Economic Interdependence Ch.16 APHG
Export Processing Zones
(EPZs) Physical spaces within a country where special regulations benefit foreign-controlled businesses -Used as an incentive in developing countries to attract manufacturing jobs -Used in over 100 countries -near international airports, seaports, or land borders where products can be exported easily
Trade increased ________ in the US in 1960 to _________ in 2015 and in China ___________ to ____________
-5% -13% -4% -22%
Basic Industries vs nonbasic industries
-A settlement's distinctive economic structure derives from its basic industries (Brings money into settlement from surrounding areas and gives the city its primary function (identity)) , which export primarily to consumers outside the settlement. -Nonbasic industries are enterprises whose customers live in the same community-essentially, consumer services. -A community's unique collection of basic industries defines its economic base. 1. Economic base of a postindustrial society, such as the U.S., are in business, consumer, or public services. 2. Ex. Computing and data processing services: Boston
Variations of economic development within countries
-Brazil, China, and Mexico are among the world;s largest and most populous countries and fall in the middle of the GDP per capita and most other HDI indicators, much more than sub-saharan Africa and south asia but well behind the US and Europe -there are substantial variations within the countries traced to their features such as... Brazil: Wealth is highest along the Atlantic coast and lowest in the interior Amazon tropical rainforest China: Wealth is highest along the east coast and lowest in the remote and inhospitable mountain and desert environments of the interior Mexico: Wealth is relatively high in the region bordering the US and on the Yucatan Peninsula -At a local scale, wealth in the intermediate-development countries is concentrated in large urban areas, such as Rio, Mexico City, and Beijing/Shanghai
Newly industrialized countries (NICs) and why they have come into existence
-Developing countries that are now being used for production= this is occuring because new tech. allows developed countries to have communication and keep in contact with the management of their companies in developing countries b/c developing countries have less wages, less regulations, and things are cheaper to produce there/ more workers willing to work
backwash effects and example
-Economic success in one region causing economic downturn in another region -EX: In China, urban eastern areas have seen great growth and prosperity has pulled many pp from the rural west. This has caused the west to face a shortage of the working age pop. and not enough pp to take care of the elderly family members -Could also lead to depopulation, loss of tax revenue, closure of various services, and loss of pp in working age pop.
How can increased interdependency be positive? How can it be negative? (examples)
-Growth in one country can result in economic opportunities in other countries -EX: China has gotten wealthier, so it has purchased grains and meat from the US -Economic downturn in one country can lead to economic challenges elsewhere -EX: When the price of oil dropped in mid-2014, consumers got to pay low prices, however economies in all oil-producing regions suffered... 1. Oil companies lost revenue. For ex., Royal Dutch Shell, based in the Netherlands, saw its earnings drop 80% from 2014 to 2015 2. Worldwide, 250,000 pp lost their jobs= pp who extracted oil, pp who worked in tanker firms, pp who worked in ports around the world 3. Gov. in oil-dependent countries, such as Venezuela, lost tax revenue causing them to lay off public employees and reduce public services 4. Coal Companies could not compete with the oil prices and laid pp off 5. Energy investors saw significant losses=share prices plummeted alongside oil prices. In the second half of 2014 energy producers in the Fortune 500 lost $263 billion in market value
Industrial Problems in Developing Countries
-In some respects, developing countries (LDCs) face obstacles similar to those once experienced by today's developed countries (MDCs). (One of the biggest issues is distance from markets.) -To minimize geographic isolation, industrializing countries invest scarce resources in constructing and subsidizing transportation facilities. (Another issue is inadequate infrastructure.) -The LDCs obtain support services by importing advisers and materials from other countries, or by borrowing money to develop domestic sources. -Lack of real investment capital (In many cases, countries take out loans and accrue debt ) -Few untapped foreign markets remain to be exploited. (New industries must sell primarily to consumers inside their own country.) -Transnational corporations have been especially aggressive in using low-cost labor in developing countries (LDCs). (Transnational corporations can profitably transfer some work to LDCs, despite greater transportation cost.) (Operations that require highly skilled workers remain in MDCs.) -This selective transfer of some jobs to LDCs is known as the new international division of labor.
