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Industrial Revolution
Beginnings in the 1700s
Location: England
Key Resources: Coal and iron
Technological Advancements:
Bessemer Process: Expedited steel smelting
Steam Engine: Allowed for quicker transportation
Spinning Jenny: Increased textile output in factories
These technological advancements and the industrial revolution went together like peas and carrots.
Diffusion of the Industrial Revolution
Mainland Europe: Spread through rivers and other trade routes.
Japan and the United States: Eventually reached these regions, leading to significant industrial growth.
Industrial Regions in the United States
New England: Initial region of industrialization; later became known as the Rust Belt due to deindustrialization.
Sunbelt: Experienced technological development and a population boom in the 1960s.
Corn Belt: Significant agricultural region.
Impacts of the Industrial Revolution
Agricultural Surplus and Population Boom
Technology and Resources: Led to more efficient farming tools and increased food availability.
Population Growth: Higher food availability led to a population boom.
Urbanization: Surplus in agricultural productivity meant fewer farmers were needed, leading to migration into cities for factory work.
Restructuring of Social Classes
Preindustrial Classes:
Nobility at the top
Clergy in the middle
Farmers and merchants at the bottom
Post-Industrial Revolution:
Nobility and wealthy owners at the top
Increased middle class due to education and new opportunities
Working class (proletariat) working for extremely low wages
Colonialism and Resource Extraction
Thirst for Resources: European countries sought more raw resources due to industrial demands.
Race for Africa: European countries carved out the continent to extract resources such as coal, gold, oil, and diamonds.
Consequences: Led to internal struggles in Africa that continue to affect the continent to this day.
Economic Sectors
Understanding the various economic sectors is crucial for analyzing how economies function and develop. These sectors are typically divided into primary, secondary, tertiary, and quaternary sectors.
Primary Sector
Definition: The primary sector involves the extraction and production of raw materials.
Examples: Agriculture, mining, forestry, fishing.
Importance: Provides the basic materials for goods and services and is foundational for developing economies.
Secondary Sector
Definition: The secondary sector involves the manufacturing and processing of raw materials into finished goods.
Examples: Factories, construction, food processing.
Importance: Adds value to raw materials by transforming them into products, contributing significantly to economic growth.
Tertiary Sector
Definition: The tertiary sector involves the provision of services rather than goods.
Examples: Retail, healthcare, education, banking.
Importance: Supports both the primary and secondary sectors and is crucial for the functioning of the economy.
Quaternary Sector
Definition: The quaternary sector involves knowledge-based activities focused on research and development, technology, and information.
Examples: IT services, research, consultancy.
Importance: Drives innovation and technological advancement, essential for modern economies.
Quinary Sector
Definition: Involves high-level decision-making in the economy and politics.
Examples: CEOs (e.g., Elon Musk), Presidents, Congress members, Governors
Rostow's Model of Development
Rostow's model outlines the stages countries go through as they develop economically. It helps explain how economies grow and transform over time.
1. Traditional Society
Characteristics:
Mostly subsistence agriculture, where people grow food mainly to feed themselves.
Barter trading, meaning goods are exchanged directly without money.
Limited technology and simple societal structures.
2. Precondition for Take-Off
Characteristics:
Job specialization begins, leading to more efficient systems and processes.
Agricultural surplus, meaning there is extra food that can support a growing population.
Development in infrastructure, such as roads and communication networks.
3. Take-Off
Characteristics:
Rapid growth in manufacturing and secondary jobs (like factory work).
Urbanization, as more people move to cities for work in these new industries.
4. Drive to Maturity
Characteristics:
The economy diversifies, moving away from just factories to include more varied industries.
Higher use of technology in all sectors, improving productivity and innovation.
5. High Mass Consumption
Characteristics:
The service sector (jobs like retail, healthcare, education) becomes dominant.
Higher levels of GDP per capita, indicating a wealthier population with more spending power.
Criticisms of Rostow's Model
Colonialism:
The model doesn't consider how colonial history can limit a country's development by stripping it of resources and economic independence.
Carrying Capacity:
It overlooks the limits of natural resources, which could prevent a country from expanding its economy indefinitely.
