Economic development Flashcards
Wealthy countries can be known as:
HIC – High Income Country
Or
MEDC – More Economically Developed Country
Countries with a medium level of development can be known as:
MIC – Middle Income Country
NIC – Newly Industrialising Country
NEE – Newly Emerging Economy
Countries with a low level of development can be known as:
LIC – Low Income Country
Or
LEDC –Less Economically Developed Country
Factors influencing development: Physical factors
Climate: The Sahel region in Africa suffers from a lack of rainfall. This means that droughts are common.
Natural hazards: Floods, droughts and tectonic activity can limit future growth and destroy buildings and agricultural areas.
Landlocked countries: 16 countries in Africa are landlocked. This means it is more difficult to trade as goods have to be driven through other countries to get to the coast for shipping.
Natural resources: Natural resources such as minerals, gas and oil can help improve a country’s level of development. However
this is closely tied in with the ability to exploit the resource for the benefit of the country.
Factor influencing development: Human factors
Historical development: Colonialism hindered a developing country’s level of development. Borders of some colonial countries were set without attention to tribal and cultural differences, causing tensions and instability.
Political factors: Poor governance does not help a country to develop. Money that could be spent on development may be used to fund military weapons or the affluent lifestyle of an elite group of people.
Economic factors: World trade is often not fair. LEDCs tend to sell primary produce. LEDCs have to compete with each other to win the trade - which lowers the prices farmers get.
Foreign investment can help a country to develop.
Many LEDCs are in debt to MEDCs. Some of their income has to pay off these debts.
Social factors: A poorer country finds it more difficult to invest in education. The problem is made worse because many countries have a high dependency ratio. Clean water is essential for health.
One in six people do not have access to safe water. If water is not safe, people may be unable to work or care for their families because of illness.
Measuring development
Economic development: is a measure of a country’s wealth and how it is generated (for example agriculture is considered less economically advanced then banking).
Human development: measures the access the population has to wealth, jobs, education, nutrition, health, leisure and safety - as well as political and cultural freedom.
Material elements, such as wealth and nutrition, are described as the standard of living.
Health and leisure are often referred to as quality of life.
Development indicators
Health.
Industry.
Education.
The North South Divide
MEDCs are countries which have a high standard of living and a large GDP. LEDCs are countries with a low standard of living and a much lower GDP.
The map shows the locations of LEDCs and MEDCs. Most of the southern hemisphere is less developed, while countries in the northern hemisphere are more developed.
Economic development indicators
Gross National Income (GNI): total amount of money earned by a nation’s people and businesses.
Gross National Income (GNI) per capita: total amount of money earned by a nation’s people and businesses divided by the total population to give an indication of average income per person.
Inequality of wealth: is the gap in income between a country’s richest and poorest people. It can be measured in many ways,
Unemployment: is the number of people who cannot find work.
Economic structure: shows the division of a country’s economy between primary, secondary and tertiary industries.
Human/social development indicators
Life expectancy - the average age to which a person lives.
Infant mortality rate - counts the number of babies, per 1000 live births, who die under the age of one.
Access to basic services - the availability of services necessary for a healthy life, such as % of people with access to clean water and sanitation.
Access to healthcare - takes into account statistics such as how many doctors there are for every patient.
Access to education - measures how many people attend primary school, secondary school and higher education.
Literacy rate - is the percentage of adults who can read and write.
Access to technology - includes statistics such as the percentage of people with access to phones, mobile phones, television and the internet.
Problems with development indices
Development indices can be misleading and need to be used with care:
- Many indices are averages for the whole population of a country. This means that indices do not always reveal substantial inequalities between different segments of society.
- In some countries, the data used in indices could be out of date or hard to collect. Some countries do not wish to have certain index data collected.
Advantages of the HDI:
It uses a range of indicators to assess the development of a country e.g. social and economic indicators
Using the human development index allows easy statistical comparisons between countries so that differences in global development can be observed.
It also allows changes in development over time to be observed.
Uneven development
Uneven development means that development takes place at different rates in different regions. There are various causes of uneven development and a number of policies to change this.
Case study: Uneven Development in China
Industry
Industry
There are many different types of industry.
We can classify industry into three main categories:
Primary – these industries extract raw materials directly from the earth to the sea. (LICS)
- Farmers
- Coal-miners
- Fishing
Secondary – these industries process and manufacture products from raw materials. (MICs)
- Car manufacturing
- Iron and steel industry
Tertiary - these industries provide a service. (HICs)
- Doctor
- Lawyer
- Cleaner
- Banker
- Waiter
- Retailing
- Teaching
- Dentistry
Quaternary – these industries incorporate a high degree of research and technology in their processes and employ highly qualified people.
- Biotechnology
- Computer programing
Industry as a system
- Inputs are everything that goes into the system. The main three inputs are:
* Physical inputs: These include raw materials
* Labour
* Capital - Processes are all the things that happen to those inputs, to help turn them into outputs. These include:
* Production
* Factory maintenance
* Packaging
* Transport - Outputs. The finished products include:
* profits
* wages. - Feedback includes anything that improves the system, such as:
* Customer feedback. Companies find out what consumers think of their products through market research. They may use this to improve their product to sell more and increase their profits.
* Profits - the money left after inputs (staff wages, raw materials, machinery and buildings etc) have been paid for.
The pre-industrial phase
The primary sector leads the economy and may
employ more than 2/3 of the working
population. Agriculture is the most
important
The industrial phase
The secondary and tertiary sectors increase in
importance. The primary sector declines
Post-industrial phase
As the tertiary sector becomes the most
important sector, the secondary sector
declines and the primary sector employs
a small percentage of the active population.
