Economic GeographyEconomic Geography

Money-making Money-making activitiesactivities

Primary activitiesPrimary activities Any activity where a natural Any activity where a natural

resource (raw material) is resource (raw material) is used directly for profit.used directly for profit.FarmingFarmingFishingFishingMiningMiningLoggingLogging

Secondary activitiesSecondary activities When raw materials are taken to When raw materials are taken to

produce or manufacture a product.produce or manufacture a product. Iron and Coal (extracted – primary) Iron and Coal (extracted – primary)

produces Steelproduces Steel Steel produces thousands of parts for Steel produces thousands of parts for

machinery of all kinds. (automobiles)machinery of all kinds. (automobiles) Cotton is harvested (primary)Cotton is harvested (primary) Taken to a factory and made into Taken to a factory and made into

clothes. (textiles)clothes. (textiles)

Tertiary (Service) activitiesTertiary (Service) activities Anything that provides a product or Anything that provides a product or

service to the public.service to the public. Largest sector of an MDC country Largest sector of an MDC country

today.today. Banking, education, medicine, retail Banking, education, medicine, retail

or wholesale sales, food service, or wholesale sales, food service, military, insurance, entertainment, military, insurance, entertainment, transportation, tourismtransportation, tourism

Quaternary SectorQuaternary Sector Processing and distribution of Processing and distribution of

primarily technical information.primarily technical information. EngineeringEngineering Research and developmentResearch and development Information technologyInformation technology

SoftwareSoftwareWeb designWeb designSupportSupport

Quinary SectorQuinary Sector Decision makersDecision makers

CEO’sCEO’s CFO’sCFO’s ConglomeratesConglomerates Highest levels of StateHighest levels of State

These people will directly impact These people will directly impact the markets and therefore the the markets and therefore the economies from local to global economies from local to global

scale.scale.

So Who’s Rich and Who’s Poor?So Who’s Rich and Who’s Poor? https://youtu.be/9-4V3HR696khttps://youtu.be/9-4V3HR696k

Economic SystemsEconomic Systems There are 3 primary types of There are 3 primary types of

Economic Systems.Economic Systems. Traditional or SubsistenceTraditional or Subsistence Market or Demand SystemMarket or Demand System Command SystemCommand System

Like activities, these systems can be Like activities, these systems can be found in many places throughout the found in many places throughout the world.world.

TraditionalTraditional Generally associated with Generally associated with

subsistencesubsistence agriculture. agriculture. Subsistence-producing only enough Subsistence-producing only enough

for you and your family at a survival for you and your family at a survival level.level.

Almost exclusively involved in Almost exclusively involved in Primary economic activities.Primary economic activities.

LDC’s of sub-Saharan Africa, parts of LDC’s of sub-Saharan Africa, parts of South Asia, parts of Latin America.South Asia, parts of Latin America.

Market or Demand SystemMarket or Demand System Guided by the principle of free Guided by the principle of free

enterprise.enterprise. People are People are free to decidefree to decide on what they on what they

will produce, sell, and buy.will produce, sell, and buy. Competition is encouraged by supply Competition is encouraged by supply

and demand principles.and demand principles. Capitalism – A system based on private Capitalism – A system based on private

ownership of property, businesses, and ownership of property, businesses, and resources with little government resources with little government interference.interference.

Command SystemCommand System A system where the government makes A system where the government makes

most, if not all decisions in regards to most, if not all decisions in regards to ownership, production, and distribution.ownership, production, and distribution.

CommunismCommunism version requires all version requires all property to be re-distributed by the property to be re-distributed by the government after commanding what, government after commanding what, when, and how much can be produced.when, and how much can be produced.

SocialismSocialism involves governments involves governments controlling, owning or operating certain controlling, owning or operating certain businesses within a country.businesses within a country.

Mixed EconomiesMixed Economies An economic system that includes a An economic system that includes a

mixture of mixture of capitalismcapitalism and and socialism. socialism. This type of economic system includes This type of economic system includes a combination of private economic a combination of private economic freedom and centralized economic freedom and centralized economic planning and government regulation.planning and government regulation.

MOST COUNTRIES ECONOMIES FALL MOST COUNTRIES ECONOMIES FALL INTO THIS CATEGORY TODAY.INTO THIS CATEGORY TODAY.

http://www.youtube.com/watch?http://www.youtube.com/watch?v=1efDli000Cwv=1efDli000Cw

Measuring Economic DevelopmentMeasuring Economic Development GNPGNP (Gross (Gross NationalNational Product) is the Product) is the

total value of goods and services that total value of goods and services that a country produces in a year, a country produces in a year, including all foreign investment.including all foreign investment.

