industry through its low taxes and lax regulation of this business. Other countries profit greatly through trade in cocaine, heroin, or other illegal drugs.

Transnationals and Export Processing Zones

Many governments in the developing world offer incentives to attract manufacturing jobs. One common technique used in over 100 countries is the creation of export processing zones (EPZs). These are physical spaces within a country where special regulations benefit foreign-controlled businesses. These zones are known by different names in different countries: maquiladoras in Mexico, free zones in Dominican Republic, and special economic zones in China. They are often situated near international airports, seaports, or land borders from where the products can be exported easily.

ECONOMIC INTERDEPENDENCE 269

One incentive that countries use in EPZs is tax breaks. Transnationals typically do not pay taxes on the machinery and raw materials they import into an EPZ as long as these items are used to make products for export. This regulation protects existing businesses that cater to the local market. For example, if a resident entrepreneur employs 20 people producing T-shirts to sell locally, the new T-shirt factory in the EPZ will not drive the resident owner out of business with cheaper products. The country hopes that existing jobs in the locally owned factory will remain in addition to the jobs added in the foreign-owned factory.

Ethics and Societal Changes Related to EPZs

People disagree about whether EPZs are ethical. Critics charge that the transnationals are taking advantage of the workers and paying them a fraction of what they would pay workers in their home countries. Proponents of EPZs believe that the wages are reasonable for the region and thousands of people, mainly women, have access to paid employment at better wages than would otherwise be available to them. In addition, low wages keep the cost of items manufactured low, which allows lower-income people to purchase them.

EPZs and the employment of women in general can make significant changes on the status of women in their society. As women earn wages, they become less dependent upon men. As a result, women find that their concerns are more likely to be heard by their partners and governments. In addition, birth rates decline as more women gain employment.

The Postindustrial Landscape

As the types of economic activities that exist in a region evolve, so does the economic landscape. Many wealthier countries now have a postindustrial economy, one that no longer employs large numbers of people in factories. Most people are providing services and processing information. The shift from an industrial to a postindustrial economy changes the landscape of a country.

The Fate of Brownfields

The stereotyped image of a postindustrial landscape is one of deteriorating buildings surrounded by weeds and marked by broken or boarded-up windows and rusting metal. These sites of abandoned factories are known as brown fields. Because of the rusting metal, the region of the United States hit hardest by deindustrialization, the Northeast and lands around the Great Lakes, is often called the Rust Belt. In reality, old buildings are usually torn down, so brownfields are often empty.

However, if the factory building remains structurally solid, an entrepreneur might renovate it for a new use and keep enough of its exterior so that people know the building's history. People have converted old factories into apartments, restaurants, recreational facilities, and artisan boutiques. In central

270 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMENT® EXAM

Iowa, Grinnell College now has many of its offices in a building that once manufactured gloves.

If the factories have been torn down and the land cleaned of debris and pollution, the land might be converted to new uses such as a park, a housing development, or a shopping mall. If no memorial indicates the former use of the land, newcomers to the area might not realize the site was used for a factory.

In most communities that have experienced factory closures, the affected landscape includes far more than the former industrial site. Unless the community successfully replaced the lost manufacturing jobs, much of the community may show signs of decline. Because many people will have moved away from the area seeking employment and many of those who have stayed remain unemployed or have much lower-paying jobs, there are often many abandoned stores and homes. And as tax revenues shrink, public buildings and parks might also show signs of neglect.

Corporate Parks and Campuses

It is not just the existence, removal, or repurposing of old factories that typifies a postindustrial landscape. New jobs that are created also help to shape the postindustrial landscape. As a result of this growth, office buildings and other commercial spaces are more likely to be evident on the landscape. Increasingly, these office buildings congregate in corporate parks or business parks.

COMPARING CORPORATE AND INDUSTRIAL PARKS

Attribute

Size of Tract Location

Buildings

Roads

Grounds

Some very large corporations create their own corporate parks where they are the only tenant. Samsung has its headquarters, known as Samsung Digital City, in a park 13 miles south of Seoul, South Korea. The campus covers an area about equal to 40 city blocks. About 35,000 people work there, and it includes 135 buildings, of which four are large office towers. Other facilities include research laboratories, gymnasiums, swimming pools, medical offices, a heliport, daycare facilities, and housing for guests and visiting employees.

ECONOMIC INTERDEPENDENCE 271

Technopoles

Just as agglomeration economies can encourage the spatial grouping of manufacturing plants, the same principles can apply to technology companies. A technopole is a hub for information-based industry and high-tech manufacturing. It allows for benefits such as the possible sharing of certain services and attracting highly skilled workers to the area. Often these technopoles are located near universities well known for their computer, mathematics, engineering, science, and entrepreneurial business faculties:

• Silicon Valley, with the University of California, Berkeley, and Stanford University campuses nearby, is perhaps the most famous technopole. • Harvard University and the Massachusetts Institute of Technology have acted as a catalyst for the development of the Route 128 high technology corridor near Boston.

