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Economic Geography

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Title: Economic Geography


1
Economic Geography
  • Money-making activities

2
Primary activities
  • Any activity where a natural resource (raw
    material) is used directly for profit.
  • Farming
  • Fishing
  • Mining
  • Logging

3
Secondary activities
  • When raw materials are taken to produce or
    manufacture a product.
  • Iron and Coal (extracted primary) produces
    Steel
  • Steel produces thousands of parts for machinery
    of all kinds. (automobiles)
  • Cotton is harvested (primary)
  • Taken to a factory and made into clothes.
    (textiles)

4
Tertiary (Service) activities
  • Anything that provides a product or service to
    the public.
  • Largest sector of an MDC country today.
  • Banking, education, medicine, retail or wholesale
    sales, food service, military, insurance,
    entertainment, transportation, tourism

5
Quaternary Sector
  • Processing and distribution of primarily
    technical information.
  • Engineering
  • Research and development
  • Information technology
  • Software
  • Web design
  • Support

6
Quinary Sector
  • Decision makers
  • CEOs
  • CFOs
  • Conglomerates
  • Highest levels of State
  • These people will directly impact the markets and
    therefore the economies from local to global
    scale.

7
So Whos Rich and Whos Poor?
  • https//youtu.be/9-4V3HR696k

8
Economic Systems
  • There are 3 primary types of Economic Systems.
  • Traditional or Subsistence
  • Market or Demand System
  • Command System
  • Like activities, these systems can be found in
    many places throughout the world.

9
Traditional
  • Generally associated with subsistence
    agriculture.
  • Subsistence-producing only enough for you and
    your family at a survival level.
  • Almost exclusively involved in Primary economic
    activities.
  • LDCs of sub-Saharan Africa, parts of South Asia,
    parts of Latin America.

10
Market or Demand System
  • Guided by the principle of free enterprise.
  • People are free to decide on what they will
    produce, sell, and buy.
  • Competition is encouraged by supply and demand
    principles.
  • Capitalism A system based on private ownership
    of property, businesses, and resources with
    little government interference.

11
Command System
  • A system where the government makes most, if not
    all decisions in regards to ownership,
    production, and distribution.
  • Communism version requires all property to be
    re-distributed by the government after commanding
    what, when, and how much can be produced.
  • Socialism involves governments controlling,
    owning or operating certain businesses within a
    country.

12
Mixed Economies
  • An economic system that includes a mixture of
    capitalism and socialism. This type of economic
    system includes a combination of private economic
    freedom and centralized economic planning and
    government regulation.
  • MOST COUNTRIES ECONOMIES FALL INTO THIS CATEGORY
    TODAY.
  • http//www.youtube.com/watch?v1efDli000Cw

13
Measuring Economic Development
  • GNP (Gross National Product) is the total value
    of goods and services that a country produces in
    a year, including all foreign investment.
  • GDP (Gross Domestic Product) includes only those
    good and services produced within the country.
  • GNI (Gross National Income) is the dollar value
    of all goods and services, plus the dollar value
    of EXPORTS minus IMPORTS.

14
Measuring Economic Development
  • Gross National Income (GNI) then is
  • GOODS SERVICES (EXPORTS IMPORTS)
  • Per Capita Calculations
  • GDP per capita
  • (GOODS SERVICES) divided by POPULATION
  • GNP per capita
  • (GOODS SERVICES) (EXPORTS IMPORTS) divided
    by POPULATION

15
Purchasing Power Parity
  • (GNI PPP) is an estimate that takes into account
    differences in prices between countries.
  • If in a poor country, the cost of goods can be
    cheap, and can actually raise their true GNI PPP.
    In other words, they can get more for their
    money.
  • Example
  • Chinas PC-GNI is 6,560 approximately
  • Chinas GNI PPP is about 12,880

16
Forms of Government
  • http//www.youtube.com/watch?vklm6yZxDmJc

17
Big Mac Index
18
Gini coefficient
  • This measures the level of income disparity
    between the countrys richest and poorest
    population groups on a scale of 0 100. High
    number means a wider gap between rich and poor.
  • Examples
  • China 37
  • South Africa 65
  • U.S. 41
  • Venezuela - 45
  • Colombia 54
  • http//databank.worldbank.org/data/views/reports/m
    etadataview.aspx

19
Human Development Index
  • A quality of life index developed by the UN based
    on
  • Life expectancy at birth (demographic)
  • Literacy rate (social)
  • Years of education (social)
  • Per capita GDP (economic)
  • HDI 0 1.0
  • Norway 0.944 (1st)
  • U.S. 0.914 (5th)
  • Russia 0.778 (57th)
  • India 0.586 (135th)
  • D.R. Congo 0.338 (186th)

20
Real World Examples
  • Qatar, United States, Japan, Germany
  • MDCs
  • Free Market System
  • Per Capita GDP - PPP
  • Qatar - 143,427 1
  • U.S. - 54,957 10
  • Germany - 45,888 18
  • Japan - 37,390 28
  • PRE-DOMINANTLY TERTIARY AND SECONDARY ACTIVITIES

21
Real World Examples
  • Brazil Russia, India, China, South Africa (BRICS)
  • Developing Countries (very uneven)
  • Now referred to as NICs
  • Socialists (mixed economies)
  • GDP - PPP
  • Brazil - 16,096 74
  • Russia - 24,805 49
  • China - 12,880 89
  • India - 5,855 125
  • South Africa - 13,046 87
  • MIXED SECONDARY AND AGRICULTURAL PRE-DOMINANTLY,
    AND INCREASING TERTIARY

22
Real World Examples
  • Haiti, Congo, Somalia
  • LDCs
  • Command-Traditional
  • Per Capita GDPs
  • Haiti - 1,100
  • Afghanistan - 950
  • Congo - 350
  • SUBSISTENCE IN AFRICAN COUNTRIES

23
Measuring Social Development
  • Education and Literacy
  • Health and Welfare
  • MDCs vs. LDCs
  • What infrastructure is necessary to insure social
    development and a higher quality of life?

