Chapter 9 and 11

Economic
Pertaining to the production, distribution, and use of income, wealth, and commodities.
Development
the act or process of developing; growth;
progress: child development; economic development
Gross National Product (GNP)
Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year. Includes things produced inside and outside a country’s territory.
Gross Domestic Product (GDP)
Measure of the total value of the officially recorded goods and services produced by the citizens and corporations of a country in a given year.
Gross National Income (GNI)
Measure of the monetary worth of what is produced within a country plus income received from investments outside the country. ** Most common measurement used today.
Developed Countries-(DCs)
have high levels of industrialization, urbanization & standard of living
Underdeveloped (UDCs) or Developing Countries
are moving toward developed status-not as highly industrialized or urbanized with a lower standard of living
Sectors of the economy
Primary Sector
jobs that extract raw materials from the earth. ex. farming, mining, fishing, and forestry.
Secondary Sector-
jobs that include manufacturers that process, transform, and assemble raw goods into useful products and then fabricate them into finished consumer goods.
Tertiary Sector-
basically salespeople; it involves the provision of goods and services in exchange for payment. ex. retailing, banking, law, education, and government.
Human Development Index
is a composite statistic of life expectancy, education, and income indices to rank countries into four tiers of human development. It was created by economist Mahbub ul Haq, followed by economist Amartya Sen in 1990, and published by the United Nations Development Programe
Formal Economy
the legal economy that governments tax and monitor.
Informal Economy
the illegal or uncounted economy that governments do not tax or keep track of.
HDI only includes income from the formal market. Reported to and monitored by the government, pay taxes.
HDI does not include income from the informal market. Not reported to or regulated by the government, no taxes paid
Core-Periphery Model
Three Tier Structure
Core
Processes that incorporate higher levels of education, higher salaries, and more technology
* Generate more wealth in the world economy

Periphery
Processes that incorporate lower levels of education, lower salaries, and less technology
* Generate less wealth in the world economy

Semi-periphery
Places where core and periphery processes are both occurring. Places that are exploited by the core but then exploit the periphery.
* Serves as a buffer between core and periphery

Global Economic Disparities
Much of the disparity existed as Colonialism was established by European nations.

The Industrial Revolution increased the need for raw materials and markets for finished goods.

Neo-colonialism refers to the economic dominance of the core over the former colonial nations-economic rather than political control