Non-basic Employment Sector
-Includes jobs that shift money within the city (between residents of a city), not bring in outside money (like basic jobs) Examples: Teachers, janitors, fire departments, dry cleaners, and repair companies are all examples of non-basic employment. -Jobs largely responsible for maintaining a city's infrastructure and day to day needs
Maquiladors: Info
-Nearly 500,000 Mexicans work in the maquiladoras -Many are overpopulated and have pollution problems -As part of NAFTA (1994), the program is to be phased out
Cooperation within trading blocks
-North American Free Trade Agreement brought Mexico into the free trade zone w/ US & Canada. -European Union eliminated most barriers to trade through W. Europe & expanding. -Cooperation is less formal in E. Asia, in part because Japan's neighbors have much lower levels of economic development & unpleasant memories of Japanese military aggression during 1930s -1940s.
Examples of where technopoles locate
-Silicon Valley, with the Uni. of California, Berkley, and Standford -Harvard and Mass. Institute of Tech. have acted as a catalyst for the development of the Route 128 high tech. corridor near Boston -The Research Triangle in North Carolina developed with Duke, North Carolina State Uni., and the Uni. of North Carolina, Chapel Hill -The Tech. Triangle near the Uni. of Waterloo and the Uni. of Guelph in Ontario Canda, is a smaller-scale technopole and a very important economic stimulus to much of southern Ontario
Africa and South America economies
-Some African states have growing economies, although average incomes remain low compared with most developed countries -South America has had uneven economic growth in the past 2 decades, often not enough to match its growing pop.
Basic Employment Sector (Industries)
-The basic employment sector defines a city -Brings money into settlement from surrounding areas and gives the city its primary function (identity) -Gives it a more unique sense of place and presence in the economy -A settlement's distinctive economic structure derives from its basic industries, which export primarily to consumers outside the settlement. -A community's unique collection of basic industries defines its economic base. Examples of basic sector employment types that heavily influence a city's sense of identity: -Film industry - Hollywood, CA -Music industry - Nashville, TN -Auto Manufacturing - Detroit, MI -Steel Mills - Pittsburg, PA (more of a historic example) -Casinos - Las Vegas, NV -Silicon Valley - San Francisco, CA
growth poles/growth centers
-another name for technopole -The high concentration of high-value economic development in the growth pole attracts even more economic development---> feeds on itself and the "magnet" keeps on becoming stronger and stronger
structural adjustment program and critics
-developing countries are required to prepare a Policy Framework Paper (PEP) outlining ____________ -includes economic goals, strategies for achieving the objectives, and external financing requirements Typically includes... -Spending only what one can afford -Directing benefits to the poor, not just the elite -Diverting investment from military to health/education spending -Investing scarce resources where they will have the most impact -Encouraging a more productive private sector -Reforming the gov, including making civil service more efficient, increasing accountability, implementing more predictable rules and regulations, disseminating more info to the public Critics: -Say the poverty worsens under structural adjustment programs -Cuts health, higher unemployment, loss of jobs in state enterprises and civil service, less support for those in need such as prego women, mothers, children, and elderly pp
Factors that have encouraged increased international trade, making it cheaper, easier and faster
-larger and faster ships -improvements in major canals such as the Panama and Suez Canals -new port facilities capable of handling larger ships -increases in air cargo
Asia's economy
-largest income gains in recent decades has been here -South Korea, Hong Kong, and Singapore have transformed themselves from lands of poverty to lands of somewhat comfort in less than a century -Largest increase in the middle-class has occurred in China and India
Other factors that are impacted other than the former industrial site in deindustrialization
-pp lost jobs so they moved away---> abandoned factories and home -tax-revenues shrink---> public buildings and parks might show signs of neglect
Incentives in EPZs
-tax breaks: transnationals usually 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 protects existing businesses that cater to the local market) EX: A resident entrepreneur employs 2- people producing T-shirts to sell locally, the new T-shirt factory in the EPZ will not drive out the resident owner out of bus. with its cheaper products. The country hopes that the locally owned factory will stay in addition to the jobs added in the foreign-owned factory
Variations of economic development within regions
-very high in Southwest Asia and North Africa and Central Asia -Much of Southwest Asia and North Africa is desert and can only sustain sparse concentrations of plant and animal life, although it has petroleum -oil-rich states have used the billions of dollars generated from petroleum sales finance development -Some countries such as Egypt, Jordan, Syria, etc do not have as many economic opportunities due to their lack of resources= large gap between petra. vs non petra. countries and creates tension
new international division of labor
A system of employment in various economic sectors spread throughout the world -CORE countries: Countries such as the U.S. and Germany= rapidly increasing quaternary sectors the emphasize research and development -MIDDLE-INCOME countries: Countries such as China, Mexico, and Indonesia= manufacture goods that are developed in the highly developed countries -LEAST DEVELOPED countries: Large primary sectors and may export minerals and resources in the production process
Bangladesh, China, and Japan adult literacy rates
B: 57.7% C: 95% J: 100%
Example of how weak laws can effect non-industrial sectors
Cayman Islands in the Caribbean Sea made itself a global center for investment industry through its low taxes and lax regulation of its business= can sell illegal drugs to countries
Parties tend to trade goods or services in which each has a ________________________________________ in producing (Plus example)
Comparative advantage -EX: climate and soil gives farmers in Florida an advantage over farmers in Maine in growing oranges but Maine farmers have an advantage in growing potatoes
Throughout US history gov. efforts to promote economic growth have been controversial, what were states' opinions?
