APHG: Economics 8.1 (COMPLETE!!)

Terms in this set (90)

Industrial Revolution
A period of rapid industrialization, more new technology, and expansion of economy starting in the 18th century in Britain, diffusing from there to east Europe mostly along natural resources
Industrialization: New Technologies
Different inventions such as railroads, mechanized textile process, and the steam engine
Industrialization: Coal
People clustered around this, because lots of new technology needed it to function
Industrialization: Water
Powered water pumps and wheels, so industries using that particular technology needed to be concentrated around this
Diffusion of Industrialization
Britain---> East Europe (around coal)
Diffusion of Industrialization: Populations
People started to move to industrialized cities for jobs, causing rapid urbanization and population growth
Diffusion of Industrialization: Black Country
Hearths of industrial revolution appeared around coal
Diffusion of Industrialization: Increased Food Supplies
Lots more food can be made from tech of the 2nd agricultural revolution, so workers can come out of agriculture and into factory work
Effects of Increased Industrialization
Higher demand for materials (fuel, iron to smelt, etc.), looking for other markets (from surplus product created, to earn money), and colonialism/imperialism (exploiting for resources)
Primary Sector of Economic Activity
Extracting of resources from natural environment, need to be near resources (mostly in LCDs)
Secondary Sector of Economic Activity
Adding of value to yields from primary economic activity, such as smelting raw ore, needs access to primary extractors
Tertiary Sector of Economic Activity
Services such as teaching, more present in developed countries, need to be near a suitable market (teachers: students)
Quaternary Sector of Economic Activity
Action involved with research, analyzing, information, etc. "white collar" jobs, need access to good work force and communication and infrastructure
Quinary (sub)Sector of Economic Activity
Subcategory of quaternary economic activity, research, high level decision making, need access to people of similar skills
Alfred Weber's Model of Industrial Location
A model explaining the locations of secondary economic activities, showing that they are situated based on (mainly) transportation and labor costs, and agglomeration (makes an area more attractive to other businesses from similar workforces). This model, quite exclusively at its time, takes into account not only the regular factors of location (energy, transport, labor) but the weight of products
Friction of Distance
Products require more money, labor, etc. to be transported as the distance increases
Substitution Principle
Different costs for producing products can be swapped if one factor is low enough (while other(s) rise) to allow zero net change in cost or net decrease in cost. For example, a business could be located very close to the market so transportation costs are low, but in that area labor is costly. If that business is relocated further away to where labor is much cheaper but transportation costs more, then the cost of producing could be unaffected or even lowered
Most Significant Criticisms to Alfred Weber's Theory
- Transportation costs are becoming a lesser determinant of location (new technology)
- Labor may require a degree of skill, therefor not ubiquitous
- Perfect competition isn't common, government intervenes with business
- Uneven land
Factors of Industrial Location: Resources
Certain industries have to have access to their resources, especially if they're heavy
Factors of Industrial Location: Bulk Reducing Industries
These must be near primary industries, as product weight is high before processing
Factors of Industrial Location: Power
Industries will gather where this is cheaper (20% of the cost of producing aluminum is based on this!)
