Industrial and Economic Development Notes
Industrial and Economic Development Patterns and Processes
Industrialization
Definition: Transformation from an agricultural to an industrial society.
Impact: Improved standards of living; geographically uneven development.
4 stages of industrialization:
1750s: Consists of technologies such as the steam engine, which allowed for more factories to operate with assembly lines and machines. We’re no longer relying on workers to complete tasks by hand.
1870s: Electricity became more common along with assembly line, great productivity and efficiency, expanded steel and oil industries
1970s (digital revolution): Industries that went into the technology field such as computers, telecommunications, industralize cities
2010s: We have internet, artificial intelligence, 3D printing
Industrial Revolution: Resulted from new technologies and the availability of natural resources.
Consequences of Industrialization:
Increased food supplies and population growth.
Creation of industrial jobs in urban centers.
Shifted social class structures.
Investors pursued raw materials and new markets.
Contributed to colonialism and imperialism.
Traditional Society: Economy is mainly subsistent, majority population have jobs such as a subsistence farmer.
Experience low economic growth
Little specialization
Often lack modern technology
Economic Sectors
Primary Sector: Extraction and harvesting of raw materials.
Examples: Agriculture, forestry, fishing, mining.
Secondary Sector: Processing of raw materials into finished goods.
Example: Manufacturing industries.
Tertiary Sector: Provision of services, doing a service for another person.
Examples: Health, legal, education.
Quaternary Sector: Revolves around acquiring information, processing + sharing information
Examples: Finance, insurance, computer services.
Quinary Sector: High-level decision-making and human capacity advancement.
Examples: Scientific research, higher education.
Spatial Patterns of Industrial Development
Core: Countries with concentrated economic power (e.g., U.S., Japan).
Semi-periphery: Industrializing countries with more power than periphery (e.g., Brazil, India).
Periphery: Countries with low economic productivity and high dependency on core countries (e.g., Sub-Saharan Africa).
Influences on Manufacturing Location
Labor: Availability and cost; skilled labor needs.
Land Costs: Availability and expense of land.
Resources: Proximity and cost of raw materials.
Markets: Access to trade and consumer base.
Transportation: Proximity to shipping routes; intermodal connections.
Theories on Industrial Location
Least Cost Theory (Alfred Weber):
Optimal industry location minimization of costs.
Factors: Transport, labor, agglomeration benefits.
Example: Clusters like Michigan's auto industry.
Footloose Industries: A company that can move anywhere, informational businesses.
Ex: Call-centers
Agglomeration: Clustering can improve efficiencies and reduce costs.
Levels of Development
LDC (Less Developed Country): Low industrialization, mainly agriculture.
NIC (Newly Industrialized Country): Growing industrial economies (e.g., BRIC countries (Brazil, Russia, India, and China).
MDC (More Developed Country): High industrialization and services economy.
Post-Industrial Society: Transition to services-based economy.
Economic Measures of Development
GDP: Total value of goods/services within the country in a given period.
Less economically developed countries —> lower GDP due to only having jobs in areas such as agriculture
GNP: The total economic output produced by a country’s residents + businesses, regardless of their location
GNI: The total amount of income generated by a country’s residents + businesses, both domestic + abroad
GNI per capita: Allows us to gain an estimate showing us the average income earned by each person in the country —> doesn’t factor in income inequality, quality of life or other social aspects
Economic Sector Distribution: Core heavily tertiary, semi-periphery transitioning.
Income Inequality: Measured by Gini coefficient.
Gini coefficient: A Measurement of income distribution within a population
Informal Economy: Significant in semi-periphery and periphery countries. Consists of jobs that are not regulated by the government or protected by law ex: Street vendors, domestic work, unregistered small businesses
Formal Economy: Economic activities that are recognized by law and and overseen by the government ex: Doctors, servers, teachers
Human Development Index (HDI): An index used to measure the social and economic development of a country
HDI is determined by life expectancy, expected yrs of schooling, gross national income per capita
Higher score —> higher human development
Switzerland, Iceland, Hong Kong, Australia have high HDI scores
Social Measures of Development
Fertility Rate: Average children per woman.
Infant Mortality Rate: Deaths under one year per 1,000 live births.
