Download Unit 5 Key Terms - George Washington High School

UNIT 5 KEY TERMS
INDUSTRIALIZATION & ECONOMIC DEVELOPMENT
1. MEDC/DC
• MEDCs: More Economically Developed Countries
• DCs: Developed Countries
• Definition: the richest of the developed countries
• Example:
2. LEDC/LDC
• LEDCs: Less Economically Developed Countries
• LDCs: Less Developed Countries
• Definition: the poorest of the developing countries
• They have major economic, institutional and human
resource problems. In 2009, 49 countries were
labeled as LEDCs/LDCs – many are in Sub-Saharan
Africa
• Example: Kenya, Bangladesh, Sudan
3. GDP
• GDP = Gross Domestic Product
• Definition: Total value of goods and services
produced in a country (US$)
• Example: In 2013, US’s GDP was 16.77 trillion US
dollars
4. GNP
• GNP = Gross National Product
• Definition: GDP that also includes income from
investments abroad (US$)
• Example: In 2013, US’s GNP was 16.99 trillion US
dollars
INDICATORS OF INCOME
• The following are indicators used to measure
economic development (indicators of income):
• GDP (gross domestic product)
• GNP (gross national product)
• GDP/GNP Per capita
• **Total value divided by the total population (per person)
• Example: in 2013, US GDP per capita was 53,041.98 US dollars
NATIONAL INCOME: PROBLEMS WITH
USING GDP/GNP
• Some economic activity not recorded – subsistence farming
and barter activity, for example
• Some economic activity is carried out illegally – building work
‘cash in hand’, drug dealing, etc.
• Work of the non-paid may not be considered but may
contribute to welfare – charity work, housework, etc.
• A small proportion of the population can own a large amount
of the wealth in a country.
Check out Angola and Equatorial
Guinea: Why is their child
mortality rate so high if their GNI
is so high?
5. MDG
• MDG: Millennium Development Goals
• Definition: eight international development goals
established by the UN in 2000 to address the world’s
most pressing issues. Target date to achieve goals
was 2015. See next slide for photo of all eight goals.
• Example/illustration: check out next slide
Purpose of MDGs
• The Goals were agreed to in 2001
• The Goals were devised by the UN in 2000 and adopted by
nations in 2001
• The idea of course is to create a better world
• Many nations are already falling short
• But there are success stories
6. HUMAN DEVELOPMENT INDEX
• Definition: An attempt to measure development of
a country by more than just income. It’s a
composite statistic of life expectancy, education
and income per capita indicators
• Example/illustration:
7. GENDER INEQUALITY INDEX (GII)
• Definition: an index for measurement of gender
disparity between males and females that was
introduced in the 2010 by the UN
• Example/Illustration:
8. DEVELOPMENT/SUSTAINABLE
DEVELOPMENT
• Definition of development: the act of improving/advancing
the quality of life (standard of living) of people
• Definition of sustainable development: development that
meets the needs of the present without compromising the
ability of future generations to meet their own needs
• Example:
9. PRIMARY ECONOMIC ACTIVITIES
• Definition: extraction of natural resources
• Example: farming, mining, forestry, etc.
10. SECONDARY ECONOMIC ACTIVITIES
• Definition: Processing of raw materials into finished
goods by manufacturing
• Example: steel manufacturing, furniture production,
food processing, etc.
11. TERTIARY ECONOMIC
ACTIVITIES
• Definition: provision of services
• Example: retail, restaurants, tourism, police and fire
provision, sanitation, advertising, etc.
12. QUATERNARY ECONOMIC
ACTIVITIES
• Definition: information and knowledge processing
• Example: education, data processing, research and
development, banking and finance, medical
13.QUINARY ECONOMIC ACTIVITIES
• Definition: highest level decision making
• Example: top-level government officials, business
executives/CEOs, financial consultants
14. ROSTOW’S MODEL OF ECONOMIC
DEVELOPMENT
• Definition: A theory on economic development that
states every country will eventually reach high levels
of development as they follow a predetermined
timeline
• Example/illustration: on next slide
• * more info on each stage in the upcoming slides
ROSTOW – STAGE 1
(TRADITIONAL SOCIETY)
• Characteristics:
• Little technology
• No social changes
• Moves to next stage when other countries invest in
resources or new markets appear (ex. OIL! GOLD!
Minerals)
ROSTOW – STAGE 2
(PRECONDITIONS FOR TAKE-OFF)
• Commercial companies invest:
• Plantation agriculture
• Garment industry
• mining
• Moves to next stage when roads/railroads
(infrastructure improves) and social and political
leaders emerge
ROSTOW – STAGE THREE
(TAKE OFF)
• Development of manufacturing (a country’s own
companies for export)
• Moves to next stage with even more investment in
this sector and the creation of modern social,
economic, and political institutions
ROSTOW – STAGE FOUR
(DRIVE TO MATURITY)
• Development of economy beyond manufacturing
(widening base of industry and business)
• Moves to last stage when it can take advantage of
its abilities to produce
ROSTOW – STAGE FIVE
(HIGH MASS CONSUMPTION)
• People buy a lot of stuff!
