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Economic Geography
Money-making
activities
Primary activities
 Any
activity where a natural
resource (raw material) is used
directly for profit.
 Farming
 Fishing
 Mining
 Logging
Secondary activities
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When raw materials are taken to produce
or manufacture a product.
 Iron and Coal (extracted – primary)
produces Steel
 Steel produces thousands of parts for
machinery of all kinds. (automobiles)
 Cotton is harvested (primary)
 Taken to a factory and made into
clothes. (textiles)
Tertiary (Service) activities
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Anything that provides a product or
service to the public.
Largest sector of an MDC country today.
 Banking, education, medicine, retail or
wholesale sales, food service, military,
insurance, entertainment,
transportation, tourism
Quaternary Sector
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Processing and distribution of primarily
technical information.
 Engineering
 Research and development
 Information technology
 Software
 Web design
 Support
Quinary Sector
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Decision makers
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CEO’s
CFO’s
Conglomerates
Highest levels of State
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These people will directly impact the
markets and therefore the economies
from local to global scale.
So Who’s Rich and Who’s Poor?
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https://youtu.be/9-4V3HR696k
Economic Systems
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There are 3 primary types of Economic
Systems.
 Traditional or Subsistence
 Market or Demand System
 Command System
Like activities, these systems can be found
in many places throughout the world.
Traditional
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Generally associated with subsistence
agriculture.
Subsistence-producing only enough for
you and your family at a survival level.
Almost exclusively involved in Primary
economic activities.
LDC’s of sub-Saharan Africa, parts of
South Asia, parts of Latin America.
Market or Demand System
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Guided by the principle of free enterprise.
People are free to decide on what they will
produce, sell, and buy.
Competition is encouraged by supply and
demand principles.
Capitalism – A system based on private
ownership of property, businesses, and
resources with little government
interference.
Command System
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A system where the government makes
most, if not all decisions in regards to
ownership, production, and distribution.
Communism version requires all property
to be re-distributed by the government
after commanding what, when, and how
much can be produced.
Socialism involves governments
controlling, owning or operating certain
businesses within a country.
Mixed Economies
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An economic system that includes a
mixture of capitalism and socialism. This
type of economic system includes a
combination of private economic freedom
and centralized economic planning and
government regulation.
MOST COUNTRIES ECONOMIES FALL
INTO THIS CATEGORY TODAY.
http://www.youtube.com/watch?v=1efDli000Cw
Measuring Economic Development
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GNP (Gross National Product) is the total
value of goods and services that a country
produces in a year, including all foreign
investment.
GDP (Gross Domestic Product) includes
only those good and services produced
within the country.
GNI (Gross National Income) is the dollar
value of all goods and services, plus the
dollar value of EXPORTS minus IMPORTS.
Measuring Economic Development
Gross National Income (GNI) then is
GOODS + SERVICES + (EXPORTS – IMPORTS)
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Per Capita Calculations
GDP per capita:
(GOODS + SERVICES) divided by POPULATION
GNP per capita:
(GOODS + SERVICES) + (EXPORTS – IMPORTS)
divided by POPULATION
Purchasing Power Parity
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(GNI PPP) is an estimate that takes into
account differences in prices between
countries.
If in a poor country, the cost of goods can
be cheap, and can actually raise their true
GNI PPP. In other words, they can get
more for their money.
Example:
China’s PC-GNI is $6,560 approximately
China’s GNI PPP is about $12,880
Forms of Government
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http://www.youtube.com/watch?v=klm6yZxDmJc
Big Mac Index
Gini coefficient
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This measures the level of income
disparity between the country’s richest
and poorest population groups on a scale
of 0 – 100. High number means a wider
gap between rich and poor.
Examples:
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China – 37
South Africa – 65
U.S. – 41
Venezuela - 45
Colombia – 54
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http://databank.worldbank.org/data/views/reports/metadataview.aspx
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Human Development Index
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A quality of life index developed by the UN
based on:
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Life expectancy at birth (demographic)
Literacy rate (social)
Years of education (social)
Per capita GDP (economic)
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HDI 0 – 1.0
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Norway 0.944 (1st)
 U.S. 0.914 (5th)
 Russia 0.778 (57th)
 India 0.586 (135th)
 D.R. Congo 0.338 (186th)
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Real World Examples:
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Qatar, United States, Japan, Germany
 MDC’s
 Free Market System
 Per Capita GDP - PPP:
 Qatar - $143,427 #1
 U.S. - $54,957 #10
 Germany - $45,888 #18
 Japan - $37,390 #28
 PRE-DOMINANTLY TERTIARY AND
SECONDARY ACTIVITIES
Real World Examples:
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Brazil Russia, India, China, South Africa
(BRICS)
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Developing Countries (very uneven)
Now referred to as NIC’s
Socialists (mixed economies)
GDP - PPP:
 Brazil - $16,096 #74
 Russia - $24,805 #49
 China - $12,880 #89
 India - $5,855 #125
 South Africa - $13,046 #87
 MIXED SECONDARY AND AGRICULTURAL PREDOMINANTLY, AND INCREASING TERTIARY
Real World Examples:
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Haiti, Congo, Somalia
 LDC’s
 Command-Traditional
 Per Capita GDP’s:
 Haiti - $1,100
 Afghanistan - $950
 Congo - $350
 SUBSISTENCE IN AFRICAN
COUNTRIES
Measuring Social Development
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Education and Literacy
Health and Welfare
 MDC’s vs. LDC’s
 What
infrastructure is necessary to
insure social development and a
higher quality of life?