Conditions That Hamper Development
1. Political instability and corruption
2. Exploitation of natural resources and workers
3. Dependence of agricultural products or primary
products
4. Misuse of foreign assistance
5. Misguided priorities
6. Cultural resistance to modernization
Costs of Economic Development
Industrialization
– Export Processing Zones (EPZs), maquiladoras, and
special economic zones (SEZs).
Agriculture
– Subsistence and agricultural conglomerates
– Desertification-especially in Africa
– Soil erosion
Tourism
– may have serious negative consequences
– Use of scarce commodities
– Foreign investors make the profit
Tourism (Boom or Bust)
– contributes little to a country’s development
– Hotels & other facilities are often owned by
transnational corporations
– jobs can be demeaning & dehumanizing or even
insulting
– jobs pay minimal wages for menial tasks
Tourism (Boom or Bust)
– Profits are reinvested in airports, cruise ship ports &
other infrastructure to serve tourists
– Tourists use up valuable resources such as food &
fresh water
– Tourism can debase or change a local culture
– An invasion by wealthy foreigners can breed hostility
and resentment
– Harsh contrast between gleaming modern tourist
hotels and poor workers housing
Walt Rostow’s model
Dependency Theory
Dependency Theory
The political and economic relationships between countries and regions of the world control and limit the economic development possibilities of poorer areas.
– Economic structures make poorer countries
dependent on wealthier countries.
– Little hope for economic prosperity in poorer
countries.
The total value of the output of goods and services in a year in a country is its
gross domestic product
Gross domestic product (GDP) is the
total value of outputs of goods and services produced in a country during a year.
An example of a primary sector activity is
mining.
Processing of computer information is an example of which sector of the economy?
Tertiary
The secondary sector of the economy includes which of the following?
A) data processing
B) mining
C) government
D) construction
In MDCs, employment is increasing more rapidly in which of the following sectors?
Tertiary
The primary sector of the economy includes which of the following?
A) data processing
B) beverage bottling
C) government
D) sheep herding
E) banking
The value of a product minus the costs of raw materials and energy is
Value added
________ is an example of a secondary sector activity.
Manufacturing
In less developed countries, consumer goods such as telephones, televisions, and motor vehicles are
familiar to many but owned by relatively few.
Examples of material conditions include
drinking water and sewage systems.
A country that has a higher level of development exhibits a(n
improvement in material conditions.
Per capita GDP is a poor indicator of which of the following?
A) the approximate level of material well being in a country
B) the number of countries below the poverty level
C) the distribution of wealth within a country
D) the spatial distribution of global wealth
E) potential for providing all citizens with a comfortable life
Per capita GDP is a good indicator of which of the following?
A) the approximate level of spiritual well being in a
country
B) the number of countries below sea level
C) the distribution of wealth within a country
D) the political dimensions of a population
E) potential for providing all citizens with a comfortable
life
The inequality-adjusted human development index of the United States is
inferior to that of Canada and most Western European countries.
Compared to less developed countries, more developed countries have higher rates of
Literacy
People are more productive in more developed countries because they
have access to more technology.
If a country has a large number of publishers and globally esteemed universities, you might surmise that the country is most likely
an MDC
Compared to less developed countries, more developed countries have lower
percentages of GDP spent on education.
The difference in per capita GDP between the more developed and less developed regions is
Widening.
The North American region has high rates of material development but troubling levels of
inequality.
The Gender Inequality Index (GII)
compares the levels of indicators for females to those of males within a country.
Severe gender inequality is a challenge to development because
it severely limits the economic and social mobility of women, as well as families that are headed by women.
In terms of the GII, most African countries have
rates far below the United States and Western Europe
Since 1990, most countries have seen a decline in previous patterns of
gender inequality.
What is an indicator of global gender inequality?
– Women on average have only two-thirds of the
income of men in MDCs.
– Women have much lower incomes than men in LDCs.
– Female literacy is much lower than males in Sub-
Saharan Africa.
– Women hold less than one-fourth of managerial jobs
in LDCs where data are available
Gender inequality is a challenge to development because
it leads to larger family sizes.
Petroleum reserves in Southwest Asia and North Africa are
clustered primarily in the Persian (Arabian) Gulf states
Saudi Arabia has successfully employed the international trade alternative primarily because of
petroleum reserves.
The United States has
more coal reserves than China or Russia.
The Chernobyl incident in 1986 involved
a nuclear power accident.
The principal benefit of the self-sufficiency approach is to promote
balanced growth of all economic sectors
In contrast to the international trade approach, the self-sufficiency approach to development
attempts to spread investment through all sectors of the economy.
Traditional barriers to international trade have included
requiring licenses for importers.
The biggest problem faced by less developed countries in financing development is
inability to repay loans.
The major economic asset of the Russian region is
oil reserves
Southwest Asia and North Africa may become more developed primarily because of what characteristic?
abundant petroleum reserves
Population density was traditionally low in North Africa because of