Factors of Industrial Location: Labor
A skilled but cheap work force attracts businesses
Factors of Industrial Location: Market Oriented Industries
If products are perishable, heavy, (usually) services then they must be near the market
Factors of Industrial Location: Bulk Gaining Industries
Because weight is added, transportation cost increases after processing, so these must be near the market (ex: soda bottling factories are near the market because weight is added)
Factors of Industrial Location: Transportation: Break-of-Bulk Points
Places where the mode of transportation is changed and from which goods are distributed into many different locations, such as a port where trucks drop off goods (those goods are put onto ships and brought to different places). Industries like to be near these so transportation costs less
Transportation: Ship
The least costly transportation option over large distances (sea), but slow
Transportation: Rail
The least costly transportation over medium distances (land)
Transportation: Truck
The least costly transportation over short distances (land)
Transportation: Airplane
The mostly costly transportation over long distances, but very fast (for light, high-value goods)
Factors of Industrial Location: Containerized Shipping
This has decreased transportation overseas by 90%, most industries use this to move goods, so industries that typically ship overseas are located near these
Factors of Industrial Location: Infrastructure
Places with good infrastructure already in place are very attractive for businesses
Factors of Industrial Location: Agglomeration
Similar businesses cluster together because of similar workforce, similar calculations on the best place to locate their business, or because they know another business has done calculations on an optimal location
Factors of Industrial Location: Environment
Different businesses require certain environments, one wouldn't locate a water park on top of Mt. Everest. Some locations attract more customers because they're in an area with a nicer climate
Footloose Industries
Industries, usually based on technology, that don't require an optimal location. Ex: over-the-phone customer service doesn't need to be near a market, as phone signals can be transmitted over long distances easily (as long as there is good digital infrastructure)
Amenity Sites
Sites which have attractive characteristics, attracting more workers/ customers, not completely essential to industrial location
Outsourcing
The obtaining of different items through a third party company, can be out of country or inside country
Offshoring
The strategic locating of different aspects of a business outside of a country for cheaper labor, access to resources, etc.
Hotelling Model
A model describing the phenomenon of similar businesses being clustered together. This is commonly used in describing how 2 ice-cream vendors would end up right next to each other on a beach (start far apart, but in time relocate to right next to each other because that is the most favorable site, attracting the most customers)
Cottage Industry
A business running within one's home or village
Social Indicators of Development
Indicators of development including healthcare accessibility, education, infant mortality rate, etc.
Economic Indicators of Development
Indicators of development including GNP, GDP, income distribution, etc.
GNI (Gross National Income)
The total money produced by every resident of a given country, both foreign and not foreign
GNP (Gross National Product)
The total value of products created by a given country, within or outside
GDP (Gross Domestic Product)
The total money created within a given country, not outside (things like offshoring don't count towards this)
GNI per Capita
The average amount of money earned per residents of a country, both foreign and not foreign
GDP per Capita
The average amount of money earned per residents of a country (residents must only be in the country, not foreign residents earning money from offshoring or other factors)
Sectoral Structures of an Economy
The employment rates/ percentages of a given country's population in the different sectors of economy (higher primary in developing, quickly rising secondary in industrializing, and higher tertiary in postindustrial)
Income Distribution
A indicator of development, typically measured by the GINI Index, that measures the gap of income between the rich and the poor. Larger gap --> larger number on GINI Index; no gap --> 0 on GINI Index ("rich" and "poor" at 0 will be making the exact same amount of money)
Fertility Rate
The rate of birth, higher *per person* in less developed countries and lower per personper personbirth, higher *per person* in less developed countries and lower *per person* in more developed countries
Infant Mortality Rates
The rate of infant death, usually higher chance/ rate per child in less developed countries and a lower chance/ rate per child in more developed countries, due mainly to access of healthcare
Healthcare (Access)
More developed countries have a higher access to this, while less developed countries have a lower one, causing high infant mortality rate, and lower average life expectancy
Literacy Rates
The ratio of total people in a country to the number of literate people in a country, higher with more developed countries
Gender Equality Index
Women tend to have more rights in more developed countries
Measures of Gender Inequality: Reproductive Health
Women in more developed countries have better reproductive health
Measures of Gender Inequality: Indices of Empowerment
Women tend to have more power in decision making in more developed countries
Measures of Gender Inequality: Labor-Market Participation
Women tend to have more jobs and opportunities in more developed countries
Human Development Index (HDI)
