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different categories that make up the economy
primary production
deal with extraction of natural resources from the earth, agriculture, mining, energy, forestry, and fisheries
secondary production
processing of raw materials from the primary sector; all forms of manufacturing
tertiary production
services; transportation, wholesaling, and retailing of finished goods to consumers
work that doesn't create a tangible good
quaternary production
business services; includes wholesaling, finance, banking, insurance, real estate, advertising, and marketing
quinary production
consumer services; retailing, tourism, entertainment, and communications, government, health, education, utilities
something that is bought and sold; a good or product
processing of making products
commodity chains
links between producers and consumers in the production and distribution of a product
process of obtaining coal or other minerals from the earth
energy extraction
extracting resources from the earth; petroleum (oil)
resource-dependent country
countries that depend on the prices of their resources
part of the ocean where fish and other sea creatures are caught
nonrenewable products
energy sources which cannot be recreated once expended
renewable products
energy sources that can be recreated once expended
alternative energy
hydroelectricity, solar, wind, nuclear, tidal, geothermal power
sustainable use
ability to meet humanities current needs without compromising the ability of future generations to meet their needs
population of organisms existing together in a small, relatively homogeneous area (pond, forest, small island) together with the energy, air, water, soil, and chemicals upon which it depends
value-added processing
additional value of a commodity beyond the cost of commodities used to make it from the previous stage of production
durable goods
goods intended for use of more than a year
non-durable goods
goods intended for use of less than a year
low-benefit services
sectors where the labor force tends to be hourly employees or receive few if any benefits (paid vacation, health insurance); for example, hotel and food services, retail, customer services, contract agricultural labor, construction
high-benefit services
sectors where pay tends to be salaried and includes fringe benefits like health, dental, vision, vacation, sick days, and retirement pay
service firms
classified by the type of activity performed as part of a service
shift away from manufacturing as the main source of economic production
agricultural labor force
number of people who work in agriculture
calorie consumption
percentage of daily requirement, can be important index of development
commodity chain
series of links connecting the many places of production and distribution and resulting in a commodity that is then exchanged on the world market
core-periphery model
describes patterns of distribution of MDCs (clustered near center) and LDCs (near edges) when earth is viewed from North Pole
cultural convergence
change in culture that occurs as diffusion of technology and ideas grows
dependency theory
LDCs tend to have a higher dependency ratio
process of improving material conditions of people by diffusion of knowledge and technology
energy consumption
indicator of development, MDCs tend to use more than LDCs per capita
foreign direct investment
investment in the economics of LDCs by transnational corporations based in MDCs
social, not biological, differences between men and women
Gross Domestic Product, total value of goods and services produced in a year in a country
Gross National Product, total value of all goods and services produced by a country’s economy in a year
Human Developent Index, aggregate index of development that takes into account economic, social, and demographic factors using GDP, literacy and education, and life expectancy
levels of development
undeveloped, developing, developed; based on HIE (healthcare, infrastructure, education specifically of women)
measures of development
used to distinguish LDCs from MDCs, include GDP, literacy rate, life expectancy, caloric intake
economic control that MDCs are sometimes believed to have over LDCs
physical quality of life index
development index based on literacy rate, infant mortality rate, and life expectancy at age 1
Purchasing Power Parity, monetary measurement of development that takes into account what money buys in different countries
Rostow's Stages of Growth model
linear theory of development that developed countries go through a common pattern: 1) Traditional Society 2) Transitional Stage 3) Take Off 4) Drive to Maturity 5) High Mass Consumption
technology gap
difference in technology used and or development in two companies, countries, ethnic group, etc. where one is more advanced than another
technology transfer
process by which existing knowledge, facilities or capabilities developed under federal research and development funding are utilized to fulfill public and private needs
Third World
countries in the developing world who are not politically aligned; misused and outdated term used to describe countries in the developing world
World Systems Theory
theory developed by Immanuel Wallerstein that explains the emergence of a core, periphery, and semi-periphery in terms of economic and political connections first established at the beginning of exploration in the late 15th century and maintained through increased economic access up until the present
acid rain
rain containing acids that form in the atmosphere when industrial gas emissions (especially sulfur dioxide and nitrogen oxides) combine with water
clustering of productive activities and people for mutual advantage
agglomeration economies
economies based on the clustering of productive activities and people
air pollution
the contamination of the atmosphere by the introduction of pollutants from human and natural sources
assembly line production
efficient manufacturing process in which components are added to a product in a sequential manner using optimally planned logistics, resulting in extremely fast production