its dry climate
According to Rostow’s development model, the process of development begins when
an elite group initiates innovative activities.
If the per capita GDP in a given country is about $1,500, this indicates that it is a
less developed country.
The highest levels of development within Latin America are generally found in
southern South America.
Sub-Saharan Africa has seen some development because of
investment in the infrastructure of port cities, despite ignoring infrastructure in many other areas.
The share of GDP in the secondary sector is now larger in LDCs than MDCs.
True
Less developed countries can be distinguished from more developed countries according to social and demographic characteristics, as well as economic ones
True
GDP per capita is a more meaningful measure of development than gross domestic product alone.
True
The three large relatively developed regions in the world are North America, Western Europe, and Eastern Europe.
True
Gender inequality exists in every country of the world
True
Developing countries are increasingly pursuing the international trade approach to development.
True
India and China are examples of countries which had pursued the self-sufficiency alternative to development.
True
Southwest Asia & North Africa and Latin America are the less developed regions with the most favorable balance between population and resources
True
The availability of energy and other resources is linked to the level of development
True
Market Based (Model of Development)
– Importance of the existence of the free market
– Government inefficiency restricts growth
– Role of government to liberate markets and promote
competition
– Establishment of property rights
– Problems:
-Existence of market failure
-Problems of lack of infrastructure
-Problems of equity in allocation
How Government Policies Affect Development
1. Governments get involved in world markets
2. Governments price commodities
3. Governments affect whether core processes produce
wealth
4. Governments shape laws to affect production
5. Governments enter international organizations that
affect trade
6. Governments focus foreign investment in certain
places
7. Governments support large-scale projects
Islands of Development
Places within a region or country where foreign investment, jobs, and infrastructure are concentrated
Low Levels of Social Welfare (Barriers to Economic Development)
1. Lack of education, High illiteracy
2. Trafficking-bullied into poor working conditions
3. Lack of proper health care
4. Poor water supply & sanitation
5. Widespread Disease vectored diseases-spread by a
host. Malaria-kills 150,000 children each month
Political Instability (Barriers to Economic Development)
military dictatorships, corruption, revolution
Foreign Debt (Barriers to Economic Development)
– World Bank or International Monetary Fund
– Structural adjustment loans-economic reform
required
Gender Inequality
Know It
Industrial Revolution:
dramatic innovations in manufacturing, mining, transportation and communication that results in rapid changes in society and commerce
1st Industrial Revolution:
1730s to 1860s First Phase of the Industrial Revolution.
Textiles, Iron Production, Steam Power
2nd Industrial Revolution:
1860s to 1914 Second Phase of the Industrial Revolution Steel, Chemicals, Railroads, Gasoline Engine, and mass production.
3rd Industrial Revolution:
Post WWII Third Phase of the Industrial Revolution
high technology-computerization, miniaturization and automation
5 things about the Chapter you should be familiar with……..#1
Industry is based on transportation and labor costs. Weber’s least cost theory suggests that a production point must be located within a “triangle”, with raw materials coming from at least two sources. Weight-reducing industries must have their production point closer to the market. Weight-reducing industries must have their production point closer to the source of raw materials.
5 things about the Chapter you should be familiar with……..#2
The five main means of industrial transportation are truck, train, airplane, pipeline, and ship. Each has advantages and disadvantages for hauling raw materials or finished products to production points and markets around the globe
5 things about the Chapter you should be familiar with……..#3
Basic industries are city-forming, whereas nonbasic industries are city-serving industries. Basic industries are the main business for which a city is known. Detroit/automobiles, Pittsburgh/steel, San Jose/ computer chips are just three examples of basic industries in major urban area in the United States
5 things about the Chapter you should be familiar with……..#4
The main factor in determining an area’s development is Human Development index, which measures life expectancy, literacy , education, and overall standard of living for different countries around the world. It was developed by Pakistani economist Mahbub Haq in 1990, and has since been used by the United Nations as the primary indicator of countries levels of development
5 things about the Chapter you should be familiar with……..#5
The core-periphery model describes regions as core, semi-periphery, and periphery areas. It also describes four areas, the industrial core, upward transition, downward transition, and resource frontiers. The model can be used from a worldwide scale down to an urban scale to analyze city zones.
Agglomeration
Grouping together of many firms from the same industry in a single area for collective or cooperative use of infrastructure and sharing of labor resources.
capitalism
An economic system based on private property and free enterprise.
cumulative causation
A process through which tendencies for economic growth are self-reinforcing; an expression of the multiplier effect, it tends to favor major cities and core regions over less-advantaged peripheral regions
Maquiladoras
the term given to zones in Northern Mexico with factories supplying manufactured goods to the U.S. market. The low-wage workers in the primarily foreign-owned factories assemble imported components and/or raw materials and then export finished goods.
footloose industry