24
Demographic Factors
  • Life Expectancy
  • Infant Mortality Rates
  • Total Fertility Rates
  • Natural Increase Rates
  • Crude birth and death rates

25
Rostows Development ModelWalt Rostow developed
this approach in the 1950s to examine what is
necessary for full development to take place
within any given country.
26
Rostows Modernization Model
  • Traditional Society
  • Pre-conditions for takeoff
  • The takeoff
  • Drive to maturity
  • Age of mass consumption

27
Stage 1
  • Traditional Society - Rostow uses this term to
    define a country that has not yet started a
    process of development. A traditional society
    contains a very high percentage of people engaged
    in agriculture and a high percentage of national
    wealth allocated to what Rostow calls "non
    productive" activities, such as the military and
    religion.

28
Stage 2
  • Preconditions for Take-Off - According to
    Rostow, the process of development begins when an
    elite group initiates innovative economic
    activities. Under the influence of these
    well-educated leaders, the country starts to
    invest in new technology and infrastructure, such
    as water supplies and transportation systems.
    These projects will ultimately stimulate an
    increase in productivity.

29
Stage 3
  • Take-Off - Rapid growth is generated in a limited
    number of economic activities, such as textiles
    or food products. These few take-off industries
    achieve technical advances and become productive,
    while other sectors of the economy remain
    dominated by traditional practices.

30
Stage 4
  • Drive to Maturity - Modern technology, previously
    confined to a few take-off industries, diffuses
    to a wide variety of industries, which then
    experience rapid growth comparable to the
    take-off industry. Workers become more skilled
    and specialized.

31
Stage 5
  • Age of Mass Consumption - The economy shifts from
    production of heavy industry, such as steel and
    energy, to consumer goods, like motor vehicles
    and electronic products

32
International Trade Approach
  • The Persian Gulf states
  • Saudi Arabia
  • U.A.E.
  • Qatar
  • Kuwait
  • Bahrain
  • Focus was on natural capital (oil) as a means to
    economic prosperity and development.
  • This began in earnest in the 1970s.

33
Geographic situation
  • Dependency Theory
  • Political and economic relationships often based
    on colonialism limits the economic development of
    poorer countries.
  • World-Systems Theory
  • Wallersteins theory
  • Core, semi-periphery, periphery relationships
  • Would imply that the world cannot be flat

34
International Trade Approach
  • The original Asian Tigers
  • South Korea
  • Singapore
  • Taiwan
  • Hong Kong
  • The focus was on human capital building a
    manufacturing base.
  • Japan was the original Asian Miracle
  • New to the game Malaysia, Vietnam, and of course
    CHINA.

35
International Trade Approach
  • Chinas Market Socialist model
  • Central planned economy
  • Gradual approach starting with Special Economic
    Zones (SEZs)
  • Joint partnerships have led to direct foreign
    investment.
  • Government backed, slow privatization

36
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37
Shenzhen, China
38
Paths to Development
  • Indias Self-Sufficiency Model
  • Nehru chose a path that focused on internal
    development without outside interference.
  • It was based on isolation an a system of high
    tariffs and quotas.
  • Discouraged exports and instead focused on
    producing for internal consumption.

39
Paths to Development
  • Indias Self-Sufficiency Model
  • Government controlled prices created monopolies
    and this led to inefficiency.
  • A complex bureaucracy led to a reduction in
    entrepreneurship.
  • Since the early 1990s open market reforms have
    led to rapid increase in development.

40
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41
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42
World Trade Organization
  • WTO works to reduce barriers to international
    trade.
  • Reducing tariffs, quotas and general restrictions
  • Enforcing agreements and laws
  • China entered the WTO in 2001
  • Governments sometimes use subsidies and corporate
    interest to dominate markets.
  • Some are also concerned about the impact of
    losing sovereignty and outsourcing.

43
Loan Issues
  • LDCs must borrow often from the IMF or World
    Bank.
  • Focus on building infrastructure which should
    lead to further development is often
    unsuccessful.
  • Profits are often times insufficient to provide
    wealth to the nation as it must use its profits
    to repay its loans.
  • Leads to arguments over Fair Trade

44
NGOs Non-governmental organizations
  • Not ran by a state or economic alliance
  • Doing the work that governments cant or wont
    do.
  • The Economist refers to at as a parallel state
  • Medecins san frontier
  • Red Cross
  • Charities, Churches, and volunteer organizations

45
  • Microcredit
  • Popular for of economic empowerment
  • Loans to poor people, especially women
  • Started in Bangladesh
  • Muhammad Yunus (Grameen Bank)
  • Ways to help
  • www.grameen-info.org
  • www.grameenfoundation.org
  • www.grameenamerica.org
  • www.kiva.org
  • www.msf.org
  • www.heifer.org
  • www.redcross.org
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