ROSTOW’S MODEL: ASSUMPTIONS
• All countries have similar development trajectories
• Intrinsic factors like culture and natural resources
don’t impact development
• Countries that undergo development at different
times in history will undergo the same process
• All countries have the same access to development
• The goal and purpose of all economies is to
increase productivity and material consumption
ROSTOW’S MODEL – LIMITATIONS
• Not fair to compare today’s poorer countries to
those that were the first to take off. Those that took
off didn’t have to compete in a global market
• Difficult to say whether all countries will eventually
conform to Rostow’s model
• Unlikely that Rostow’s model will be universally
applicable
15. DEVELOPMENTALISM
• Definition: the notion that every country and region
will eventually make economic progress toward a
high level of mass consumption if they only
compete to the best of their ability within the world
economy
• Example: Rostow’s model
16. DEPENDENCY THEORY
• Definition: theory that blames
the underdevelopment of the
developing world on exploitation
by the developed world
• Poverty in the developing world
arose through the spread of
capitalism (countries were wealthy
before Europeans colonized)
• The development of the rich was
achieved by exploitation of the raw
materials in the developing world
• Developing countries became
dependent on rich countries
17. NEOCOLONIALISM
• Definition: the geopolitical practice of using
capitalism, business globalization, and cultural
imperialism to influence a country instead of direct
military or political control
• Example:
18. WORLD SYSTEM THEORY
• Definition: theory based on the history of capitalist
world economy. Countries fall into three economic
levels (core, semi-periphery, periphery) and can
move from one level to another if their contribution
to the world economy changes
• *More info on the three levels in upcoming slides
• Example: next slide
WORLD SYSTEM THEORY - CORE
CORE: North America, Western Europe, East Asia
The world’s richer countries
Wide range of products and services
High wages
Import raw materials and export manufactured
goods/services
• Have favorable trade balances with poor countries
• Invests in other core country economies
•
•
•
•
•
WORLD SYSTEM THEORY
SEMI-PERIPHERY
Transition between core and periphery
Still have dependent relationships with cores
Have peripheral countries dependent on them
Examples: South Korea, Mexico, Argentina,
Thailand, Malaysia are examples of countries
moving up
• Russia and neighbors are moving down the scale
•
•
•
•
WORLD SYSTEM THEORY - PERIPHERY
LEDCs: mainly within Africa
Limited products and technology
Lower wages
Supply the raw materials
Generally exploited by core
Small domestic markets, lack infrastructure,
population increase, low economic output
• High agricultural population
•
•
•
•
•
•
19. INDUSTRIAL REVOLUTION
• Definition: Began in the late 1700s in England and led to the
huge growth of the world population for the next two
centuries as industrialization diffused outwards.
• Example: look through upcoming slides for photos
THE INDUSTRIAL REVOLUTION
B.Why did it begin in the Great
Britain?
• capitalist system
• people free to form businesses
• education
• patent system encouraged
development
• labor:
• Jethro Tull’s seed drill (1701) and
other developments > improved
productivity in farming > people
can leave farms and work
elsewhere
THE INDUSTRIAL REVOLUTION (CONT)
B.Why did it begin in the Great
Britain?
3.raw materials (iron ore, coal)
4.rivers, canals, harbors (ease in
trade)
5.small, compact size (iron and
coal near rivers and harbors)
6.existing banking system
(borrow $ to buy machinery)
7.stable political system
8.colonies (guaranteed markets,
additional raw materials)
THE INDUSTRIAL REVOLUTION (CONT)
C.Key developments
• James Watt patents the steam engine
(1769)
• wood replaces running water as
source of energy
• changes location of machinery
• was located by running water (streams,
rivers)
• now can be located wherever wood
exists (more flexibility)
THE INDUSTRIAL REVOLUTION (CONT)
D.Effects
• economic: more goods at
lower prices
• social: available labor
leaves farms and clusters in
cities
• political: surplus labor >
mistreated workers >
liberalism and communism
THE INDUSTRIAL REVOLUTION (CONT)
D.Effects
4.technological: > railroad,
steamship
5.agricultural: > 2d
Agricultural Revolution
• increased productivity
• use of machinery > larger
farms > enclosures
20. FORDISM
• Definition: process of using assembly line techniques
in manufacturing and is attributed to Henry Ford
21. COMMODITY CHAIN
• Definition: a chain of activities from the
manufacturing to the distribution of a product
• Example: the clothing industry
•
•
•
•
•
Growing of cotton
Textile mills to create cloth
Garment factories where stitching occurs
Firms for design
Retailing and selling to the consumer
22. TRANSNATIONAL
CORPORATION
• Definition: companies that have facilities and
processes spread among several countries. Found
at the high-profit end of the commodity chain and
specialize in brand names, high technology, and
design and marketing
23. GLOBALIZATION
• Definition: a set of processes that are increasing
interactions, deepening relationships, and
heightening interdependence without regard to
country borders
24. COMPARATIVE ADVANTAGE
• Countries should specialize in producing those
goods of which they are relatively more efficient
producers
• These countries should then trade with the rest of the world
to obtain needed commodities
• If countries do specialize this way, total world
production will be greater
• Example: check out next slide
25. OUTSOURCING
• The practice of shifting
production of a product to
a third party either in the
country in which you are
based or in an other
country.
• (part of comparative
advantage)
• Taking advantage of less
expensive labor
26. MAQUILADORAS
• Foreign-owned assembly companies located in the United
States/Mexico border region.
• These companies are able to take advantage of cheaper labor,
tax breaks, lax environmental regulations while operating
close the the markets for the products.
• See next slide for photo