Unit 7: Industrial and Economic Development
Big idea behind Weber's least cost theory:
A theory that locating a firm in a place where the cost of moving raw materials to the manufacturing site is low with help maximize profit (trying to have the least amount of transportation costs possible)
What makes the Fourth Industrial Revolution unique?
All about advancements in technology (AI, robots, etc) unique because it global and can spread incredibly rapidly.
What is industry?
Any economic activity that uses machinery on a large scale to process raw materials into finished goods.
How does female labor-market participation affect a country's economic development?
DTM! When women work, it lowers birth rates because they work longer before settling down, which may also make them wealthier because they don't have to provide for children along with the extra income Shows that development is happening in a country Contributes to lower TFR, which is a sign of an industrialized and more developed country Shows an increase and contributes to an increase in wealth ina country.
What are some limitations of HDI?
Doesn't reflect other quality of life factors, like poverty, gender equality, environmental equality, sustainability, or an overall feeling of security or even happiness Doesn't take into account that many countries have some minority groups or speakers of a minority language that do not have the same access to income, education, or healthcare.
How did the Third Industrial Revolution build on the Second?
Drastically improving computers and the need and importance of them
How did the Second Industrial Revolution build on the first?
Factories made in the first Industrial Revolution were changed to use the ASSEMBLY LINE was powered by the need for electricity and the internal combustion engine saw the growth of the automobile, steel, and plane industries, the chemical industry, and the development of consumer appliances.
What are GDP and GNP?
GDP: Gross Domestic Product: measures the value of goods and services produced WITHIN A COUNTRY'S BORDERS by citizens GNP: Gross National Product: measures the value of goods and services produced by ONLY a country's citizens but DOMESTICALLY and ABROAD.
What is GDP?
Gross Domestic Product: the total value of all goods and services produces by a country's citizens and companies within the country in a year helps understand how much money each sector makes and makes it easier to see what a country is productive in.
What is GNI?
Gross National Income: the average income of citizens in a country
what is the purpose of the IMF?
International Monetary Fund provides loans to countries to ensure the stability of the international monetary system controversial because some countries can't pay back the loans, leaving them in debt
How does Wallersteins world systems theory explain why industrialization didn't spread evenly throughout the world?
It mainly spread through wealthy, core countries with enough money to mass produce goods and have factories.
What two measures of reproductive health does GII measure?
Maternal deaths related to childbirth Births among adolescent mothers
How do formal and informal sectors influence the economy?
Only the formal sector can be tracked, so it is the only one that impacts GNI.
What is OPEC?
Organization of Petroleum Exporting Countries impacts the global economy because so many industries across the globe rely on oil production
What two measures of empowerment does the GII measure?
Political representation Education attainment
Traditional society stage:
Primarily rural, centered on subsistence farming by family labor and using primitive technology STAGE 1 DTM
What is the difference between small and large scale production?
Small scale: goods are made in relatively small quantities using hand tools or basic machines (quality over quantity, cost more apiece because of economies of scale) Large scale: shift to industrial production, using specifically purposed machinery in factories for mass production (quantity over quality, costco effect because they are mass produced in large facilities)
What are raw materials?
Substances that are used to make goods that are sold to customers. can include metals, wood, plant products, animal products, etc
what is the Federal Reserve?
The central bank of the US lowers and raises interest rates to either stimulate economic growth or to prevent an unsustainable rise in the price of goods
How are industrialization and colonialism linked?
The expansion of European influence that had begun in the 15th century increased with Britains enhanced industrial power. Control of colonial areas was desired to provide raw material and gurantee exclusive access to new materials.
Connection between Industrialization and the rise of middle class:
There was growth in the class between land-owning aristocracy and rural peasantry. This included merchants, shopkeepers, and artisans. rise of factories contributed to the growth of middle class because of job growth and expansion.
What is the connection between the Second Agricultural Revolution and the Industrial Revolution?
They happened around the same time. The second agricultural revolution increased the output of agriculture, making Europeans healthier and leading to population growth and increased life expectancy.
