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Economic Development Unit 6 What is Economic Geography? • Study of how people provide for themselves, flow of _________________, and patterns of economic development & _______________. • ______________________is a leading component in development today • Service-Based Economies: What does development mean? • ____________________: process of improvement in the material conditions of people through diffusion of knowledge/technology Continue… • LDC’s challenge is to find _____________ to the global economy by taking advantage of ______________________ in skills and resources What is globalization? • _________________________: actions or processes that involve the entire world and result in making something worldwide in scope What determines development? • Level of development can be created by: 1) 2) 3) What is HDI? • Human Development Index (HDI): - What is the economic factor? • The economic factor is a state’s GDP per capita • Gross Domestic Product (GDP): Continue… • Average GDP top five states (not per capita) What are the social/demographic factors in HDI measurement? Facts Continued about HDI… • Highest HDI possible is 1.0 or 100% • Highest ranking HDI states are mostly in the Nordic Nations of Europe, the lowest being in Sub-Saharan Africa • Highest HDI state is Norway .943 (2011) • The US is 4th with 0.910 (2011) • One of the lowest is…..(extra credit opportunity) What is the PQLI? • The Physical Quality of Life Index (PQLI): -Created by Overseas Development Council -Looks at three factors: infant mortality, life expectancy and literacy -Three are averaged after being scored on a 0100 scale with 0 being the poorest/worst What are some economic indicators to distinguish MDCs from LDCs? • • • • • 1) GDP per capita 2) Economic structure 3) Worker productivity 4) Access to raw materials 5) Availability of consumer goods What are some examples of economic structure? • Typical workers in LDCs receive $2 per hour, in MDCs it is $15 per hour • MDCs tend to have minimum wage laws • Types of jobs: people in MDCs have more jobs in tertiary, quaternary and quinary sectors, while LDCs have more in primary and secondary sectors What are some productivity issues? • Productivity: value of a particular product compared to the amount of labor needed to create it -Higher in MDCs • Value Added: the gross value of the product minus the cost of raw materials and energy -Workers in MDCs produce more with less effort because of access to technology, machinery, tools, etc… What does access to raw materials include? • Development requires raw materials that will be manufactured • Need energy sources • MDCs started looking to colonies and other states for raw materials after exploiting their own resources What does the availability of consumer goods refer to? • Wealth generated by MDCs is used to purchase goods/services • Most important are those related to transportation, communication and technology What are social indicators of development? • Education and literacy (% of state’s adults who can read/write) • Health and welfare What are some demographic indicators of development? • • • • Life expectancy Infant mortality rate Natural rate increase Crude birth rate What is GNI? • Gross National Income (GNI): Total value of goods/services produced by a state per year plus net income earned abroad by its nationalists; formerly called gross national product Continue… • Argued that GNI is a more accurate measure than GDP • Some states experience a trade imbalance: -Trade Surplus: (Exports > Imports) and this adds to the value of an economy -Trade Deficit: (Exports< Imports) and this removes value from the economy Formal Economy vs. Informal • Formal Economy: legal economy that is taxed & monitored by the gov. and is included in GNI • Informal Economy: economic activity that is neither taxed nor monitored by a gov. and is not included in GNI (illegal/black market or uncounted activities) What is PPP? • Purchasing Power Parity: a monetary measurement of development that takes into account what money buys in different states • Ex. Big Mac prices by states (2009): -USA: $3.54 -Brazil: 8.02 Real ($3.45 US) -Philippines: 98.0 Peso ($2.07 US)