• The Research Triangle in North Carolina developed because of three major research universities: Duke University, North Carolina State University, and the University of North Carolina, Chapel Hill.

• A smaller-scale technopole, the Technology Triangle near the University of Waterloo and the University of Guelph in Ontario, Canada, is a very important economic stimulus to much of southern Ontario.

Economic Growth Because of the economic stimulus associated with the technopoles, they can be called growth poles or growth centers. The concentration of high-value economic development in the growth pole attracts even more economic development. Once the process starts, the cumulative causation effect means it tends to feed upon itself. Each time new businesses are attracted to the growth pole, the "magnet" becomes even stronger and attracts still more businesses.

Desired Side-Effects Economic planners promoting a growth pole policy hope that it will have spin-off benefits, positive outcomes in addition to the main outcome. Spin-offs can help communities far beyond the growth pole itself. For example, farmers a hundred miles away from the pole should have expanded markets in which to sell their produce, resulting in increased sales and profits.

Unwanted Side-Effects The possible downsides of growth poles are the backwash effects. One of these is the loss of the highly educated young people from distant communities as they migrate to the growth pole for employment. As a result, the distant communities might suffer depopulation, loss of tax revenue, and the closure of various services. These changes can be detrimental for a community. This is an ongoing issue in many countries. In China, the impressive growth in prosperity for people in large urban areas in the eastern part of the country has pulled in people from rural areas in the west. One backwash effect of this has been that the rural western areas sometimes face a shortage of working age people and people to take care of elderly family members.

272 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMENT" EXAM

Government Development Initiatives

Because of the desire for economic development, governments at all levels provide various incentives to encourage the expansion of existing economic activities or the creation of new ones. Depending upon the nature of the economic development and what level of government is supporting the development, the type of incentive may vary. In most cases, the government providing the incentives insists that the company receiving the incentive must achieve certain targets such as providing a certain number of full-time jobs. The common incentives used to stimulate economic development are described in the table below.

GOVERNMENT EFFORTS TO PROMOTE ECONOMIC GROWTH

Type of Incentive Tax Breaks

Loans

Direct Assistance

Changes in Regulations

Throughout most of U.S. history, government efforts to promote economic growth have been controversial. In the nineteenth century, the debate over the proper role of government reflected strong regional differences. Compared to the states in the South, states in New England and the Midwest supported more active government:

• At a national scale, New England and the Midwest supported high tariffs to fund government construction of roads, canals, and harbors, and to subsidize construction of railroads.

• At the local scale, citizens of New England and the Midwest supported higher taxes to pay for local transportation projects and, most importantly, public schools.

ECONOMIC INTERDEPENDENCE 273

GEOGRAPHIC PERSPECTIVES: THE GLOBAL DISTRIBUTION OF INCOME

The distribution of income draws the attention of many scholars economists, historians, sociologists, and others. Geographers focus on how wealth and income are distributed through space. Africa and South America

While some African states have growing economies, average incomes remain low compared with most developed countries. South America has had uneven economic growth in the past two decades, often not enough to match its population growth.

Asia

The largest income gains in recent decades have been in Asia. South Korea, Hong Kong, and Singapore have transformed themselves from lands of grinding poverty to lands of relative comfort in less than a century. However, the really big increases in the size of the middle class have occurred in two enormous countries: China and India.

North America and Europe

North America and Europe have been relatively prosperous over the past century. However, middle-class incomes have stagnated in recent decades. As a result, income inequality, particularly in the United States, bas increased.

GDP BY CONTINENT, 2016

GDP (in trillions

~

Continent

•Asia

• North America Europe

• S. America • Africa

•Oceania

of U.S. dollars) $24.3

$21.7

$19.1

$3.6

$2.2

$1.4

barter

complementarity trading blocs

newly industrialized countries

transnational

corporations

KEY TERMS

274 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMEN~ EXAM

MULTIPLE-CHOICE QUESTIONS

Question 1 refers to the chart below.