Compared to the South, states in New England and the Midwest supported more active gov.: -National scale: New England and the Midwest supported high tariffs to fund gov. construction of roads, canals, and harbors, and to subsidize construction of railroads -Local scale: citizens of New England and the Midwest supported higher taxes to pay for local transportation projects and, most importantly, public schools
Convergent vs Competitive Regions
Convergence Regions - Southern and Eastern Europe where incomes are lower, growing Competitive Regions - western Europe's traditional core industrial areas, declining
Where do office buildings and commercial spaces congregate in as a result of growth of the postindustrial landscape and new jobs that are created by that
Corporate offices or bus. parks
Ethics and Societal Changes related to EPZs
Critics: -say that transnationals are taking over the world and paying the workers a fraction of the cost they would be getting in their homeland Proponents: -Say it is reasonable wages -have access to employment that they may not have without the corp. -Many women receive jobs allowing them to be less dependent on men and allows the birth rate to drop
What did the economic downturn in 2008 and 2009 (in developed countries) do to developed countries? To developing countries?
Developed: -GDP per capita declined Developing: -spilled over into developing countries that depended on developed countries for trade (Latin America and Southwest Asia)
Compare resource use between developed and developing countries along with the life expectancy of both as well
Developed: -have much more disposable income to spend on goods and purchase a great deal -EX: US consumes 1/5 of all the resources, although is only home to 1/20 of the pop. of the world -People tend to live much longer, therefore increasing the amount of resources they consume Developing: -Have little disposable income so often purchase only necessities -live a shorter amount of time
How the spatial distribution of manufacturing is shifting on a global and regional scale
Global: -companies moved manufacturing plants from highly developed countries such as the US to less-developed countries such as Indonesia and Vietnam Regional: -factories in the US have moved from the Northeast and Midwest to the Southeast and the Southwest
Industry in the EU moving east & south
Government policies have encouraged this shift EU structural funds provide assistance to what it calls convergence & competitive regions Western European country with most growth = SPAIN -motor vehicle industry (2nd to Germany's) -concentrated in Catalonia (northeast) centered on Barcelona Poland, Czech Republic, and Hungary (Eastern Europe) -Lots of labor (less skilled, cheaper than western Europe) -Proximity to markets (close to western Europe markets)
trading blocks
Groups or countries that agree to a common set of trade rules -resulted from increased importance of trade and increased relationships with countries -EX: The EU and The North American Free Trade Agreement (NAFTA) -These agreements help ease trade restrictions -People, goods, and markets are easier to access and can move much more easily to different countries than before the agreement
North America and Europe's economies
Have relatively prosperous economies over the past century -However, middle-class incomes have stagnated in recent decades, leading to income inequality, especially in the US
Rust Belt
Located in the Northeast and lands around the Great Lakes -called "Rust Belt" because of the rusting metal of buildings/factories that were abandoned during deindustrialization
Names for EPZs in different countries
Mexico: *maquiladors* Dominican Republic: free zones China: special economic zones
Natural Gas, Coal, and Petroleum matched with country with largest proven reserves
NG: Russia C: US P: Saudi Arabia
Postindustrial
Refers to countries (usually developed) that no longer employ large numbers of pp in factories, most pp are involved in services and processing info -shift from industrial to postindustrial can change the landscape of a country
Ex of large corp. creating own corporate parks where they are their only tenant
Samsung has a headquarters, known as Samsung Digital City -13 miles south of Seoul, South Korea -covers equal to about 40 city blocks -about 35,000 pp work there -135 buildings, of which are 4 large office towers Other facilities include laboratories, gymnasiums, swimming pools, medical offices, a heliport, daycare facilities, and housing for guests and visiting employees
