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GLOBAL ECONOMICS
Economic Geography The branch of geography
concerned with how people use Earth's resources,
how they earn a living, and how products are
distributed is called economic geography. People's
economic activities can be divided into four
categories-primary (first order), secondary (second
order), tertiary (third order), and quaternary (fourth
order) industries.
industries involve manufacturing. For example, a
dairy takes a raw material (raw milk) and processes
it into products such as ice cream and butter. Often,
a product will go through several stages before it
becomes a finished good. Many factors determine
the locations of manufacturing industries. Some
industries, such as dairies and bakeries, are located
near markets because their products may spoil if
they must be transported too far. Modern
refrigeration and improved roads, however, have
made longer hauls possible. Other industries are
located where special manufacturing needs can be
met easily. These may be needs for cheap power
sources,
skilled
workers,
or
specialized
transportation facilities.
Primary industries include agriculture,
forestry, and mining. These activities directly use
natural resources and raw materials and are found at
or near sources of those materials. Agriculture and
forestry are found in regions with suitable soils and
climates. Mines are located where mineral deposits
have been found.
Secondary industries take goods from
primary industries and change the goods into
products that are useful to consumers. Secondary
Tertiary industries are service industries. These
industries provide services to primary and
secondary industries, to communities, and to
individual consumers. Service industries include
stores, restaurants, banking, insurance, transportation, and government agencies. Services
usually are located close to where people live.
The use of computers and electronic
communications is changing some service
industries. Today, consumers can buy a wide
variety of catalog items over the telephone.
Computers allow some people to work at home,
which gives them more flexibility in deciding
where they want to live. A worker living in Jackson
Hole, Wyoming, for example, may work for a firm
in New York City.
Some geographers include this movement and
processing of information in a fourth category of
economic activity.
Quaternary industries, a subdivision of
tertiary industries, are performed by professionals
having specialized skills or knowledge. Information
research, management, and administration are
quaternary industries. Your school principal is an
example of a worker involved in a quaternary
industry.
Economic Indicators As economic activities vary,
so do economic conditions. Accurately measuring
levels of economic development is difficult, but
geographers can use several means to compare data
and make generalizations. It is important to
remember that a country's economic level says little
about its cultural values and contributions.
One measure of a country's economic development is gross national product or GNP. Gross
national product is the total value of goods and
services produced by a country in a year, both
inside and outside the country. Some geographers
use gross domestic product (GDP) instead of gross
national product. Gross domestic product includes
only those goods and services produced within a
country and does not include income earned outside
that country. This number becomes more useful
when it is divided by the number of people in that
country. This figure tells us the per capita GDP,
which then can be used to compare the economic
level among countries.
Another way to describe levels of economic
development is to identify the extent to which a
country has industrialized. The world's poorest
countries have little or no industrial activity.
The next poorest countries are industrializing,
which means they are in the process of developing
manufacturing and industry. Some countries are
beginning to move out of the industrial stage into a
postindustrial stage. In a postindustrial country,
more people are employed in tertiary and
quaternary industries than in primary and secondary
industries. This trend, however, has resulted in
industrial decline in some regions, as experienced in
the Northeastern and Midwestern United States.
The full impact of this trend will not be known for
some time.
Other measures of economic development are
literacy, infrastructure, and telecommunications.
Literacy is the ability to read or write. In
general, the higher a country's literacy rate, or the
higher the number of people who can read or write,
the more economically developed the country.
Infrastructure includes roads, bridges, transportation
facilities, power plants, water supply, sewage
treatment facilities, and government buildings that
are necessary to build industries and to move goods
in and out of a country quickly and easily.
Telecommunications is electronically transmitted
communication. Today, a rapid, efficient telecommunications network is important for developing
high-technology industries.
DEVELOPED AND DEVELOPING
COUNTRIES
Categorizing the world's countries by economic
level identifies the world's richest and poorest
countries and those that lie in between. The world's
wealthy countries are called developed countries.
These include many of the countries in Europe, the
United States, Canada, Japan, Australia, Singapore,
and others.
Developed countries share a number of common
characteristics. Among these are a good educational
system, widely available health care, and many
manufacturing and service industries. Developed
countries are industrialized and participate in
international trade. People mostly live in cities. The
few people who work as farmers use modern
technology. In developed countries, most people
have access to a telephone and are part of the global
network formed by modern telecommunications .