EMPLOYMENT IN SELECTED EXPORT PROCESSING ZONES

Nicaragua Cape Verde El Salvador Bangladesh Sri Lanka Honduras

i--~~~--~~~~~~~~~~__,j 1--~~~....-~~~--~~~~~----

~~~~-.-~~~-.-,~~~~..-~

0% 25% 50% 75% 100%

Gender of Employees

D Females Males

Source: International Labor Organization, 2007.

1. Which statement about the employment of men and women in EPZs is most clearly supported by the graph above?

(A) Unemployment is probably an acute issue for men in these countries.

(B) Women make up the vast majority of each country's secondary sec tor employees.

(C) Men generally prefer to work in quaternary sector positions than in the positions found in these EPZs.

(D) The governments of these countries will be more likely to listen to the concerns of the women.

(E) Resource consumption by women working in EPZs will surpass that of men in these countries, causing great social change.

ECONOMIC INTERDEPENDENCE 275

2. Silicon Valley is an example of a technopole because it (A) takes its name from the material used to make microchips (B) demonstrates the concept of agglomeration economies (C) is a center for developing new ideas that generate growth (D) has attracted new universities to locate in the region

(E) reuses brownfield sites that were once industrial factories Question 3 refers to the map below.

CANADA

3. Which statement best describes the darker shaded region in the above map?

(A) Growing prosperity in this region over the past several decades has had a spin-off effect on nearby regions.

(B) Industries in the region have a comparative advantage over ones in the South and Southwest regions in recent years.

(C) Brownfields are one sign of the economic recovery occurring in the reg10n.

(D) The region is known as the Rust Belt because of the many closed factories in it.

(E) The region has always had a shortage of jobs in the secondary sector.

276 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMENT'e EXAM

4. The EPZs found in Mexico are known as

(A) free zones

(B) special economic zones

(C) urban enterprise zones

(D) maquiladoras

(E) backwash regions

5. Which feature is typical of a postindustrial landscape? (A) a corporate research park

(B) a modern dairy farm

(C) an offshore natural gas well

(D) an aluminum smelter

(E) a large manufacturing area near an urban core

6. Which is most responsible for deindustrialization in highly developed countries?

(A) easy capital financing available in developing countries (B) low wages in developing countries

(C) labor shortages in developed countries

(D) the lack of strong unions in developed countries

(E) the shortage of raw materials in developed countries

7. The main benefit for countries that host Export Processing Zones is that these zones

(A) create thousands of relatively high-paying jobs for their citizens (B) increase availability of manufactured products for their citizens (C) attract thousands of foreign workers, which results in millions of extra dollars in tax revenue

(D) increase opportunities for the citizens to work for American com panies and to learn English

(E) provide an efficient way to increase imports from the United States ECONOMIC INTERDEPENDENCE 277

Question 8 refers to the photo below.

8. Which phrase best describes what is shown in the photo? (A) an industrial landscape

(B) an urban brownfield

(C) an export processing zone (EPZ)

(D) a transnational corporation

(E) a maquiladora

FREE-RESPONSE QUESTION

1. Changes in the spatial distribution of industrialization cause several changes in the landscape. Define each of the following terms and explain how they reflect economic changes to the landscape.

A. brownfields

B. corporate parks

C. technopoles

278 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMENT~ EXAM

THINK AS A GEOGRAPHER: ANALYZE TARIFF INFORMATION

Geographers study patterns of interaction among people who live in different places. One of these interactions is trade in goods and services. Many less-developed countries hope that trade will provide them an opportunity to create jobs and improve the lives of their citizens. The experience of the United States in economic development might provide a model for some countries to follow.

Use the graph showing average tariffs (taxes on imports) in the United States to answer the questions about the role of trade in economic development.

AVERAGE TARIFF RATE IN THE UNITED STATES,

1792T02010

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

1790 1820 1850 1880 1910 1940 1970 2000

1. Describe the general level of tariff rates between 1792 and 1860.

2. How did tariff rates between 1860 and 1900 compare to earlier and later tariff rates?

3. What has been the trend in tariff rates since 1942?

4. How might some developing countries today use the experience of the United States to justify either high tariffs or low tariffs?

ECONOMIC INTERDEPENDENCE 279

Measures of Development

A nation's growth depends, among other factors, on whether and how it educates and integrates its talent.

-World Economic Forum, "Gender Parity." 2016

Essential Question: What does development mean, how can it be measured, and how can it be encouraged?

The opening quotation highlights a key issue in making progress: using the talents of all members of society. Until the past century, many countries have restricted the opportunities of minority ethnic groups and women to help develop society. Development includes both economic advances, such as creating new jobs and improving incomes for people, and other cultural changes, such as improving health care and providing schooling for everyone. Having measurable data regarding the level of development allows people to make comparisons to evaluate the success of development attempts in various regions.

Measures of Development

Measurements of economic development focus on types of jobs, income, and economic output. In order to make the numbers from different countries comparable, the income and output figures are usually converted to U.S .. dollars and stated as a certain amount of money per capita, which means "per person." Three common measures describe the total output of the country (each with slightly different technical meanings):

• gross national product (GNP) per capita

• gross domestic product (GDP) per capita

• gross national income (GNI) per capita

Other common measures used to measure wealth are sectoral U ob) structure of the labor force, consumption per capita, income distribution, and energy use per capita.