Why did places like Pittsburgh and Chicago become centers of the steel industry?
They were near coalfields or sources of iron ore.
Why did places like Detroit become centers of the car industry?
They were near steel production
What are Rostow's stages of economic growth?
Traditional society Preconditions for Takeoff Takeoff Drive to Maturity High Mass Consumption
What is a microloan?
Very small, short-term loans with low interest intended to help people in need (commonly women)
What kinds of economic instability are possible in commodity dependent countries?
When a country is too dependent on one commodity, if something happens to that one commodity, then an entire economy could be ruined If corrupt government, gangs, or something else threatens the commodity that a country is dependent on, they can just threaten the one thing that everyone relies on
What is the relationship between economic development and gender parity?
When an economy develops (think DTM), women get more involved in the workforce and may prove themselves as capable When they start contributing to incomes, roles begin to shift as men are not the sold provider of the household anymore
What are dual economies?
When there are two divisions of economic activity in a country may develop because people don't want to change to another kind of economic activity, or a core-periphery dynamic in a country
Quinary Sector:
Within the quaternary sector Involves top leaders with high levels of education *CEOs, top leaders of government, etc
Global trends in educational attainment:
Women's access to education affects their social and economic opportunities, as well as their health outcomes. Women account for 2/3 of all adults who lack basic literacy skills 16 mil girls will never set foot in a classroom, and 9 mil of those girls are in Sub-Saharan Africa.
what is the purpose of the WTO?
World Trade Organization: goal to provide governments with a forum to negotiate trade agreements, settle disputes, and oversee trade rules
what is Fordism?
a highly organized and specialized system for industrial production that focuses on efficiency and productivity in mass production focused on automation, standardization, economies of scale, and division of labor so each person only has one task named after Henry Ford
What is the Gender Inequality Index (GII)?
a measure that calculated inequality based on 3 categories: reproductive health, empowerment, and labor-market participation
What is the Gender Development Index (GDI)?
a measure that calculates gender disparity in the basic dimensions of human development: health, knowledge, and standard of living
what is just in time delivery?
a system where materials are delivered when they are needed for short-term production, so that companies can avoid paying to store extra inventory at their facilities
What is dependency theory?
a theory that describes development challenges and limitations faced by poorer countries and the political and economic relationships poorer countries have with richer countries
Primary Sector:
activities involving the extraction of natural resources from the Earth *agriculture, fishing, mining
define command economy:
an economy in which production, investment, prices, incomes are determined centrally by a government ex: North Korea
What is the formal sector of the economy?
any businesses, enterprises, and other economic activities that have government supervision, monitoring, protection, and are taxed
What is the informal sector of the economy?
any part of the country's economy that is outside of government monitoring or regulation and is not taxed typically deal in cash ex: unlicensed food or beverage stands
Why did the Industrial Revolution begin?
began because of technological innovations and inventions. occurred in the midlands of Britain because of many factors: -ready availability of coal natural resources (coal, iron ore, water) so it was cheap to transport -high capital cost of equipment and the need to maintain machinery made it important to focus operations in one place -midlands was near the port of Liverpool, which became a hub for raw cottton from India and later the US -merchants had created a system of canals in midlands to transport coal and textiles
What are economic sectors?
collections of similar economic activities based on the creation of raw materials, production of goods, provision of services, or other activities. typically defined in three main sectors: primary, secondary, tertiary
define trade deficit:
cost of a country's imports exceed the value of their exports
Drive to Maturity stage:
economy keeps progressing in a period of self-sustained growth "maturity" is the state in which a country's successes become the norm industries function at max effectiveness, and electric power and consumption are high entrepenurial leadership changes from individual industries to managerial beauracracy STAGE 3 DTM
What is a post-industrial economy?
extremely low primary sector employment relatively low secondary sector employment predominant tertiary sector employment with a rising share of quaternary and quinary
What noneconomic factors do geographers use to analyze a country's development, factors that affect the populations well-being?