An index measuring development life based on a given country's GNP, life expectancy, mean years of schooling, and expected years of schooling
Physical Quality of Life Index (PQLI)
An index measuring the quality of life in a country based on a given country's infant mortality rate, life expectancy, and (basic) literacy rate
Cycle of Poverty
A cycle describing how less developed countries say less developed:

1. Undeveloped countries have little money (little savings and investment)
2. Because they have no money, they can't buy necessary capital resources (limited capital resources)
3. The products produced are low in quantity and/ or low in quality (low productivity)
4. Little money is made from low quantity/ low quality of products (low per capita GNP)

(Back to step 1)
LCD
Less developed country
NIC
Newly industrialized country
MDC
More developed country
North/ South Split
More developed countries are typically in the north while less developed countries are typically in the south
Fast World
Regions of the world, typically the most developed, that are very connected to the rest of the world because of their technological and transportation advantages
Slow World
Regions of the world, typically the less developed parts, that don't have proper technology or digital infrastructure to transport/ communicate information like the fast world does
First World
The regions of the world, such as US or Japan, that have an advanced postindustrial society with lots of tertiary economic activity
Second World
Communist countries where economy is planned
Third World
The regions of the world, such as Uganda, that are developing or undeveloped with a very low quality of life
Fourth World
Third world countries, such as Haiti, that have experienced a terrible disaster
Transition Economy
An economy moving from a communist (planned) economy to capitalist (free market) economy
Formal Economy
Trade/ buying/ selling recorded by the government or taxed
Informal Economy
Trading, random (untaxed) services (carrying luggage), and other economic interaction not recorded or taxed by the government, more prominent in less developed countries
UN Millennium Development Goals
1. Eradicate Extreme Poverty and Hunger
2. Achieve Universal Primary Education
3. Promote Gender Equality and Empower Women
4. Reduce Child Mortality
5. Improve Maternal Health
6. Combat HIV/ AIDS, malaria and other diseases
7. Ensure environmental sustainability
8. Global Partnership for Development
Microcredit
A lend of a small loan to help start a business
Rowstow's Stages of Economic Growth: Traditional Society (1)
A very simple, undeveloped state of economic growth in which most of the employment is in agriculture. Agriculture produces low yield, usually only enough to feed the producers
Rowstow's Stages of Economic Growth: Transitional Stage/ Preconditions to Takeoff (2)
Jobs start to differ from solely agriculture, infrastructure starts to improve and trading to other countries starts with mainly primary goods
Rowstow's Stages of Economic Growth: Takeoff (3)
Industrialization starts and secondary economic activity raises significantly. More money in cycle starts to create more opportunities to invest into better capital
Rowstow's Stages of Economic Growth: Drive to Maturity (4)
Increased diversification and technological innovation creates a country producing many products, lowering need for imports
Rowstow's Stages of Economic Growth: Mass Consumption (5)
Postindustrial, a country's economy leans toward selling to consumers as tertiary sector activity rises
Liberal Models of Development Similarities
Most liberal models assume that countries will develop in the same way and that economic disasters are short-term/ temporary and are fixed overtime
Liberal Models of Development: Modernization Theory
A liberal model describing that developing countries will grow along a specific path if they are allowed to interact with developed countries, as wealth from developed countries will trickle down
Structural Models of Development: Dependency Theory
A structuralist model describing that MDCs will develop more as dependent citizens of periphery countries move to them. Because the more skilled workers of periphery countries is moving from the periphery countries, the periphery countries become more poor as the richer countries benefit more
Structural Models of Development: Dependency Theory: Backwash
The negative effect (negative to the periphery) of the moving working class from periphery to the more developed countries, as described by the dependency theory
Structural Models of Development: Dependency Theory: Spread Effect
The positive effect (positive to core) of the moving working class from the periphery to the more developed countries, as described by the dependency theory, and partially the spread of wealth back to the periphery from the core
Neoliberal Counterrevolution
A revolution in which people argued that value to the economy comes from business and not the government (a trust in the market, not the government)
Sustainable Development
The act of taking the most from resources to meet economic needs without depleting the resources from future generations
Wallerstien's World System Theory: Core-Periphery Model
An aspect of Wallerstien's Theory describing the interaction of the world's core regions, semi-periphery regions, and periphery regions, describing how the core and periphery can be dependent on each other in different ways
Core
The most developed regions of the world with advanced technology, educated population, usually a postindustrial economy, advanced infrastructure, etc.
Semi-Periphery
The newly industrializing regions of the world with OK technology, a somewhat literate population, moderate infrastructure, etc.
Periphery
The developing regions of the world with little to no technology, lower work force skill and literacy, and a dependence on core countries
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