APHG Unit Six Review

Industrialization and Economic Development

Economic Development

Industrialization: the process evolved from taking basic goods from the earth, and processing them into finished goods Industrial Revolution: began in England in the late 1700s

Economic Development: improving the conditions of people through diffusion of knowledge and technology More Developed Countries (MDCs): Less Developed Countries (LDCs): Newly Industrialized Countries: somewhere in the middle

Compressed modernity: rapid economic and political change that transform a country into a stable nation

Economic Indicators of Development

Gross Domestic Product per Capita: MDC-Higher Types of Jobs: MDC-Tertiary, LDC-Primary Worker Productivity: MDC-More productive

Value Added: subtracting the costs of raw materials and energy from the gross value of the product

Access to Raw Materials: MDC-More access Availability of Consumer Goods: MDC-More Available Social Development: literacy, formal education, and good health

care

Theories of Economic Development

Modernization Model: According to Weber, the cultural environment of Western Europe favored change; tradition is greatest barrier to modernization

Dependency Theory: responsibility for poverty on wealthy nations; Wallerstein Core Countries: rich nations that fuel world’s economy Semi-Periphery Countries: exert more power than

peripheral countries, but are dominated by core countries Periphery Countries: low income countries hindered by

colonization

Rostow’s Model

Economic prosperity is open to all countries• Traditional Stage: build lives around families, communities, and

religion; limited wealth; subsistence farmers• Take-off Stage: countries began experimenting with trade;

industrial revolution; individualism, willingness to take risks, and material goods

• Drive to technological maturity: economic growth is accepted; higher standard of living; economy diversifies; BR declines

• High mass consumption: mass production of goods; luxury goods become necessities; high incomes and more people in tertiary sector

Industrial Revolution

Began in Britain, spread through Europe and Russia, then to the United States

Early factories in Britain were powered by water running downslope James Watt: inventor of the steam engine; water

can be pumped more efficiently; more flexible use of machines

Break-of-bulk: transfer of cargo from one type of carrier to another

Location Theory

Why is what produced where? Variable Costs: energy, labor, and transportation

is less expensive in some areas Friction of Distance: cost of transportation

increases with distance Distance Decay: industries are more likely to

serve markets of nearby places than those far away

Weber’s Least Cost Theory Developed by Weber as an attempt to explain the location of

secondary industries Transportation: site of factory is determined based on

costs of moving raw materials to the factory, and then to the market

Labor: cheap labor may make up for high transportation costs

Agglomeration: if several industries cluster, they can share talents, services, and facilities Deglomeration: occurs when a business moves from a crowded

area

Substitution Principle: business owners can juggle expenses, as long as not all their costs go up at once

Hotelling’s Model Harold Hotelling (1895-1973) was an

economist who built on Weber’s model He wanted to understand locational

interdependence Asked what two ice cream vendors would do

on a beach Said they would begin at opposite ends, and then

gradually end up back-to-back Once there, they would be unlikely to move

Hotelling Interdependence Theory

influence of one firm’s locational decisions by locations chosen by its competitor

Variable Revenue Analysis: the firm’s ability to capture a market that will earn it more customers and money than its competitor

Site

Particular to a geographic location and focus on varying costs of land, labor, and capital

Labor Intensive Industries: an industry heavily dependent on labor like a textile industry

Situation

• In Industrialization, has mostly to do with transportation costs• Bulk-reducing industry: the raw materials are bulkier

and heavier than the finished products; example: copper industry

• Bulk-gaining industry: raw materials weigh less than the finished products; example: canning industry

• Single-market manufacturing: manufacturing clusters near its market

Major Industrial Regions

The distribution of industries around the world are very uneven

Primary Industrial Regions: areas of large agglomeration of industry Western and Central Europe: Ruhr River area of Germany

(proximity to markets, raw materials, and transportation) Eastern North America: Manufacturing Belt extends from

Boston and New York to Philadelphia and Baltimore, and borders Great Lakes

Russia and the Ukraine: Ukraine provides coal; Trans-Siberian Railroad; Ural Mountains

Major Industrial Regions Primary Industrial Regions:

Eastern Asia: Japan: 1st country in East Asia to industrialize; never

colonized Meiji Restoration: campaign for modernization and

colonization Oligarchs: industrial and military leaders; established

colonies Kanto Plain: includes Tokyo and surrounding areas; Tokyo-

forward capital

China: began industrializing under communism Northeast District: industrial heartland in Manchuria; large

deposits of coal and iron

Major Industrial Regions

Primary Industrial Regions: Four Tigers: (South Korea, Taiwan, Hong Kong, and

Singapore) Export-oriented industrialization: directly integrate their

economies into the global market by concentrating on producing goods for export; example: electronics

Pacific Rim: countries that border the Pacific Ocean on their eastern shores

Special Economic Zones: found in China; foreign investment is allowed and capitalistic ventures encouraged

Secondary Industrial Regions

• Lie south of the Primary Industrial Regions• Venezuela, Argentina, Brazil, South Africa, Nigeria,

Ganges River area of India, Malaysia, and southern Australia• Maquiladoras: developed in 1960’s in Mexico, just south of

the US border; goods manufactured for export to the US

• NAFTA: agreement between US, Canada, and Mexico• Pros: promote trade between countries• Cons: Mexico’s standard of living and wages

• India:• Natural Resources: hydroelectric power, iron, and coal• Human Resources: HUGE population becoming more

educated and westernized

Global Inequalities Challenges for MDCs

Trade Blocs: conglomeration of trade among countries within a region North America: NAFTA European Union: European Union East Asia: No formal agreement yet…Four Tigers?

Transnational Corporations: companies that operate in countries other than the ones in which they are headquartered

Conglomerate Corporations: comprised of many small firms that support the overall industry

Deindustrialization: decrease of employment in manufacturing as a share of total employment

Global Inequalities Challenges for LDCs

Distance from markets: invest in transportation facilities like airports

Inadequate infrastructure: lack transportation, communications, schools, and universities

Competition with existing manufacturing in other countries: transnational competition; low-skilled jobs in LDCs, high-skilled jobs in MDCs New international division of labor: keeps global inequalities in

place; discourages new industries, keeps high-skilled jobs in MDCs, and prevents wealth from flowing to LDCs

Industrialization and the Environment

Fossil Fuel Reserves: Proven Reserves: oil reserves that have been found, but

not extracted Potential Reserves: unknown number

Consumption of Fossil Fuels: MDCs have about ¼ of the world’s population, but use ¾

of the world’s fossil fuels China uses the most fuel, followed by the United States

Industrialization and the Environment

Industrial Pollution: increased air, water, and land pollution Global Warming: increase in Earth’s temperature caused

by the burning of fossil fuels Greenhouse Effect: an anticipated warming of the Earth’s

surface that could melt the polar icecaps Acid Rain: forms when sulfur dioxide and nitrogen oxides

are released in the atmosphere by burning fossil fuels Sustainable Development: people living today should not

impair the ability of future generations to meet their needs

Solutions to Environmental Problems

Prevention: Chinese One-Child Policy; Debt-for-Nature Swap

Technological Change: includes recycling of industrial wastes

Mitigation: damage may be undone or reduced once it has occurred

Compensation: political bodies may negotiate compensation for those negatively impacted by industrial waste; ex: Erin Brokovitch