Measures of social or human development indicate the quality of life that people experience in a country and the level of equity that exists. The most common measures cover variables such as birth rate, death rate, fertility rate,

280 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMENT® EXAM

infant mortality rate, child mortality rate, life expectancy, literacy rate, caloric intake, gender inequality, school enrollment rate, and access to health care.

Terms of Development

Development is a continuum that reflects the relative wealth and development of countries. People use various sets of terms to categorize countries on this continuum. The table below summarizes some of these sets.

COMPARING NAMES FOR LEVELS OF DEVELOPMENT

System Low End Middle Range High End

Please note that the stages used by Rostow in his analysis of economic growth are not the same as the stages in the Demographic Transition Model. Since most wealthy countries are in North America and Europe, and most poor countries are in South America, sub-Saharan Africa, and southern Asia, some people divide the world into a more developed "North" and a less developed "South." The imaginary line separating the two regions is sometimes called the Brandt Line, named for Willy Brandt, a German politician interested in development. Australia and New Zealand are considered part of the North economically, even though they are geographically located far south.

MEASURES OF DEVELOPMENT 281

Measuring Economic Development

One way to measure economic development is by the sectoral distribution of the workforce. The least developed countries in the world have higher percentages of their labor force in the primary sector, while more developed countries have higher percentages in the tertiary sector.

A second way to measure economic development is by comparing either the annual incomes of people or the total accumulated wealth of people who live in various locations. This can be complicated by three problems:

• Countries have different currencies. This problem can be solved by converting all amounts to one currency, such as the U.S. dollar. • The value of a currency changes over time. This problem can be solved by converting all amounts to their amount in a specific year. • Prices vary from country to country. In 2016, the same collection of goods that cost $1 ,000 in the United States cost $590 in the Czech Republic, but $1 ,620 in Switzerland. This problem can be solved by converting amounts to their purchasing power parity (PPP), which is based on what an amount of money will buy.

Income Equality

The Gini coefficient, sometimes called the Gini index, measures the distribution of income within a population. The values range between 0 and 1. A 0 would mean everyone's income was the same. The higher the number, the higher the degree of income inequality. In general, developing countries have the highest income inequality. Highly developed countries, such as those in Western Europe, tend to have lower income inequality.

GINI COEFFICIENT BY COUNTRY

282 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMENT~ EXAM

Measuring Social Development

'

Noneconomic statistics that reflect a country's development status typically focus on the conditions in which people live. Life expectancy measures the number of years a person is anticipated to live. Since life expectancy is usually calculated from the time of birth, high infant and child mortality rates greatly affect it. A low life expectancy suggests that people in a society do not have adequate nutrition and health care, which indicates a low level of development.

Before the 19th century, people who survived to adulthood often lived until they were 50 or more years old. But because so many people died as infants or children, life expectancy in most of the world was under 40 years.

As a result of the dramatic declines in infant mortality over the past two centuries, and particularly in the past 50 years, life expectancy has increased substantially. In 2015, nearly 70 percent of the world's countries had a life expectancy above 70 years and 15 percent had a life expectancy of more than 80 years. However, there are still countries such as Angola, where more than one in ten babies dies before reaching a first birthday, and the life expectancy at birth is only 56 years.

Besides access to health care, access to education promotes a healthy population. Geographers use the literacy rate (the percent of population that c.an read and write usually at an 8th grade level) as another social measure. Literacy rates above 99 percent are common in highly developed countries, and according to UNESCO, more than 90 percent of the world population in 2015 was literate. This still leaves more than 730 million people who are not literate. Most are female, and most live in less developed countries.

The Gender Gap

Differences in the privileges afforded to males and females in a culture are referred to as the gender gap. These differences might appear in educational opportunities, or in employment, wages, voting rights, health care, political empowerment, property rights, the ability to drive a car, inheritance rights, or the right to make contraception decisions. The size of the gender gap varies tremendously among countries based upon different aspects of society. Over the past decade, the gap in education and health care has been reduced. The gap in political empowerment and economic participation remains significant.

Gender Inequality Index (Gil)

One way to summarize the different opportunities open to males and females in a society is through the Gender Inequality Index (Gil), a composite index for measurement of gender disparity. The GII considers the reproductive health, empowerment, and labor market participation of women to determine a country's composite score. Maternal mortality rates and adolescent fertility rates are used as indicators of reproductive health. The indicators of empowerment are the share of government seats held by each sex and the proportion of adult females and males with at least some secondary education.

MEASURES OF DEVELOPMENT 283

The labor market participation aspect of the index is indicated by the labor force participation rate offemale and male populations aged 15 years and older. The composite score is a measure of the percentage of potential human development lost due to gender inequality. For example, Guatemala has a composite score of 0.533 compared to Sweden's score of 0.055. This means that there is a 53.3 percent loss in potential human development due to gender inequality in Guatemala compared to only 5.5 percent in Sweden.