GDPGDP (Gross (Gross DomesticDomestic Product) Product) includes only those good and services includes only those good and services produced within the country.produced within the country.

GNI GNI (Gross National Income) is the (Gross National Income) is the dollar value of all goods and services, dollar value of all goods and services, plus the dollar value of plus the dollar value of EXPORTS EXPORTS minus IMPORTS.minus IMPORTS.

Measuring Economic DevelopmentMeasuring Economic Development

Gross National Income (GNI) then is Gross National Income (GNI) then is GOODS + SERVICES + (EXPORTS – IMPORTS)GOODS + SERVICES + (EXPORTS – IMPORTS)

Per Capita CalculationsPer Capita CalculationsGDP GDP per capitaper capita::(GOODS + SERVICES) divided by POPULATION(GOODS + SERVICES) divided by POPULATIONGNP GNP per capita:per capita:(GOODS + SERVICES) + (EXPORTS – IMPORTS) (GOODS + SERVICES) + (EXPORTS – IMPORTS)

divided by POPULATIONdivided by POPULATION

Purchasing Power ParityPurchasing Power Parity (GNI PPP)(GNI PPP) is an estimate that takes is an estimate that takes

into account differences in prices into account differences in prices between countries.between countries.

If in a poor country, the cost of goods If in a poor country, the cost of goods can be cheap, and can actually raise can be cheap, and can actually raise their true GNI PPP. their true GNI PPP. In other words, they In other words, they can get more for their money.can get more for their money.

Example:Example:China’sChina’s PC-GNI is $6,560 approximately PC-GNI is $6,560 approximatelyChina’sChina’s GNI PPP is about GNI PPP is about $12,880$12,880

Forms of GovernmentForms of Government http://www.youtube.com/watch?v=klm6yZxDmJchttp://www.youtube.com/watch?v=klm6yZxDmJc

Big Mac IndexBig Mac Index

Gini coefficientGini coefficient This measures the level of income This measures the level of income

disparity between the country’s richest disparity between the country’s richest and poorest population groups on a and poorest population groups on a scale of 0 – 100. scale of 0 – 100. High number means a High number means a wider gap between rich and poor.wider gap between rich and poor.

Examples:Examples: China – 37China – 37 South Africa – 65South Africa – 65 U.S. – 41U.S. – 41 Venezuela - 45Venezuela - 45 Colombia – 54Colombia – 54 http://databank.worldbank.org/data/views/reports/metadataview.aspxhttp://databank.worldbank.org/data/views/reports/metadataview.aspx

Human Development IndexHuman Development Index A quality of life index developed by A quality of life index developed by

the UN based on:the UN based on: Life expectancy at birth (demographic)Life expectancy at birth (demographic) Literacy rate (social)Literacy rate (social) Years of education (social)Years of education (social) Per capita GDP (economic)Per capita GDP (economic) HDI 0 – 1.0HDI 0 – 1.0

Norway 0.944 (1Norway 0.944 (1stst)) U.S. 0.914 (5U.S. 0.914 (5thth)) Russia 0.778 (57Russia 0.778 (57thth)) India 0.586 (135India 0.586 (135thth)) D.R. Congo 0.338 (186D.R. Congo 0.338 (186thth))

Real World Examples:Real World Examples: Qatar, Qatar, United States,United States, Japan, Japan, GermanyGermany

MDC’sMDC’s Free Market SystemFree Market System Per Capita GDP - PPP:Per Capita GDP - PPP:

Qatar - $143,427 #1Qatar - $143,427 #1U.S.U.S. - $ - $54,957 #10GermanyGermany - $ - $45,888 #18 JapanJapan - $ - $37,390 #28PRE-DOMINANTLY PRE-DOMINANTLY TERTIARYTERTIARY AND AND SECONDARY ACTIVITIESSECONDARY ACTIVITIES

Real World Examples:Real World Examples: BrazilBrazil Russia, Russia, India, India, China, China, South Africa South Africa

((BBRRIICCSS)) Developing Countries (very uneven)Developing Countries (very uneven) Now referred to as Now referred to as NIC’sNIC’s Socialists (mixed economies)Socialists (mixed economies) GDP - PPP:GDP - PPP:

BrazilBrazil - $16,096 #74 - $16,096 #74 RussiaRussia - $24,805 #49 - $24,805 #49 China - $12,880 #89China - $12,880 #89 IndiaIndia - $5,855 #125 - $5,855 #125 South Africa South Africa - $13,046 #87- $13,046 #87 MIXED SECONDARY AND AGRICULTURAL PRE-MIXED SECONDARY AND AGRICULTURAL PRE-