Literacy Rate: Population's ability to read and write.
Gender Inequality: Measure of women's access to opportunities.
GII (Gender Inequality Index): Evaluates women's economic, political, and health status.
Access to free healthcare: Refers to the ability to get medical attention
Life Expectancy: How long do people live
Gender Parity and Development
Gender Parity: Access to education for males vs. females.
Role of Women: Increasing workforce presence but unequal opportunities.
Microloans: Small loans to lift women out of poverty.
Theories of Economic Development
Rostow's Stages of Growth:
Primarily based on U.S. and Europe
Assumes comparative advantage
Disregards colonial legacy
Traditional Society: Subsistence farming, experience low economic growth, little specialization, often lack modern tech
Pre-conditions to takeoff: Towards greater openness and diversification. Economy begins 2 grow due 2 more investment in infrastructure + education
Take-off: Industrialization and sustained growth. Jobs start 2 transition out of traditional based agricultural activities and more industrial activity, new technology. However, they are exploited by larger countries.
Drive to Maturity: Technological spread and industrial specialization. Participation in global trade, allowing economy to diversify + create new opportunities for citizens, shift to more consumer goods, independent state.
High Mass Consumption: Expanding service sector. Economy is fully developed, produce items that not only meet peoples needs but also their wants. Majority jobs are in the tertiary sector.
Criticisms of Rostow:
Not accounting outside political + social factors
Environmental limitations such as a carrying capacity + limited resources
Wallerstein's World Systems Theory:
Core, semi-periphery, and periphery dynamics.
Dependent relationship of periphery on the core.
Dependency Theory: Less developed countries remain dependent on core economies.
Neo-Colonialism: Economic dependency persists even after political independence.
Criticisms of Wallerstein:
Fails to account for nongovernmental organizations that offer microfinancing for individuals in developing countries
Fails to consider other programs such as micrloans that seek to support individuals in the semi-periphery and periphery allowing them to become independent + self reliant
Weber’s Least Cost Theory: Looks at how the location of an industry is influenced by: transportation costs, labor costs, and agglomeration
Transportation costs: Shipping costs connected to the moving of resources + materials for producing a good and shipping the final product to the market
Labor costs: Costs that come from workers producing the product itself
Agglomeration: Clustering of different economic activities + industries in a specific geographic area, allows businesses to reduce their overall costs by taking advantage of larger labor forces
Growth Poles: Concentration of highly innovative and technically advanced industries that stimulate economic development in linked businesses and industries
International Trade and Economic Changes
Comparative Advantage: Locations benefit from lower operating costs.
Ex: oil producing nations have a comparative advantage when making products that require oil such as chemicals
Complementary Advantage: advantages created when producing goods that are consumed together, trade instead of compete
Ex: Cars and gas, printer and ink cartridges
Neoliberal Policies: Promote free market and deregulation leading to globalization.
Global Financial Institutions: Such as the IMF and World Bank focus on economic stability and development.
Free Trade Zones (FTZs): International trade where there are no restrictions or barriers that increase the cost of trade or prevent trade from occurring
Special Economic Zones (SEZs): a designated area that has economic laws that are more free-market-oriented than a country’s typical national laws
Export Processing Zones (EPZs): designated area generally in developing countries by their governments that offer exemptions from certain taxes and business regulations to promote industrial and commercial exports
Recent Economic Changes Impact
Outsourcing: Movement of jobs to cheaper locations.
Offshoring: The process of relocating a business or service to a foreign country
Advantages? Lowerl labor costs, tax incentives, favorable economic conditions
Economic Restructuring: Shift from manufacturing to services in core regions.
Manufacturing Zones: Favorable conditions to attract export-oriented industries.
International Division of Labor: Shift in manufacturing towards semi-periphery and periphery regions.
Post-Fordist Production: Flexible production methods through technology and outsourcing.
Environmental Challenges and Sustainable Development
Industrialization Issues: Pollution, resource depletion, climate change.
Sustainable Development: Development with equity for humans and the planet.
Ecotourism: Sustainable tourism that protects environments while benefiting locals.
Sustainable Development Goals: U.N. initiative targeting poverty eradication and environmental sustainability.