The Human Development Index (HD/)

In 1990, a group of researchers led by Pakistani economist Mahbub ul Haq released an alternative measure of development, one that considers more than just income. The Human Development Index (HDI) combines one economic measure (GNI per capita) with several social measures, such as life expectancy and the average education level:

• The rankings of countries by HDI and income are often similar. Norway ranks 1st in HDI and 6th in income. The United States ranks 11th in HDI and 8th in income.

• Countries that invest heavily in education and medical care rank higher in HDI than in income. Ireland ranks 6th in HDI but only 22nd in income. Cuba ranks 67 in HDI but only 114th in income.

• Some countries that are rich in oil or other natural resources rank higher in income than in HDI. Qatar ranks first in the world in income, but only 32nd in HDI.

Analyzing Spatial Patterns of Development Regardless of the variables considered to classify the levels of development, certain spatial patterns emerge. North America, Europe, Australia, and Japan are more developed than most of Africa and parts of Asia and South America.

Rostow's Stages of Economic Growth

In 1960, American economist Walt W. Rostow developed a modernization model, one that focuses on the shift from traditional to modern forms of society, called the Stages of Economic Growth Model. He assumed that all countries wanted to modernize, and that all would, though at different speeds. He saw economic development as a linear progression in which countries moved from one stage to the next until they reached the fifth and final stage

high mass consumption.

Like the Demographic Transition Model (DTM), the Stages of Economic Growth model is a generalization based upon how the United States and western Europe evolved, and both identify distinct stages. However, the DTM is a population model and Rostow's model is economic, so they differ fundamentally.

Rostow suggested that different ingredients and levels of investment were required to allow countries to move from one stage to the next. The model

284 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED LACEMENT~ EXAM

suggests a recipe for development: do this, then this, and eventually a country will become developed. There are key characteristics associated with each stage as outlined in the following chart.

ROSTOW'S STAGES OF ECONOMIC GROWTH

Stage Characteristics Examples

1. Traditional • English colonies Society in North America in the 17th

century

• Medieval Europe

• No entire country

is at this stage

today

2. Pre-Condition • United States in for Take-Off the early 19th century

• Nigeria today

• Afghanistan today

3. Take-Off • United States, mid-19th century

• Japan, late 19th

century

• Bangladesh today

4. Drive to ^{• United States,} Maturity ^{late 19th century} • Germany, early

20th century

• Brazi l today

5. High Mass _{• Spends money on nonessential goods} • United States, Consumption _{(consumerism)} early 1920s to _{• Purchases of high order goods} present

_{become common} • Japan, mid-1950s

_{• Desires to create an egalitarian society} to present

• Supports a strong tertiary sector

MEASURES OF DEVELOPMENT 285

Criticisms of Rostow's Model

Some of the criticisms ofRostow's model include:

• The model was based on American and European examples, so it did not fit countries of nonwestem cultures or noncapitalist countries. • The model encouraged the exploitation of less developed countries (LDCs ), and some LDCs could get trapped in a state of dependency with highly developed countries.

• The model suggested linear change, always in the direction of progress. However, LDCs often need the assistance, money, and technology of developed countries in order to develop. And in some cases, countries might regress in economic development.

• The model suggested all countries have the potential to develop, but there are significant differences among countries, such as the physical size, population, natural resources, relative location, political systems, and climate, which could affect their ability to develop.

• 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.

• The model failed to recognize that most of the countries that 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.

Despite these criticisms, the Stages of Economic Growth model continues to provide one way to view the changes countries have been going through over the past two centuries. Part of its value was that it prompted others to think about economic and social change in a global context, and it challenged them to provide their own framework.

Wallerstein's World System Theory

In the 1970s, historian Immanuel Wallerstein proposed an alternative view to Rostow's on economic development, which he called the World Systems Theory. It is a 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. Because the World Systems Theory includes both political and economic elements, it is sometimes viewed as a political theory .and sometimes as an economic theory.

Wallerstein divided countries into three types: core, semiperiphery, and periphery. As a result, his theory is sometimes referred to as the Core Periphery model. The traits of each type of country are identified in the following chart.

286 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMENT" EXAM

WALLERSTEIN'S WORLD SYSTEMS THEORY

Category Characteristics Examples

Core Dominance The core countries achieved their initial dominance through the industrial production of goods, which led to political control through colonization. As countries successfully won their political independence, the style of colonialism nearly vanished.

But core countries continued to maintain their supremacy by controlling the production of goods in countries in the semiperiphery and periphery. This new form of control, which relied on economic and cultural influence rather than political power, was called neocolonialism.

Private corporations worked closely with governments under both colonialism and neocolonialism. Large multinational companies, which are often headquartered in core countries, have had significant influence over the economies of periphery and semiperiphery countries.

MEASURES OF DEVELOPMENT 287

Changing Categories Unlike Rostow's model, Wallerstein's model does not suggest that all countries can reach the highest level of development, nor does it explain how countries can improve their position. In contrast, it indicates that as a result of the nature of dependency, the world system will always include a combination of types of countries. But countries can change categories:

• In 1750, the British colonies in North America were part of the periphery. But by 1870, at least one former colony-which had become the United States- was part of the core.

• In 1900, Argentina was a core country. By 2000, it had become part of the semiperiphery.

• In the past few decades, the BRICS countries- Brazil, Russia, India, China, and South Africa-have challenged the dominance of the core countries. With new virtual and just-in-time business models transforming the world economy, predicting the change in economic power among countries is challenging.

THE WORLD SYSTEM

Category Based

on Wallerstein

-Core

^{- Semiperiphery} CJ Periphery

Labor Trends Wallerstein's model provides a framework for analyzing where sectors of workers in new international division oflabor live and work: • Peripheral countries are often where primary sector workers engaged in the extraction of raw materials are located.

• Semiperipheral countries are often home to many workers in the secondary sector (such as factory workers) and in the tertiary sector (such as call center staff).

• Core countries include most quinary and quaternary sector workers, such as the senior managers and research staffs of transnational companies.

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Systems Theory at the Country Scale While Wallerstein built his model for a global scale, geographers apply the concepts of core, semiperiphery, and periphery to smaller scales, such as a country. In the United States, the core would be the major cities, such as New York and Chicago. The semiperiphery would be the manufacturing belt in the Midwest and parts of the South. The periphery would be the rural areas of the Great Plains and the West.

Criticisms of World Systems Theory The World Systems Theory has its detractors. Criticisms of Wallerstein's model include the following:

• It downplays the role of culture. For example, it focuses heavily on U.S. economic influence (investments and purchases of raw materials), but it pays little attention to the pervasive influence of U.S. culture (movies, music, and television).

• It is somewhat outdated. It was based on industrial production, but many countries are postindustrial. Core economies have transformed into high-tech, high-skilled tertiary economies.

• It is of limited practical use. It suggests that countries can change their status, but it does not explain how.

It fails to recognize the role of nongovernmental organizations. It discusses countries, but not the role of influential UN agencies or private nonprofit charitable groups such as the ones in the chart below.

TEN LEADING NGOS

Name Headquarters Mission

Source: Adapted from NGO Advisor, "Top 20 NGOs in the World.," ngoadvisor.net.

MEASURES OF DEVELOPMENT 289

The UN Millennium Development Goals

In 2000, the UN identified the most challenging barriers to development, as well as eight key development goals. The result of this process was the UN Millennium Declaration, the keystone of a movement to concentrate on improving the lives of those living in countries with the lowest standards of human development. These goals, known as the Millennium Development Goals (MDGs), were created to assist in overcoming the barriers. The goals had 21 very specific targets and a series of measurable indicators for each target that would allow for evaluating the success of the program.

According to the Millennium Development Goals Report of 2015, the global efforts to achieve the goals produced the most successful anti-poverty program in history. By focusing very specific and globally accepted goals, countries cooperated to lift nearly one billion people out of extreme poverty, reduce hunger, and increase the number of girls attending school Some details on these successes are provided in the chart below.

UN MILLENNIUM DEVELOPMENT GOALS AND PROGRESS

Goal

1. Eradicate extreme poverty and hunger

2.Achieve universal primary education

3. Promote gender equality and empower women

4. Reduce child mortality

5. Improve maternal health

6. Combat HIV/AIDS, malaria, and other diseases

7. Ensure environmental sustainability

8. Develop a global partnership for development

Despite the success in meeting the MDGs, many challenges remained. In 2016, the UN launched the 2030 Agenda for Sustainable Development. It established a new set of goals in order to tackle problems facing countries as they develop.

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Sustainable Development

In the list above, Goal 7 calls for "environmental sustainability." Sustainable development is any economic development that serves the current needs of people without making it harder for people in the future to live well. Concern for sustainable development is a modern problem. With mass consumption and increased population density, people place greater burdens on the environment.

Resource Depletion

Development is not sustainable when people overuse resources. For example, if farmers grow crops in ways that cause extensive soil erosion, land that is fertile today will not be in the future, and food supplies will decrease. To protect the soil, many farmers have changed how they plow and plant.

Environmental Degradation

Sustainable development also includes reducing air and water pollution, reducing waste through recycling and composting, and fighting climate change. Shifts in climate patterns can cause dramatic problems for people:

• If climates get warmer, diseases once confined to areas around the equator could spread and devastate new areas.

• If ocean levels rise, people along coasts could be forced to move or spend huge sums to hold back the water.

• If storms and droughts become more extreme, people with the fewest resources to move or to protect themselves will be at greatest risk.

Ecotourism

One effort to promote sustainable development is ecotourism, tourism that attempts to protect local ecosystems and to educate visitors about them. For example, tourists who visit selected sites in Costa Rica's Cloud Forest, Botswana's wildlife habitats, and Australia's coral reefs might be charged a fee to fund maintenance of these special areas and to create sustainable jobs.

Economic Development and Gender Equity

The status of females correlates to the level of development of a country. In general, higher status for females goes along with higher overall development.

World Gender Equity Statistics