DOMINANTLY, AND INCREASING TERTIARYDOMINANTLY, AND INCREASING TERTIARY

Real World Examples:Real World Examples: Haiti, Haiti, Congo,Congo, SomaliaSomalia

LDC’sLDC’s Command-TraditionalCommand-Traditional Per Capita GDP’s:Per Capita GDP’s:

HaitiHaiti - $1,100- $1,100Afghanistan - $950Afghanistan - $950Congo - $350Congo - $350SUBSISTENCE IN AFRICAN SUBSISTENCE IN AFRICAN COUNTRIESCOUNTRIES

Measuring Social DevelopmentMeasuring Social Development Education and LiteracyEducation and Literacy Health and WelfareHealth and Welfare

MDC’sMDC’s vs. vs. LDC’sLDC’s What infrastructure is What infrastructure is

necessary to insure social necessary to insure social development and a higher development and a higher quality of life?quality of life?

Demographic FactorsDemographic Factors Life ExpectancyLife Expectancy Infant Mortality RatesInfant Mortality Rates Total Fertility RatesTotal Fertility Rates Natural Increase RatesNatural Increase Rates

Crude birth and death ratesCrude birth and death rates

Rostow’s Development ModelRostow’s Development Model

Walt Rostow developed this Walt Rostow developed this approach in the 1950’s to approach in the 1950’s to

examine what is necessary for examine what is necessary for full development to take place full development to take place

within any given country.within any given country.

Rostow’s Modernization ModelRostow’s Modernization Model

Traditional SocietyTraditional Society Pre-conditions for takeoffPre-conditions for takeoff The takeoffThe takeoff Drive to maturityDrive to maturity Age of mass consumptionAge of mass consumption

Stage 1Stage 1 Traditional SocietyTraditional Society - Rostow uses this - Rostow uses this

term to define a country that has not yet term to define a country that has not yet started a process of development. A started a process of development. A traditional society contains a very high traditional society contains a very high percentage of people engaged in percentage of people engaged in agriculture and a high percentage of agriculture and a high percentage of national wealth allocated to what Rostow national wealth allocated to what Rostow calls "non productive" activities, such as calls "non productive" activities, such as the military and religion.the military and religion.

Stage 2Stage 2 Preconditions for Take-OffPreconditions for Take-Off - According to - According to

Rostow, the process of development begins Rostow, the process of development begins when an elite group initiates innovative when an elite group initiates innovative economic activities. Under the influence of economic activities. Under the influence of these well-educated leaders, the country these well-educated leaders, the country starts to invest in new technology and starts to invest in new technology and infrastructure, such as water supplies and infrastructure, such as water supplies and transportation systems. These projects will transportation systems. These projects will ultimately stimulate an increase in ultimately stimulate an increase in productivity.productivity.

Stage 3Stage 3 Take-OffTake-Off - Rapid growth is generated - Rapid growth is generated

in a limited number of economic in a limited number of economic activities, such as textiles or food activities, such as textiles or food products. These few take-off products. These few take-off industries achieve technical advances industries achieve technical advances and become productive, while other and become productive, while other sectors of the economy remain sectors of the economy remain dominated by traditional practices.dominated by traditional practices.

Stage 4Stage 4 Drive to MaturityDrive to Maturity - Modern - Modern

technology, previously confined to a technology, previously confined to a few take-off industries, diffuses to a few take-off industries, diffuses to a wide variety of industries, which then wide variety of industries, which then experience rapid growth comparable experience rapid growth comparable to the take-off industry. Workers to the take-off industry. Workers become more skilled and specialized.become more skilled and specialized.

Stage 5Stage 5 Age of Mass ConsumptionAge of Mass Consumption - The - The

economy shifts from production of economy shifts from production of heavy industry, such as steel and heavy industry, such as steel and energy, to consumer goods, like energy, to consumer goods, like motor vehicles and electronic motor vehicles and electronic productsproducts

International Trade ApproachInternational Trade Approach The Persian Gulf statesThe Persian Gulf states

Saudi ArabiaSaudi Arabia U.A.E.U.A.E. QatarQatar KuwaitKuwait BahrainBahrain

Focus was on Focus was on natural capital (oil)natural capital (oil) as as a means to economic prosperity and a means to economic prosperity and development.development.

This began in earnest in the 1970’s.This began in earnest in the 1970’s.