fertility rates, infant mortality rates, literacy rates, life expectancy data, access to healthcare, and measures of democracy.
how does the World Bank foster economic development?
focuses on encouraging a global economy to reduce poverty, increase shared prosperity, and promote sustainable development worldwide provides funding and technical assistance to periphery countries to develop infrastructure: systems for safe drinking water, improved sanitation, new schools, and expanded transportation and communication networks
Important limitations of least-cost-theory:
ignores the influences of political economic systems (tariffs, quotas, etc) markers for consumer goods are found wherever consumers live; markets for goods needed for an industry are located wherever companies in that industry are located
What is a bulk-gaining industry?
industry in which the finished goods cost more to transport than raw materials. ALSO KNOWN AS MARKET ORIENTATION ex: automobile manufacturing- parts of a car weigh less than the car as a whole. Also bread: easier to transport grain than a whole loaf and perishability plays a role as well *factory should be near the market because it is expensive to transport when all put together
What is a bulk-reducing industry?
industry in which the raw materials cost more to transport than finished goods. (because they are heavy but change as they are transported) ALSO KNOWN AS MATERIAL ORIENTATION ex: lumber industry: boards produced at a sawmill weigh less than massive tree-trunks brought in for processing. Also coal *factory should be near raw materials
Preconditions for Takeoff stage:
industry increases, along with new types of enterprises, investment increases, and output rises. improved infrastructure becomes essential *workforce shifts from agriculture to manufacturing, and credit institutions are developed STAGE 2 DTM
Limitations of World Systems theory:
may work as historical analysis but may not be a good measure of modern development says that countries can change their status but don't say how there are more determinants of a country than just their economy
What is the Human Development Index (HDI)?
measures overall levels of development in countries incorporates three key dimensions of human development: -life expectancy at birth -standard of living measured by GNI per capita -access to education in expected years of schooling
High Mass Consumption
modern societies are urban, centered on wage labor, and organized into states production shifts from industrial manufacturing to consumer goods and services *issues are no longer "can we make enough", but "how can people get it" or "how can we make people buy more"
Define isolationism:
national policy of avoiding political or economical entanglements with other countries
What are growth poles?
places of economic activity clustered around one or more high-growth industries that stimulate economic growth by capitalizing on some special asset similar to agglomeration
What are break-of-bulk points?
points where it is more economical to break raw materials into smaller unites before shipping them further. (transferred from a huge boat to a lot of trucks)
Where is economic activity located in the secondary sector?
population concentrated in urban areas, because of the desire to have industrial facilities near sources of raw materials, and also cheaper that way. commonly in periphery or semi because of labor unions in core countries
Quaternary Sector:
portion of tertiary sector activities that require workers to process and handle information requires a degree or substantial training *IT, education, government, research FIRE: Finance, Insurance, Real Estate
What sector are people most employed in in periphery countries?
primary sector (bulk of labor force working to produce their own food to survive)
what is deindustrialization?
process by which a country or area reduces industrial activity, particularly in heavy industry and manufacturing happens in country's with aging infrastructure and manufacturing processes
how does the IMF foster economic development?
provides no-interest loans to low-income countires and offeres financial assistance to member countries to help stabilize the world economy
Tertiary Sector:
provides services rather than finished goods also known as the service sector huge range of activities: any service *transportation, marketing, selling goods, etc (when not in quaternary of quinary, they are jobs that don't require a degree or lots of training)
What is the Industrial Revolution?
radical change in manufacturing methods that began in Great Britain in mid-18th century marked by the shift from small-scale, hand-crafted, muscle-powered production to power-driven mass production
What do both world system theory and dependency theory try to explain?
relationships between different countries with different economic stages and health why are some countries rich and some are poor they basically mean the same thing
Light Industry:
require less investment in production facilities and equipment, produces goods that can be made on a small or large scale. goods include: clothing, processed foods, gemstones, and electronics
Heavy industry:
requires huge production facilities and generally employ skilled workers. goods include: machinery and equipment, ships, airplanes, motor vehicles, railroad equipment
What sector are people most employed in in semi-periphery countries?
