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Chapter 4, Section 5
Economic Geography
Economic Geography 4.5
• An economy consists of the production and
exchange of goods and services among a group of
• The way people choose to produce and exchange
goods is called as economic system
– Traditional Economy - trade without money, or “barter”
– Command Economy – production determined by government, who
also owns the means of production, and does not necessarily reflect
the consumer demand: communism
– Market Economy – Production of goods and services follows
consumer demand: capitalism, free enterprise
– Socialism – where government may own major means of
production, but market consumer demand is followed
Economic Activities
• Subsistence Agriculture – just enough to feed the family
• Commercial Agriculture – producing a surplus for the market
• Cottage Industry – on a small scale, often family-owned and operating
out of the home
• Commercial Industry – serving the needs of people in a large area
– Primary Activities – taking raw materials from the environment: forestry,
fisheries, mining
– Secondary Activities – changing the form of the raw materials:
manufacturing, food processing and packing
– Tertiary Activities - providing business or personal services: education,
healthcare, lawyers, retailers
– Quaternary Activities – providing information, management and research
services by highly-trained persons: web services, think-tanks, research
• The more developed the economy, the greater the number and variety
of activities
Natural Resources are materials on
or near the earth
• These materials only become resources when
society has a use for them: cultural definition of
• Like everything, they are unevenly distributed
around the earth
• Usually divided into three groups
– Renewable – can be replaced through nature: trees,
– Non-renewable – cannot be replaced once they are
removed from the earth: iron and other ores, fossil fuels
(oil, natural gas, coal)
– Inexhaustible Energy Sources – unlimited in quantity:
sunlight, geothermal heat, winds, tides
Developed economies require basic
support systems called infrastructure
• Transportation: roads, railways, ports and
• Communications systems: Strong
economies are linked internally and
externally by Internet and satellite
• Water, sanitation, electricity and gas
networks, and education systems
Geographers compare economies
using a variety of statistics
• Per-capita Income – the average amount of
money earned by each person in a political
• Gross National Product(GNP) – the total of
goods and services divided by the number
of citizens
• Gross Domestic Product(GDP) – the total of
goods and services divided by the number
of people within the boundaries
Development Levels
• Developing Nations –
have low GDP, lack an
industrial base and
struggle to meet their
people’s basic needs
• Developed Nations –
have high GDPs, a
varied economy,
especially with
quaternary activities