Geographic “situation”Geographic “situation” Dependency TheoryDependency Theory

Political and economic relationships often Political and economic relationships often based on colonialism limits the economic based on colonialism limits the economic development of poorer countries.development of poorer countries.

World-Systems TheoryWorld-Systems Theory Wallerstein’s theoryWallerstein’s theory Core, semi-periphery, periphery Core, semi-periphery, periphery

relationshipsrelationships Would imply that the world cannot be Would imply that the world cannot be

“flat”“flat”

International Trade ApproachInternational Trade Approach The original Asian TigersThe original Asian Tigers

South KoreaSouth Korea SingaporeSingapore TaiwanTaiwan Hong KongHong Kong

The focus was on The focus was on human capitalhuman capital building a manufacturing base.building a manufacturing base.

Japan Japan was the originalwas the original “Asian Miracle” “Asian Miracle” New to the game:New to the game: Malaysia, Vietnam, Malaysia, Vietnam,

and of course CHINA.and of course CHINA.

International Trade ApproachInternational Trade Approach China’s Market Socialist modelChina’s Market Socialist model Central planned economyCentral planned economy Gradual approach starting with Gradual approach starting with

Special Economic Zones (SEZ’s)Special Economic Zones (SEZ’s) Joint partnerships have led to Joint partnerships have led to

direct foreign investment.direct foreign investment. Government backed, slow Government backed, slow

privatizationprivatization

Shenzhen, ChinaShenzhen, China

Paths to DevelopmentPaths to Development India’s Self-Sufficiency ModelIndia’s Self-Sufficiency Model Nehru chose a path that focused Nehru chose a path that focused

on internal development without on internal development without outside interference.outside interference.

It was based on isolation an a It was based on isolation an a system of high tariffs and quotas.system of high tariffs and quotas.

Discouraged exports and instead Discouraged exports and instead focused on producing for internal focused on producing for internal consumption.consumption.

Paths to DevelopmentPaths to Development India’s Self-Sufficiency ModelIndia’s Self-Sufficiency Model Government controlled prices Government controlled prices

created monopolies and this led created monopolies and this led to inefficiency.to inefficiency.

A complex bureaucracy led to a A complex bureaucracy led to a reduction in entrepreneurship. reduction in entrepreneurship.

Since the early 1990’s open Since the early 1990’s open market reforms have led to rapid market reforms have led to rapid increase in development.increase in development.

World Trade OrganizationWorld Trade Organization WTO works to reduce barriers to WTO works to reduce barriers to

international trade.international trade. Reducing tariffs, quotas and general Reducing tariffs, quotas and general

restrictionsrestrictions Enforcing agreements and lawsEnforcing agreements and laws China entered the WTO in 2001China entered the WTO in 2001 Governments sometimes use subsidies Governments sometimes use subsidies

and corporate interest to dominate and corporate interest to dominate markets.markets.

Some are also concerned about the Some are also concerned about the impact of losing sovereignty and impact of losing sovereignty and outsourcing.outsourcing.

Loan IssuesLoan Issues LDC’s must borrow often from the IMF LDC’s must borrow often from the IMF

or World Bank.or World Bank. Focus on building infrastructure which Focus on building infrastructure which

should lead to further development is should lead to further development is often unsuccessful.often unsuccessful.

Profits are often times insufficient to Profits are often times insufficient to provide wealth to the nation as it must provide wealth to the nation as it must use it’s profits to repay its loans.use it’s profits to repay its loans.

Leads to arguments over Fair TradeLeads to arguments over Fair Trade

NGO’s – NGO’s – Non-governmental organizationsNon-governmental organizations Not ran by a state or economic allianceNot ran by a state or economic alliance Doing the work that governments can’t Doing the work that governments can’t

or won’t do.or won’t do. The Economist The Economist refers to at as a refers to at as a

“parallel state”“parallel state” Medecins san frontierMedecins san frontier Red CrossRed Cross Charities, Churches, and volunteer Charities, Churches, and volunteer

organizationsorganizations

MicrocreditMicrocredit Popular for of economic empowermentPopular for of economic empowerment Loans to poor people, especially womenLoans to poor people, especially women Started in BangladeshStarted in Bangladesh Muhammad Yunus (Grameen Bank)Muhammad Yunus (Grameen Bank)

Ways to help:Ways to help: www.grameen-info.orgwww.grameen-info.org www.grameenfoundation.orgwww.grameenfoundation.org www.grameenamerica.orgwww.grameenamerica.org www.kiva.orgwww.kiva.org www.msf.orgwww.msf.org www.heifer.orgwww.heifer.org www.redcross.orgwww.redcross.org