Dependency Theory:
This theory argues that some countries remain underdeveloped because they are economically dependent on wealthier countries, challenging the idea that all countries can simply progress through Rostow's stages.
World Systems Theory
The World Systems Theory, developed by Immanuel Wallerstein, divides the world into three categories based on levels of development and economic activity:
1. Core
Characteristics:
High consumption and purchasing power.
High levels of education.
Advanced technology and infrastructure.
Dominance in tertiary and quaternary sectors (services, information, and technology).
2. Periphery
Characteristics:
Focus on extracting raw materials.
Low-skilled labor.
Emphasis on primary and secondary sectors (agriculture, mining, and basic manufacturing).
Limited economic development and lower levels of education.
3. Semi-Periphery
Characteristics:
A mix of production and consumption activities.
Mostly industrial in nature.
Transitional economies that are not as developed as the core but more advanced than the periphery.
Example: China, with its strong industrial job sector and growing consumer base.
Dependency Theory
Concept:
Resources flow from the periphery to the core, enriching the core at the expense of the periphery.
This creates a dependency that limits the growth of peripheral countries.
Modern Example:
Neocolonialism, where powerful countries exploit resources from less developed countries, hindering their economic growth.
BRICS:
Countries like Brazil, Russia, India, China, and South Africa are emerging from this system, transitioning from industrial to more service-based economies.
Criticisms of World Systems Theory
Impact of NGOs:
The theory doesn't account for the positive effects of Non-Governmental Organizations, which aid in the development process and can help peripheral countries grow despite systemic limitations.
Oversimplification:
The model may oversimplify the complexities of global economic interactions and development dynamics.
Weber’s Least Cost Model
Weber's Least Cost Model explains the optimal location of industrial and manufacturing plants based on minimizing three main costs: labor, transportation, and agglomeration.
1. Labor
Concept: Factories will be located in regions where labor is available and cheap.
Example:
China: Due to its large population, cheap labor is abundant. Cities like Shenzhen produce 90% of the world’s technology because tech companies capitalize on this cheap labor.
2. Agglomeration
Concept: Similar companies will establish their manufacturing zones near each other to take advantage of shared infrastructure and skilled labor.
Benefits:
Infrastructure: Companies save costs by using existing roads, ports, and train tracks.
Skilled Workforce: Proximity to trained workers who are already experts in the industry.
Example:
Ports: Shipping companies cluster around ports to utilize the established transportation infrastructure without additional costs.
3. Transportation
Concept: The cost of transportation depends on whether the industry is bulk-gaining or bulk-reducing.
Bulk-Gaining Industries: Products increase in volume or weight after manufacturing.
Example: Car Manufacturing
Raw Materials: Steel and other resources.
Finished Product: Car (larger and heavier).
Optimal Location: Close to the consumer to minimize transportation costs of the heavy, finished product.
Bulk-Reducing Industries: Products decrease in volume or weight after manufacturing.
Example: Paper Production
Raw Material: Trees.
Finished Product: Sheets of paper (lighter and smaller).
Optimal Location: Close to the raw materials to process them immediately, reducing transportation costs of the large, raw material.
Measurement of Development
Understanding development involves examining various economic and social indicators. Here are some key measurements:
Economic Indicators
Gross Domestic Product (GDP)
Definition: The total value of all goods and services produced within a country.
Example: Profits from fast-food restaurants like Jollibee (Philippines), Yoshinoya (Japan), and McDonald's (USA) operating within the US contribute to the US GDP.
Gross National Product (GNP)
Definition: The total value of goods and services produced by a country’s nationals, regardless of where they are located.
Example: All profits from McDonald's outlets worldwide are part of the US GNP, as McDonald's is an American company.
Gross National Income (GNI)
Definition: The total value of GDP plus the value of imports and exports, minus the income sent back to other countries.
Example: GNI includes all profits from McDonald's sales within the US, plus the value of imports and exports, minus money sent back to the headquarters of international companies operating in the US.
Social Indicators
Fertility Rate
Definition: The average number of children born to a woman over her lifetime.
Example: More developed countries like Australia have lower fertility rates, while less developed countries like Nigeria have higher fertility rates due to traditional gender roles and lower education levels for women.
Infant Mortality Rate
Definition: The number of infants who die before their first birthday per 1,000 live births.