The Gender Inequality Index (Gii) uses indicators such as reproductive health, empowerment, and the labor market participation of women to measure the percentage of potential human development lost due to gender inequality in different nations. Gii scores can be very telling from a development point of view. For example, Switzerland, with a Gii of0.028 is highly developed, while Niger, with a Gii of 0.713, is among the least developed countries in the world.

MEASURES OF DEVELOPMENT 291

As an increasing number of females gain employment outside the home or the agricultural sector, the economy of a country improves. The link between the level of equity in maternal health and empowerment and the level of development is not as obvious, but nonetheless it exists. The better maternal health care that women experience, the more capable they are of contributing to the economy; and the more educated they are, the greater contribution they can make.

The chart below shows the countries with the highest and lowest GII scores. The spatial distribution is clear. Gender equality is most advanced in Europe, and least advanced in West Africa and Southwest Asia.

GENDER INEQUALITY AND DEVELOPMENT, 2015

Highest Equality Countries Highest Inequality Countries

Country Gil Country Gil

Austria 0.053 Yemen 0.744 Source: UN Development Report.

More Jobs and Low Pay for Women

The third Millennium Development Goal dealt specifically with gender equality and empowering women. Several programs enacted by governments and international non-profit agencies, known as non-governmental organizations (NGOs), helped women find jobs outside the home. As a result, employment opportunities for women have increased sharply in recent decades.

One reason for the expanded employment opportunities for women has been the efforts of transnational corporations. As these businesses have opened more factories in developing countries, they often employed women because they were available and because they would work for lower wages. Because of very low birth rates in countries such as Japan and Singapore, there would be severe labor shortages if women were not accepted as an integral part of the labor force.

Increased educational opportunities for females during the past two decades also prepared more women to work outside their homes. Globally, more than 250 million additional women joined the paid workforce between 2006 and 2015 . Many of the women who previously had low-paying jobs began earning significantly more in manufacturing jobs.

Despite these significant increases in the number of women working and the wages of women, globally there remains a large wage gap between men

292 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMEN~ EXAM

and women, even when they are doing comparable work. In the United States, if a man and a woman do the same type of job, a man would typically make a salary that is 17 .5 percent higher than a woman.

Another trend reflecting employment discrimination toward women is that women rarely obtain upper-level jobs in companies, particularly in developing countries. The situation has been improving in recent years in developed countries, but the glass ceiling remains.

Microloans and Opportunities for Women

In recent years nongovernmental organizations (NGOs) such as the Grameen Bank, based in Bangladesh, have initiated microcredit or microfinance programs. These programs provide small loans to start or expand a business to entrepreneurs who would not normally qualify for credit from traditional sources. These loans have been particularly active in South Asia and South America. The vast majority of the entrepreneurs taking advantage of microcredit loans are women, many of whom are quite poor. While the idea of lending money to very poor people is unusual, the repayment rate is unusually high-more that 98 percent.

The success of microcredit programs has resulted in several changes to societies where the loans are available. The increased financial clout of women has given them more influence in their homes and communities. And as working women have more voice in child-bearing decisions, more money to pay for contraceptives, less time to raise children, and less need for additional children, birth rates have decreased. Women's increased wealth also allows for the children to be better nourished, which has helped to reduce child mortality.

GEOGRAPHIC PERSPECTIVES: ARGENTINA AND KOREA

The economic fortunes of Argentina and South Korea have been influenced by their physical locations as well as their roles within global trading networks. Argentina is situated along the Atlantic Coast of South America, so trade with the East Coast of the United States is convenient. Korea is between China and Japan, two large markets.

Conditions in the Early 20th Century

A century ago, Argentina was wealthy and Korea was poor. Argentina's income per worker made it one of the top ten economies in the world. 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.

MEASURES OF DEVELOPMENT 293

Conditions Today

Currently, about 60 percent of the workers in each country are employed in the service sector. Beyond that, the economies differ greatly. Argentina, like many countries in Latin America over the past half century, suffered periods of massive inflation, military dictatorships, and heavy foreign debt. These combined to severely limit overall economic growth. Today, Argentina is a semiperipheral state that relies heavily on agricultural exports such as beef, fruit, and grains. In contrast, Korea, along with much of East Asia, has been one of the success stories of modern economic development. Through a combination of intense education, heavy government subsidies, tough trade restrictions, and strong corporations, Korea focused on making products it could export. The plan worked: today, Korea is a high-tech industrialized economy. Exports-mostly manufactured goods-account for nearly half of its GDP. Its levels of health, wealth, and education rank it as a core state, with about 2 percent of its population involved in primary activities and about 40 percent in secondary activities.

KEY TERMS

dependency model Core-Periphery model core

periphery

semiperiphery

sustainable develop ment

NGOs

microcredit or

microfinance

'

~

'

I

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MULTIPLE-CHOICE QUESTIONS

Question 1 refers to the following graph.

GLOBAL GENDER GAP PERFORMANCE

Economy 0.60 Health 0.98

0.00

Complete Inequality

Politics 0.20

^{I I} I 1.00

Complete

Education 0.95 Equality

Source: Based on data from the World Economic Forum, "The Global Gender Gap Report 2015."