The wealthiest of the developed nations have per
capita GDPs above $29,000.
About three-quarters of the world's people live
in the poorer countries, which often are called
developing countries. Many of the people in
developing countries live by subsistence farming
(growing just enough to eat) in rural areas. These
countries have few manufacturing and service
industries to provide jobs. Though capital cities and
other major cities may be large, poverty and
unemployment are widespread. Many people
migrate, or move, from rural areas to cities. Many
city dwellers are underemployed, working only part
time.
In developing countries, health services are
limited and schools often are crowded. The literacy
rate is usually low. Modern telecommunications are
not usually found outside of major cities. Exporting
agricultural products and minerals to developed
countries often is an important source of income for
developing countries. Some of the world's poorest
countries have per capita GDPs of less than $600.
Several fall below $200.
Between the world's richest and poorest
countries are middle-income countries such as
Argentina, Mexico, Venezuela, Brazil,
and
Malaysia. These countries combine characteristics
of developed and developing countries. Some
middle-income countries, such as South Korea and
Taiwan, are newly industrialized. Their per capita
incomes are growing rapidly and soon will be in the
developed category. Other countries, such as
Argentina, have remained in the middle category
for decades. These are often called “emerging
economies.”
Choices in Economic Development How can a
poor country improve its economy? If it has many
natural resources such as oil fields, mineral
deposits, or valuable crops, then development of
these resources can lead to economic progress.
Income from economic activity can be invested in
education and infrastructure.
For a developing country with few natural
resources, the economic choices often are very
limited. Sometimes the governments of developed
countries help developing countries with loans and
gifts of money. Some of this foreign aid goes to
ease human suffering.
Developed countries often debate how to help
developing countries. Some wealthy countries provide little help. They argue that there are too few
resources to share and that by helping others their
own economic growth will suffer. Other developed
countries give aid only to countries with rich natural resources or a low rate of population growth.
Still other countries give aid only to those countries
with which they are on close political terms.
Multinational companies build factories in
many poor countries around the world. These
companies are businesses with activities in many
countries. Multinational firms seek raw materials
and labor at low cost. Multinational companies
provide jobs and often transfer technology from the
developed countries to developing countries.
Multinational companies sometimes are criticized,
however, for harming the natural environment or
changing the cultures of developing countries and
paying low wages to workers..
Politics and Economics Economic development is
of concern to all governments. What kinds of
economic and political ideas lead to economic
progress?
The world's economically developed countries
share two important characteristics. The first is an
economic system guided by free enterprise. Under
free enterprise, prices are determined mostly
through competition in which buyers and sellers are
free to choose what and when to sell and buy. As a
result, goods that people want are produced in large
amounts and are sold at fair prices. Under free
enterprise, people are free to move in search of
higher wages and better working conditions.
Free enterprise is the basis of capitalism, an
economic system in which resources, industries,
and businesses are owned by private individuals.
Capitalism is also called a market economy. In a
market economy, consumers determine what is to
be bought or sold by buying or not buying certain
goods and services. The term market refers to a
system in which goods and services are exchanged
freely.
The second important characteristic of the
developed countries is democracy. People must
have personal freedom to make free enterprise
work. During the past few years, all of the countries
whose economies have improved also have
expanded free enterprise and democratic ideas.
In contrast to economies based on free enterprise are command economies. In a command economy, the government determines wages, the kinds
and amounts of goods produced, and the prices of
goods.
Communist countries have command
economies. Communism is an economic and
political system in which the government owns or
controls almost all of the means of production.
Since the breakup 0of the Soviet Union, the once
communist countries of Eastern Europe and the
former Soviet Union have been reforming their
economies on a capitalist model.
The world’s developing countries are often a
mix of command and free enterprise. India, for
example, is a democracy, but much of its economy
is controlled by the government. Though China has
greatly expanded free enterprise, democracy in the
country has been put down violently.
Globalization.
Today’s “buzz word” is globalization. This is the
economic and political process that involves the
entire world in its scope. People and businesses
working in a world-wide economy that has proved
beneficial to some yet harmful to others.
The Economic Gap Unfortunately, there is still a
wide divide between developed and developing
countries. While developed countries make up
around 25% of the world’s population, they
consume nearly 75% of the resources. In most of
today’s world, it is still true that the rich are getting
richer, and the poor are getting poorer.
poorer.