DEVELOPMENT

NOTECARDS

PAGES 274 - 302

Absolute Advantage

DEF – Natural advantage.

EX – Saudi Arabia has a natural advantage over most countries in petroleum production.

South Africa - Diamonds

Agglomeration EconomiesDEF - Economy in which like things are put together to their benefit all businesses. But bringing all people to one area increases congestion.

EX – Tech Center?

The entertainment industry in in Los Angeles / Hollywood.

Silicon Valley – computer and software industry.

NYC – finance activities.

Hartford, CT – insurance related industry.

Basic IndustriesDEF - Industries that sell their products or services primarily to consumers outside the settlement. A focal point of the economy for a city.

Pittsburgh – Steel

Detroit – automobiles

Minneapolis – was the milling industry.

Non basic - Industries that sell their products primarily to consumers in the community. EX – diners / convenience stores

Brandt LineDEF - An imaginary line separating the MDCs in the Northern Hemisphere from the LDCs in the Southern Hemisphere.

Comparative AdvantageDEF - the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than other producers.

Regions should produce goods for which they have the greatest relative advantage over other areas.

EX – Egypt has a comparative advantage in cotton production over the US.

Core - PeripheryDEF - Core countries have high levels of development, a capacity at innovation and a convergence of trade flows. Periphery countries usually have less development and are poorer countries.

Ex - The USA is a core country, while Northern Sudan is a periphery country.

Dependency TheoryDEF – Development school of thought that advocates they dynamic between highly developed and developing countries, permanently keeps LDCs at an economic disadvantage.

Conflict; as developing countries make economic advancement, they are dependent on the core countries in an intertwined global economy. Most will never achieve first world status. The MNC(TNC) exploits local workers to maximize profits and forces out local companies. Workers in developing countries serve as cheap labor pool.

EX – El Salvador has gone through a process of dollarization, through which the country’s currency, the colon, was abandoned in favor of the dollar. For the people of El Salvador, dollarization made sense because the economies were tied long before dollarization occurred. When the Federal Reserve Board in the US controls the supply of dollars by altering the interest rates, the ramifications are felt directly in El Salvador.

Economic DevelopmentDEF - The increase in the standard of living in a nation's population with sustained growth.

EX - China is at a lower stage of economic development compared to Italy.

Economic IndicatorsDEF - A piece of economic data, usually of macroeconomic scale, that is used by investors to interpret current or future investment possibilities and judge the overall health of an economy.

EX - GDP-Gross Domestic Product

Gross National IncomeDEF - The country's GDP, plus the income earned from the country's investments in other countries.

EX - LDCs tend to have smaller GNIs (smaller economies, less worldwide expansion) than MDCs (bigger economies, more worldwide expansion).

GROSS NATIONAL PRODUCT

DEF – This value of the total output of goods and services produced in a country in a given time period (normally 1 year.)

EX -

Import SubstitutionDEF - government policy of encouraging local manufacturers to produce goods that would replace imports

EX – India encouraging the building of the Tata Nano car to avoid importing foreign cars.

Market OrientationDEF - The tendency of an economic activity to locate close to its market; a reflection of large and variable distribution costs.

The preference for market locations by industry because the freight rates on raw material assembly are usually less than the freight rates on product distribution due to the nature of the freight rate structure in the United States.

EX - Occurs when a product is more costly to transport than raw materials (e.g., beverages, glass bottling near breweries like Budweiser.)

Micro Loans

DEF - The practice of loaning people in poverty small amounts of money, in order for the destitute people to start their own small business and earn a living.

EX - Grameen Bank

Neo-colonialismDEF - Control by a powerful country of its former colonies (or other less developed countries) by economic pressures.

Ex: To some degree, the Commonwealth of Nations countries are being economically pressured to cooperate with the UK.

Quaternary SectorDEF - Service sector industries concerned with the collection, processing, and manipulation of information and capital.

EX - include finance, administration, insurance, and legal services.

Quinary SectorDEF - Service sector industries that require a high level of specialized knowledge or technical skill. Examples include scientific research and high-level management.

Raw Material OrientationDEF - The location of the manufacturing plant in relation to the source of raw materials. While most industries would prefer to locate near their markers in order to save the recurring costs of transportation, some industries - especially those that involve a loss of weight, bulk, or perishability in the process of manufacturing - might prefer to locate near their source of raw materials since their material index is much greater than 1.0.

Tendency for industry to locate near its source of raw material in order to save transport costs.

Usually occurs when raw materials lose weight in the production process.

EX - Paper or steel industries.

Regional Multiplier

DEF - The stimulation of economic growth by growth itself. As secondary industries develop they create a demand for raw materials and goods.

EX – Machinery is made from steel and this stimulates steel manufacturing while the development of the steel industry requires more machinery. As manufacturing industry prospers, more jobs arise in service industries.

SUBSISTENCE ECONOMYDEF - a type of

economy in which human groups live off the land with little or no surplus.

EX – Native American tribes. The Aborigines. The Bush people of the Kalahari.

SUSTAINABLE DEVELOPMENT

DEF – The level of development that can be maintained in a country without depleting resources to the extent that future generations will be unable to achieve a comparable level of development.

Advocates that the best strategies for development are the use of microloans for women and the poor, small scale community based projects, and resource conservation.

EX - Ecotourism

Trickle-Down Effects

DEF - Increased wealth for upper class means benefits for the lower class.

EX – Ronald Regan. If the upper class have “extra money” and are well off, they will spend money, that money will stimulate the economy and everyone will benefit because the economy will grow.

INFORMAL SECTOR

Def – The portion of an economy largely outside government control in which employees work without contracts or benefits

Ex – Beggars, organized crime, child labor, person who works from home – in-home child care provider

NEOLIBERAL COUNTERREVOLUTION

Development school of thought that advocates countries who wish to improve their economy should privatize industries, encourage foreign investment and move towards free trade.

EX – China in the 1980 – moving away from the communist idea of the state owning everything to individual businesses owning private property.