form of mass production in which each worker is assigned one specific task to perform repeatedly
bid rent theory
the price and demand for real estate changes as the distance towards the central business district increases
break-of-bulk point
a location along a transport route where goods must be transferred from one carrier to another
carrier efficiency
the ratio of output to input for a given carrier
cottage industry
manufacturing based in homes rather than a factory, commonly found before Industrial Revolution
comparative advantage
the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers
complimentary trade
when two regions specifically satisfy each other's needs through exchange of raw materials and or finished goods
cumulative causation
the spiral buildup of advantages that occurs in specific geographic settings as a result of the development of external economies, agglomeration effects, and localization economies
process of industrial deconcentration in response to technological advances and/or increasing costs due to congestion and competition
losing of industrial capability or strength, becoming less industrial
economies of scale
lower production costs because of a larger volume of production
port where goods are imported from other parts of the world, then re-exported for profit to foreign locations
export processing zone
special areas of a country where some normal trade barriers are eliminated and bureaucratic requirements are lowered in hopes of attracting new business and foreign investment
fixed costs
expenses that do not change in proportion to the activity of a business
footloose industry
industry whose location is not strongly influenced by access to materials and/or markets, can operate in a wide range of locations
Four Tigers
newly industrialized countries of the late 20th century: Hong Kong, Singapore, South Korea, and Taiwan
weight-losing industry
industry where the final product weighs more or is higher volume than inputs
weight-gaining industry
industry where the final product weighs less or is lower volume than inputs
growth poles
growth of the economy is not uniform over the entire region. Important to economist growth theories
heartland/rimland theory
Spykman's theory that the domination of the coastal fringes of Eurasia would provide the base for world conquest
Weber's industrial location theory
business profit is maximized by choosing a manufacturing location where production costs are lowest as well as land is cheapest and the distance from the market is the smallest
industrial region
usually region with extremely dense industry and heavily urbanized, based on environmental considerations and the cost effectiveness of the location for the industry
international division of labor
specialized tasks working together to produce a single product more efficiently broken down across international boundaries
least cost theory
states that optimum location of a manufacturing firm is explained in terms of cost minimization
factory built by US companies in Mexico near the US border to take advantage of much lower labor costs in Mexico
multiplier effect
effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent
North American Free Trade Agreement (1994), allows open trade with US, Mexico, and Canada
sending parts of a product out for production to another factory for cost savings
just-in-time delivery
method of inventory management made possible by efficient transportation and communication system, whereby companies keep on hand what they need for near term production, planning that what they need for longer term production will arrive when needed
a stage of economic development in which service activities become relatively more important than goods production
site characteristics
location factors related to the cost of factors of production inside the plant (land/labor/capital)
situation characteristics
location factors related to the transportation of materials into and from a factory
specialized economic zones
regions with economic laws more lax than typical economic laws in a country (free trade zones, export processing zones, etc.)
substitution principal
correct location of a production facility is where the net profit is the greatest; explains the tendency to substitute one factor of production (e.g., labor) for another (e.g., capital for automated equipment) in order to achieve optimum plant location
time-space compression
greatly accelerated movement of goods, information, and ideas during the twentieth century, made possible by technological innovations in transportation and communications
transnational corporation
company that conducts research, operates factories, and sells products in many countries, not just where its headquarters or shareholders are located
multinational corportation
organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management
variable costs
costs that change directly with the amount of production (energy supply and labor costs)
Wallerstein's World Systems Analysis
the global economic system is divided between nations that control wealth and those from which resources are taken. This analysis describes the unequal economic and political relationships in which certain industrialized nations dominate the core of the system
Wallerstein's Dependency Theory
rejects the thought that LDCs are mirror images of what MDCs used to be. Instead of stating that these LDCs can catch up with MDCs, this theory states that they are in another class completely and should stop trying to follow the same path as MDCs followed, and choose a path more suited to their own needs. Also states that MDCs were never in the "primitive" stage that LDCs currently reside in. Wallerstein says that LDCs should reduce their relations to MDCs so that they can fit in better with their classification.
Wallerstein's Core-Periphery Model
states that more developed countries (with the exception of Australia and New Zealand) are the core, and that LDCs are the periphery. When looking at a polar map, this is shown with a circular view, and when looking at a flat map, this is divided by a north-south line.
world cities
cities dominant in the global political economy, not population-based
present or existing everywhere