Example: Developed countries have lower infant mortality rates due to better access to healthcare, while less developed countries have higher rates.
Energy Use
Fossil Fuel Use: Developed countries use more fossil fuels due to their dependency on cars and industrial activities.
Renewable Energy Use: Developed countries also use more renewable energy due to technological advancements.
Example: In less developed countries, fossil fuel use is lower, and reliance on renewable energy is limited due to fewer resources and technological capabilities.
Literacy Rate
Definition: The percentage of people who can read and write.
Example: Higher literacy rates indicate a country’s ability to educate its population. Higher education levels lead to more quaternary (research and development) and quinary (high-level decision-making) jobs, contributing to a higher overall GDP.
Human Development Index (HDI)
Definition: A composite index measuring key dimensions of human development.
Components:
Life Expectancy: The average age a person is expected to live.
GNI per Capita: Average income per person in a country.
Education: The percentage of students attending secondary and post-secondary schools.
Gender Inequality Index (GII)
Definition: Measures development based on women's rights and opportunities.
Components:
Workforce Participation: Percentage of women in the workforce.
Reproductive Health: Access to birth control and maternal care.
Empowerment: Number of government seats held by women.
Gender Gap
Despite progress in many countries, a significant gender gap continues:
Wage Inequality: Women often earn less than men for the same work.
Employment Opportunities: Fewer opportunities for career advancement.
Social Rights: Women's rights correlate with a country's development level.
Traditional Gender Roles: Women confined to roles like caregiving and homemaking have fewer opportunities for personal advancement.
Property Rights: Limited access to land ownership restricts economic opportunities.
Driving Rights: In places like Saudi Arabia, women only gained the right to drive in 2018.
Supporting Women's Development
Microloans
Definition: Small loans provided to women to help them start businesses or further their education.
Example: In the documentary "Living on a Dollar," a woman named Rosa uses a microloan to make blankets and fund her education.
Trade and Development
Complementary Advantages
Definition: Advantages gained by countries through producing goods that complement each other.
Example:
Japan: Produces automobiles (e.g., Honda, Toyota).
Thailand: Major exporter of rubber, used to make tires.
Trade Relationship: Japan and Thailand trade because their products complement each other.
Comparative Advantage
Definition: When a country can produce a good more efficiently than another country due to environmental or other factors.
Example:
Egypt: Produces large amounts of petroleum due to vast oil deposits.
Poland: Produces cattle efficiently due to suitable environmental conditions.
Trade Relationship: Poland trades beef with Egypt in exchange for petroleum.
Additional Example: Egypt trading with India for bananas, as India has a comparative advantage in banana production.
Tariffs
Definition: Taxes imposed by governments on imported goods to protect domestic industries.
Example:
Scenario:
American Car: Costs $20,000.
Japanese Car: Costs $18,000.
Consumer Choice: Likely to choose the cheaper Japanese car.
Government Intervention: The U.S. government adds a $4,000 tariff to the Japanese car, making it $22,000 to encourage buying the American car.
Organizations and Trade
Neoliberal Policies and Free Trade Agreements
Definition: Policies and agreements promoting free trade between countries to reduce or eliminate tariffs and other trade barriers.
Examples:
OPEC: Organization of the Petroleum Exporting Countries; coordinates oil production among member countries.
European Union (EU): Promotes free trade among member countries. EU members benefit from:
Free Trade: Increased likelihood of trading within the EU.
Schengen Area: Allows free travel across borders within the EU without passport checks.
Mercosur: Similar to the EU, located in South America. Promotes the free flow of goods and people among member countries.
World Trade Organization (WTO): Oversees global trade rules to ensure smooth and fair trade practices. However, it does not guarantee tariff-free trade among its members.
Economic Interdependence and Globalization
Benefits:
Enhanced economic growth through trade.
Increased market access for goods and services.
Efficient resource allocation based on comparative and complementary advantages.
Drawbacks:
Interconnected Debt Crises: Economic problems in one country can affect others due to interconnected economies.
Example: The 2008 housing crisis in the US impacted global economies, as seen in the corresponding graph.
Outsourcing and Deindustrialization: Developed nations outsource manufacturing to semi-periphery countries like China and Mexico for cheaper labor and looser environmental regulations.