1. The two categories that have the largest degree of gender inequality are in the areas of

(A) economy and education

(B) health and education

(C) economy and politics

(D) education and politics

(E) health and politics

2. Based upon Wallerstein 's World Systems Theory, which of the following countries best fits the description of a peripheral country? (A) Brazil

(B) Mali

(C) Japan

(D) Germany

(E) China

3. Which question would most likely be studied using the Gini Index? (A) whether a country is moving closer to gender equality (B) whether religious traditions influence educational achievements (C) whether climate influences the infant mortality rate

(D) whether push or pull factors are more influential on migration (E) whether the income distribution influences economic growth

MEASURES OF DEVELOPMENT 295

Question 4 refers to the map below.

4. Which is the best description of the countries shown on the map in the darker shade?

(A) semiperipheral countries

(B) developing countries

(C) core countries

(D) least developed countries

(E) periphery countries

5. Modernization models of economic development suggest that (A) there will always be a combination of more developed countries and less developed countries

(B) industries will always try to locate to enable them to take advantage of agglomeration economies

(C) geographic factors, such as the availability of natural resources, determine how a country develops

(D) it is possible for all countries to reach a high level of economic development

(E) governments should not provide stimulus for economic development

6. Which statement best demonstrates why purchasing power parity is useful in comparing income and wealth in various countries? (A) The euro is worth about $1.05.

(B) A pair of blue jeans that cost $27 in Pakistan cost $40 in Laos. (C) Inflation is 2 percent higher in Indonesia than it is in Peru. (D) Unemployment is 2 percent higher in Israel than it is in Japan. (E) Germany's national debt is twice as high as Panama's.

296 HUMAN GEOGRAPHY: PREPARING FOR THE ADVANCED PLACEMEN-re EXAM

7. All are stages of Rostow's Stages of Economic Growth model except (A) pre-condition for take-off

(B) drive to maturity

(C) high mass consumption

(D) late expanding

(E) traditional society

Question 8 refers to the graph below.

-^{Primary Secondary Tertiary}

8. The country shown in the pie graph is probably a

(A) developed country

(B) less developed country

(C) emerging economy

(D) semiperipheral country

(E) developing country

FREE-RESPONSE QUESTION

1. Two models of economic development are Wallerstein 's World Systems and Rostow's Stages of Economic Growth.

A. What does each model suggest about the possibility of all countries achieving a high level of development?

B. Explain how colonialism helps explain the historical and political aspects of Wallerstein's model, while neocolonialism helps explain its contemporary economic development aspects.

C. In the past 20 years, development has affected gender equality. Discuss a positive impact of development for women and a challenge that women still face relative to gender equality.

MEASURES OF DEVELOPMENT 297

THINK AS A GEOGRAPHER: DEFINING DEVELOPMENT

The Human Development Index illustrates the level of development of countries using both economic and social measures. Immanuel Wallerstein asserted that the inter-regional interaction between economically developed (core) countries and economically developing (periphery) countries was dynamic and was the primary influence on the global economy. Wallerstein believed the core countries had more disposable income to invest in new technologies and higher skilled labor, while peripheral countries provided more low-skill, labor-intensive labor.

Critics ofWallerstein 's World Systems Theory argue that core countries develop political policies that essentially create a relationship between the core and periphery that locks peripheral countries into being dependent on the core countries. Some argue this dependency is neocolonialism in the late 20th and early 21st century.

Use the data in the chart to answer the questions below it.

HDI DATA FOR SELECTED COUNTRIES, 2015

Country Life Expectancy Expected Years Income per at Birth of Schooling at Capita

Birth

Source: United Nations Development Programme, Human Development Reports.

1. Using the data above, which countries demonstrate characteristics more closely aligned to being a part of the global economic core?

2. Identify one of the countries in the chart above that would be considered in the global economic periphery.

3. Explain what the country that is in the periphery could do to become more economically developed.

4. Explain where Brazil fits into Wallerstein's World Systems Theory. Identify evidence from the data that supports this view of Brazil.

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UNIT 6: Review

WRITE AS A GEOGRAPHER: GIVE FULL EXPLANATIONS

Answers to free-response questions can be very basic-or they can be fully explained for additional credit on an exam. Consider the question, Why did Chicago develop where it did? The basic answer is that Chicago grew into a major city because it was located where two water transportation networks come together-the Great Lakes and the Mississippi River system. This is correct but basic. A fuller explanation would include claims that explain the context and the details to give significance to these basic facts. It would explain:

• the importance of water travel in the 1800s

• the wealth of food- wheat, com, beef, and pork-produced in the Midwest

• the increasing demand in the East and Europe for food as industrial cities grew

• the increasing demand in the Midwest for manufactured goods produced in the East

For each question, write a basic answer in one or two sentences. Then list three additional points that would provide a fuller explanation.

1. Explain why purchasing power parity is a more useful refinement of gross national income.

2. Which criticisms of Rostow's Stages of Economic Growth model could also be made against Wallerstein 's World Systems Theory?

3. What are the costs and benefits of sustainable growth?

REFLECT ON THE CHAPTER ESSENTIAL QUESTIONS

Write a one- to three-paragraph answer to each question.

1. How did the diffusion of industrialism affect people around the world?

2. How has growing economic interdependence changed spatial relationships among people in the world?

3. What does development mean, how can it be measured, and how can it be encouraged?

UNIT 6: REVIEW 299