descriptive term applied to manufacturing activities for which the cost of transporting material or product is not important in determining location of production; and industry or firm showing neither market nor material orientation
ubiquitous
existing everywhere at the same time; constantly encountered; widespread (exp-McDonalds)
Special Economic Zones
Region offering special tax breaks, eased environmental restrictions, and other incentives to attract foreign business and investment.
standard of living
Quality of life based on ownership of necessities and luxuries that make life easier.
brain drain
the loss of well-educated people such as doctors or engineers to another country
Brain gain
an increase in the number of highly trained, foreign-born professionals entering a country to live and work where greater opportunities are offered
renewable resources
Any natural resource that can replenish itself in a relatively short period of time, usually no longer than the length of a human life.
nonrenewable resources
A natural resource that is not replaced in a useful time frame.
Fossil fuels
Coal, oil, natural gas, and other fuels that are ancient remains of plants and animals.
OPEC
An organization of countries formed in 1961 to agree on a common policy for the production and sale of petroleum.
What is the most important cost in Weber’s least cost theory?
Transportation Costs
Neocolonialism
Also called economic imperialism, this is the domination of newly independent countries by foreign business interests that causes colonial-style economies to continue, which often caused monoculture (a country only producing one main export like sugar, oil, etc).
What factor would most likely increase the cost of transportation the most?
weight
What is used to determine the Human Development Index for economic development?
Literacy Rate
What region of the world has the lowest Gender Development Index?
Sub-Saharan Africa
Special Economic Zones are most common in what country?
China
Canada’s northern region would be classified as what according to the core-periphery model?
Resource Frontier
The Country with the largest oil reserves in the world is ?
Saudi Arabia
The country with the largest coal reserves in the world is?
United States
What country possesses the greatest natural gas reserves?
Russia
This cartel, established in 1960, is the primary group in the world setting oil prices?
Organization of Petroleum Exporting Countries
In the 1700s, water pollution increased significantly when the chemical industry began to contribute to the textile industry through methods of
bleaching and dyeing.
Given the earlier history of the chemical industry, we can hypothesize that its 20th-century contributions to the textile industry began to include
the creation of synthetic fabrics.
The Industrial Revolution began in
Great Britian
The Industrial Revolution began in
in the late 1700’s
Prior to the Industrial Revolution, industry was geographically
dispersed
The most important transportation improvement in the eighteenth century was the
canal
Approximately three-fourths of the world’s industrial production is concentrated in three regions, including which of the following?
eastern North America and northwestern Europe
Outside of the three world regions where industry is concentrated, the next two largest industrial producing countries are
Brazil and India
The main source of power for steam engines and blast ovens is produced from
coal
What mining region has the most varied mineral deposits of the world, with over 1,000 minerals?
The Ural Mountains
The world’s chief source for copper is
Chile
bulk-reducing industry
An industry in which the final product weighs less or comprises a lower volume than the inputs.
Metal fabrication plants are an example of a bulk-gaining industry because
separate parts are combined to make more complex and massive products
Situation Costs
minimize transport costs
The Chicago area became a significant asset for the Western Great Lakes region owing to its steel industries and its
access to the nation’s transportation network.
The shift in steel production locations in the United States from the mid-nineteenth century until the mid-twentieth century can best be described as
starting in the Pittsburgh area and then migrating towards the Midwest before ending up on the East and West coasts, as well as the Chicago area.
Because the motor vehicle assembly industry is typically described as a bulk-gaining industry as well as a just-in-time delivery system, the most important factor when selecting a location for a new Toyota or Honda assembly plant in the United States was
minimizing the cost of shipping finished vehicles to its customers.
Although transportation costs rise because breaks in transportation, we can surmise that over very long distances the lowest-cost form of transporting goods is by
ship
Although many factory laborers in MDCs are paid $________ per hour, factory laborers in LDCs may be paid less than $________ per hour.
35;1
The Tennessee Valley Authority brought
electricity to much of the rural South in the 1930s.
Mexico’s maquiladora plants
have an advantage of proximity to U.S. markets.
Prior to the Industrial Revolution, cottage industries were most common
True
The dominant industrial power in the nineteenth century was Great Britain.
True
The invention of the steam engine in 1769 by James Watt is considered the most important invention for the development of factories at the beginning of the Industrial Revolution.
True
About three-fourths of world industrial production is clustered in three regions
True
The Rhine-Ruhr River valley in Europe is near large deposits of coal
True
The optimal location for a factory manufacturing a bulk-gaining product is likely to be one that minimizes the cost of transporting the product to the market.
True
Communications-oriented industries, like newspapers, tend to locate near their markets
True
China has the largest labor force employed in manufacturing
True
Newly constructed factories in more developed countries are more likely to be in suburban or rural areas than in urban centers.
True
The site factor most affecting the relocation of industry in the twenty-first century is labor
True