Impact: Decline in the secondary economic sectors within developed countries, as seen in the decrease of manufacturing work in the US over recent decades.
Special Economic Zones (SEZs)
Definition: Areas in a country where business and trade laws differ from the rest of the country to attract foreign investment and stimulate economic growth.
Examples in China:
Shenzhen
Shantou
Xiamen
Benefits:
Tax exemptions
Relaxed trade regulations
Increased foreign investment
Job creation and economic stimulation
Free Trade Zones (FTZs)
Definition: A type of SEZ where goods can be stored, reconfigured, and re-exported without being subjected to taxes and tariffs.
Function: Acts as a middleman that processes or repackages goods before they reach consumers.
Characteristics:
Located in developing countries to take advantage of lower wages
Attracts foreign investment
Generates income for local workers
Export Processing Zones (EPZs)
Definition: A specific type of SEZ focused on manufacturing exports.
Characteristics:
Attracts foreign investment
Creates jobs
Generates income for citizens
Example:
Maquiladoras in Mexico: These are factories located near the US-Mexico border that assemble products for export to the US.
Location Advantage: Proximity to the US reduces transportation costs and time, benefiting both US corporations and the local Mexican economy.
Fordism and Post-Fordism
Fordism
Origin: Early 1900s
Founder: Henry Ford
Key Characteristics:
Assembly Line System: Each worker is responsible for a specific task, such as attaching wheels or windows.
Massive Inventory: Large quantities of products are kept in stock to ensure they are readily available for purchase.
Efficiency and Standardization: Focus on producing large volumes of standardized products.
Post-Fordism
Contemporary Economic Landscape:
Flexible Production: Parts are produced in various locations around the world.
Just-in-Time Delivery: Goods are produced only as orders come in, minimizing inventory costs.
Customization: Customers can add their own preferences to the products, such as choosing storage sizes and colors for an iPhone.
Reliance on Machines: Increased use of automation and technology in the production process.
Example: iPhone Production
Design: Created in growth poles like Silicon Valley.
Assembly: Put together in China.
Resources: Extracted from various parts of the world.
Sales: Sold to consumers with customizable options.
Economic Concepts
Multiplier Effect: Initial spending in an economy spurs further economic development.
Example: Building a factory creates jobs, which increases local spending, leading to more businesses and services in the area.
Economies of Scale: As companies grow larger, they become more efficient and can extract more profits.
Example: Larger companies can produce goods at a lower cost per unit due to bulk purchasing of materials and more efficient production processes.
Agglomeration and Growth Poles
Agglomeration: The clustering of similar businesses in close proximity to take advantage of shared resources and infrastructure.
Example: Tech companies in Silicon Valley benefit from being close to each other, sharing talent, and innovation.
Growth Poles: Regions where economic activities are concentrated, driving growth in surrounding areas.
Example: Silicon Valley as a high-tech growth pole, attracting investment, talent, and innovation.
Sustainable Development
Environmental Challenges
Resource Depletion: Overuse of natural resources leading to scarcity.
Pollution and Trash: Increased industrial and consumer waste affecting air, water, and soil quality.
Unsustainable Mass Consumption: High consumption rates leading to waste and environmental degradation.
Global Warming: Rising global temperatures due to greenhouse gas emissions from industries and transportation.
Ecotourism
Concept: Promotes tourism and hospitality while being environmentally friendly.
Benefits:
Creates jobs in tourism and hospitality.
Preserves wildlife and ecosystems.
Less invasive to natural habitats.
Example: Ecotourism spot in Thailand.
Preservation: Trees are not cut down, and beaches are not artificially carved out.
Wildlife: Natural habitats are maintained, allowing wildlife to thrive.
United Nations Sustainable Development Goals (SDGs)
Focus Areas:
Eradicating Hunger: Ensuring food security and improved nutrition.
Maintaining Good Health: Promoting well-being for all ages.
Achieving Gender Equality: Supporting women and girls.
Responsible Consumption: Encouraging sustainable production and consumption patterns.
Protecting Life on Earth: Safeguarding ecosystems, biodiversity, and natural habitats.
Goals:
Protect the planet.
End poverty.
Promote peace and justice.
Target Year: 2030
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