Comparing Corporate parks (Bus. parks) and Industrial Parks
Size of Tract: C: Large I: Large Location: C: Edges of communities where land is inexpensive and near residential areas I: Edges of communities where land is inexpensive and near residential areas Buildings: C: Low-rise office buildings I: Large factories and warehouses Roads: C: Designed for cars: small and can be curvy I: Designed for trucks: wide and straight Grounds: C: Park-like: spacious lawns, sidewalks, walking trails, sitting areas I: Very functional
Environmental impact in developed vs. developing countries
Spread more broadly around both sets of countries -Many natural resources are extracted and manufactured in developing countries= Probs with mining and manufacturing occur here (extracting gas from the ground and processing it) -Many of the goods are used in the developed world= Problems with using the products occurs here (using gasoline in cars)
Gov. efforts to promote economic growth
Tax Breaks: -A tax holiday -A tax break for money invested in research and development Loans: -Forgivable loans -Money to borrow at below-normal interest rate Direct Assistance: -The use of land or buildings free of charge -Infrastructure such as roads and sewers paid for by gov. -A subsidy for each full-time job created Changes in Regulations: -Legislation that weakens unions -Legislation that reduces environmental rules
Example of when Complementarity trade does not exist
The U.S. wants many things from China but China does not desire many things from the U.S. -This can create tension -The country with the trade deficit might see the relationship as favoring the other side
Cooperation & competition within & among trading blocs take place primarily through actions of...?
Transnational corporations (TNCs)
US has increased its dependence on petroleum imported from...?
Western Hemisphere
technopole
a hub for info-based industry and high-tech. manufacturing -Encourages spatial grouping of tech. companies -allows for benefits such as the possible sharing of certain services and attracting highly skilled workers to the area -often located near universities well known for their computer, math, engineering, science, and entrepreneurial bus. facilities
barter
a system of exchange in which money never reaches either person's hands
brownfields
abandoned factories that are very run-down b/c of the little care pp have put into keeping up with them
Advantages India has over other countries
advantage of plentiful cheap labor large population that speaks English, due to its history as a British colony. Examples: Customer Service, Tech support, etc...
Most energy is supplied by what 3 fossil fuels?
coal, natural gas, and petroleum
transnational corporartions
companies that operate in more than one country -This has shifted manufacturing jobs away from the highly developed countries to the developing countries in order to increase profits
The flow of crude oil from Saudi Arabia (with vast oil reserves) to Japan (with none) is a function of...?
complementarity in natural resources.
trade
occurs when a party desires a good or service that it does not have or cannot produce as efficiently as someone else can, and another party is willing to take part in it and wants something else in return -usually involves money on one side of the trade
spin-off benefits
positive outcomes in addition to the main outcome -can help communities far outside of the growth center as well
Industrial competition in developed world increasingly occurs not among individual countries, but within...? Examples?
regional trading blocs. The 3 most important trading blocs are the Western Hemisphere (NAFTA), Western Europe (EU), and East Asia. -Within each bloc, countries cooperate in trade. -Each bloc then competes against the others. (Compared to individual European countries, the USA has a wealthier economy, but compare the USA to the EU as a whole & the EU is more competitive.)
What do most gov. provide incentives only if...?
the company receiving the incentive achieves certain targets, such as employing a certain number of pp/providing more jobs for full-time workers
microfinance
the provision of small loans and other financial services to individuals and small bus. in developing countries that are unable to obtain loans from commercial banks -average loan is about $60 -lots of loans given to women -only about 1% of the borrowers have failed to make their weekly loan repayments
Complementarity trade
when both parties have goods or services that the other party desires