secondary sector rely on manufacturing and workforce reflects this by having many jobs in manufacturing, processing, and construction industries
What other industries grew as a result of the Third Industrial Revolution?
service industries like banking and insurance to promote the formation and ongoing operations of industrial firms. computer manufacturing
Limitations of Rostow's model:
stages of growth in some countries may differ by region not all countries may go through the same stages at the same time, speed, or in order doesn't allow for Earth's carrying capacity and new ecological limits doesn't consider how countries impact each other, and how that can affect others countries stages of development
What sector are people most employed in in core countries?
substantial secondary but dominant tertiary sector manufacturing likely generates a substantial portion of a core country's wealth, but not for the main center of employment. Lots of service and distribution jobs
What assumption did Rostow make with his model?
the assumption that all countries wish to be an industrialized, capitalist, democratic country
what is neoliberalism?
the belief that open markets and free trade will improve things: development everywhere, lesson tensions between countries by fostering support for common values, and spread democracy and human rights NAFTA is for free trade, an example of a neoliberal policy
what is complimentarity?
the mutually beneficial trade relationship between two countries that results when they have different comparative advantages *there must be a demand in one place and supply that matches in the other
What is industrialization?
the process by which the interaction of social and economic factors lead to development of industries across a community, region, or country.
What is human development?
the processes involved in the improvement of people's freedoms, rights, capabilities, choices, and material conditions
Secondary Sector:
the production of goods made from the raw materials extracted in the primary sector *manufacturing, processing, construction
What does comparative advantage mean?
the relative cost advantages of producing certain goods and services for trade. factors that affect it: available resources, technology, capital, labor costs
Limitation of dependency theory:
theorists fail to define certain terms: dependent, underdevelopment, for example doesn't reflect all reasons for underdevelopment, such as a result of leaders making bad decisions
how do multinational corporations headquartered in core countries support economic developent in periphery and semi-periphery countries?
they all have investments and operations in developing economies (periphery and semi-periphery) that increase the local productive capacity helps diversify the local economy, providing an alternative to agriculture removal of restrictions in the banking industry has brought new funding to businesses in periphery and semi p
How did Industrialization spread?
through expansion and relocation diffusion Britain didn't want it to spread because of economic advantages of being the only industrialized country Spread to US by relocation diffusion Spread to rest of Britain was delayed because of political and economic conditions in other parts of the country. Was then spread by expansion diffusion to places with access to coal
What is the goal of a business owner under a capitalist system?
to make profit
Three things that influence location of a business according to Weber's least cost theory:
transportation: determining factor in where an industry is located; production is drawn to the location with the least cost of transportation labor: if labor costs are high in an area, profits are reduced, so manufacturing sites may be located farther as long as the cheap labor compensates for higher transportation costs agglomeration: gives an advantage for companies in the same or similar industries locating near each other. Can assist each other in controlling costs through shared talents, services, and facilities. (helps utilize economies of scale)
What does Wallerstein's World Systems Theory try to explain as a response to Rostows Mondel?
tries to explain the history of uneven economic development in the world economy explains how countries are dependent on one another and don't develop in isolation: some dominate and some are exploited
Takeoff stage:
urbanization increases, infrastructure continues to improve more people work in some manufacturing industries technological advancements STILL STAGE 2 DTM
Where is economic activity located in the tertiary sector?
vary widely in their distribution because they are needed wherever there's people, and population may not be very evenly distributed in a country quaternary: cluster near institutions of higher learning that provide the educated workforce they need quinary: found in capital cities and other political centers of countries
What were cottage industries?
when members of families, spread out through rural areas, worked in their homes to make goods.
What is commodity dependence?
when more than 60% of a country's exports and economic health are tied to one or two resources indicative of the narrow economic base that peripheral and some semi-peripheral countries depend on basically monoculture but with any kind of resource