Demographic Factors
Life Expectancy
 Infant Mortality Rates
 Total Fertility Rates
 Natural Increase Rates
 Crude birth and death rates
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Rostow’s Development Model
Walt Rostow developed this
approach in the 1950’s to
examine what is necessary for
full development to take place
within any given country.
Rostow’s Modernization Model
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Traditional Society
Pre-conditions for takeoff
The takeoff
Drive to maturity
Age of mass consumption
Stage 1
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Traditional Society - Rostow uses this term to
define a country that has not yet started a
process of development. A traditional society
contains a very high percentage of people
engaged in agriculture and a high percentage of
national wealth allocated to what Rostow calls
"non productive" activities, such as the military
and religion.
Stage 2
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Preconditions for Take-Off - According to
Rostow, the process of development begins
when an elite group initiates innovative
economic activities. Under the influence of these
well-educated leaders, the country starts to
invest in new technology and infrastructure,
such as water supplies and transportation
systems. These projects will ultimately stimulate
an increase in productivity.
Stage 3
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Take-Off - Rapid growth is generated in
a limited number of economic activities,
such as textiles or food products. These
few take-off industries achieve technical
advances and become productive, while
other sectors of the economy remain
dominated by traditional practices.
Stage 4
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Drive to Maturity - Modern technology,
previously confined to a few take-off
industries, diffuses to a wide variety of
industries, which then experience rapid
growth comparable to the take-off
industry. Workers become more skilled
and specialized.
Stage 5
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Age of Mass Consumption - The
economy shifts from production of heavy
industry, such as steel and energy, to
consumer goods, like motor vehicles and
electronic products
International Trade Approach
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The Persian Gulf states
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Saudi Arabia
U.A.E.
Qatar
Kuwait
Bahrain
Focus was on natural capital (oil) as a
means to economic prosperity and
development.
This began in earnest in the 1970’s.
Geographic “situation”
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Dependency Theory
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Political and economic relationships often
based on colonialism limits the economic
development of poorer countries.
World-Systems Theory
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Wallerstein’s theory
Core, semi-periphery, periphery relationships
Would imply that the world cannot be “flat”
International Trade Approach
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The original Asian Tigers
 South Korea
 Singapore
 Taiwan
 Hong Kong
The focus was on human capital building a
manufacturing base.
Japan was the original “Asian Miracle”
New to the game: Malaysia, Vietnam, and
of course CHINA.
International Trade Approach
China’s Market Socialist model
 Central planned economy
 Gradual approach starting with
Special Economic Zones (SEZ’s)
 Joint partnerships have led to
direct foreign investment.
 Government backed, slow
privatization
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Shenzhen, China
Paths to Development
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India’s Self-Sufficiency Model
Nehru chose a path that focused on
internal development without
outside interference.
It was based on isolation an a system
of high tariffs and quotas.
Discouraged exports and instead
focused on producing for internal
consumption.
Paths to Development
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India’s Self-Sufficiency Model
Government controlled prices created
monopolies and this led to
inefficiency.
A complex bureaucracy led to a
reduction in entrepreneurship.
Since the early 1990’s open market
reforms have led to rapid increase in
development.
World Trade Organization
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WTO works to reduce barriers to
international trade.
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Reducing tariffs, quotas and general
restrictions
Enforcing agreements and laws
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China entered the WTO in 2001
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Governments sometimes use subsidies and
corporate interest to dominate markets.
Some are also concerned about the impact of
losing sovereignty and outsourcing.
Loan Issues
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LDC’s must borrow often from the IMF or
World Bank.
Focus on building infrastructure which
should lead to further development is
often unsuccessful.
Profits are often times insufficient to
provide wealth to the nation as it must
use it’s profits to repay its loans.
Leads to arguments over Fair Trade
NGO’s –
Non-governmental organizations
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Not ran by a state or economic alliance
Doing the work that governments can’t or
won’t do.
The Economist refers to at as a “parallel
state”
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Medecins san frontier
Red Cross
Charities, Churches, and volunteer
organizations
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Microcredit
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Popular for of economic empowerment
Loans to poor people, especially women
Started in Bangladesh
Muhammad Yunus (Grameen Bank)
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Ways to help:
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www.grameen-info.org
www.grameenfoundation.org
www.grameenamerica.org
www.kiva.org
www.msf.org
www.heifer.org
www.redcross.org