Mechanisation
The replacement of human (or animal) labour with machines
Automation
The use of machinery in manufacturing of data and processing
Global shift in manufacturing
There has been a shift from the more developed countries to the less developed countries
(talk about decline in the UK then talk about China)
Global (information) superhighway
The internet/worldwide web/cyberspace, allowing the fast transfer of information to virtually anywhere on
Earth.
Global corporations
TNCs – transnational corporation
MNC – multi- national cooperation – companies that operate in more than one country.
Globalistaion
The process, led by transnational companies, whereby the world’s countries are all becoming part of one vast
global economy.
Reasons for Globalisation
Firms can keep in contact with producers easily and quickly using the internet
Developments in transport technology: goods can be moved around the world quickly and easily
Development of aircraft and containers, efficient motorway networks which cross Europe.
Why has employment in manufacturing industries declined in wealthy countries
Cheaper to make products abroad
De-industrialisation –
Transport enables goods to be moved more quickly and efficiently
Modern communication networks
Growth in transnational corporations (TNCs)
Globalisation, manufacturing in cheaper locations
This has been helped by increasing technological advances and major improvements in transport.
Primary Industry: Factors
- Relief – flat land for easy crop cultivation
- Government – grants and subsides to help industry
- Markets – somewhere to sell produce
- Soil – nutrient-rich aerated soil for crops to grow
- Climate – adequate sunshine and rainfall
- Technology – ease of introducing new machines and farming practices
- Labour and capital – local workforce available and money for investment.
Industry location factors:
HUMAN FACTORS
Skilled Labour
Cheap Labour
Available Capital
Market
Supply Network
Good Housing
Good Schools and Hospitals
Nearby Universities
Transport Links
Good Communications
Reliable Electricity and Water Supply
Industry location factors:
PHYSICAL FACTORS
Flat Land
Unpolluted Land (Greenfield Site)
Natural Transport Links
Available Raw Materials
Renewable Energy Sources
Nice Environment:
Water supply
Climate
Case study: Location of a secondary industry case study: Foxconn Factory Complex Shenzhen, China
Foxconn City is on the outskirts of Shenzhen on flat land. This is because it is a large factory complex and so there needed to be enough space for the factory buildings.
Government incentives: To encourage new markets “special economic zones” (SEZ) these areas were designed to attract foreign business. Within these zones firms are; taxed lower, allowed to import duty-free raw materials, and pay no export taxes.
Transport Links: Foxconn City is well connected via roads and railway links which is important for moving components into the factory and finished goods out and it is the third busiest container port in the world.
Supply Network: To ensure the smooth production of products it helps being close to suppliers. Many of the components needed to make an iPhone can be sourced from within a 50-mile radius of Foxconn City.
Low-cost labour is available in Shenzhen as there is a large supply of young migrants moving from poor rural areas, looking for work in the city.
This has allowed more than 450,000 people to be employed at Foxconn city in Shenzhen.
Factors attracting TNCs to a country may include:
- cheap raw materials
- cheap labour supply
- good transport
- access to market, where the goods are sold
- friendly government policies
Case Study of a TNC: Apple Inc
Research and development:
* Takes place in the Silicon Valley, California.
* This is Apple’s global headquarters.
Raw materials e.g. coltan:
* Sourced from mines in countries such as Democratic Republic of the Congo (DRC).
* Coltan is a highly conductive metallic ore.
Impacts of coltan mining:
* Mining is unregulated leading environmental damage e.g. land eroded by mining pollutes lakes and rivers.
* Many of the mines are also located in gorilla habitats which is threatening this already critically endangered species.
* Many of the mines are owned by rebel groups who use profits to purchase weapons.
* Because of some of these issues Apple has altered its sourcing relationships and now only uses ‘conflict- free tantalum’.
Component parts:
* One of Apple’s largest component suppliers is Samsung (one of its largest competitors) who supply silicon chips.
* Other suppliers include Sony (cameras) and Sharp and LG (touchscreen displays).
* Apple has around 200 vendor suppliers around the world.
Apple assembly and distrubution China
Assembly:
* China where skilled workers can be employed for wages that are relatively cheap by world standards.
* A large proportion of Apple iPhones are assembled at Foxconn, a Taiwanese TNC electronics company.
* Foxconn has 12 factories in mainland China, with the largest being in Shenzhen.
* The Shenzhen factory is often referred to as Foxconn city.
* Foxconn city employs more than 350,000 people.
* It is estimated that about 40% of all electronic products are assembled in Foxconn factories.
Distribution:
* When phones have been assembled and packaged, they are air-freighted to distribution centers in several parts of the world, including Australia, China, Singapore, The UK and the USA.
Positive Impacts of Apple’s Operations at the local and national level
Local
* Foxconn have no shortage of applicants for
jobs in their factories; with wages being
higher than most other Chinese factory
jobs.
* More people and money in the area leads
people to setting up their own businesses,
for example, many have opened restaurants to serve the workers. This is known as a positive multiplier effect.
* Foxconn provides housing for workers. In
the area that surrounds Foxconn city,
services have sprung up to serve the
workers e.g. movie theatres, restaurants,
sports and leisure facilities, night clubs etc.
* Many young people have migrated to
Shenzhen from rural areas. Their quality of
life in Shenzhen is better than in the
countryside and they are able to send
money home to help lift their families out
of poverty.
National
* With 1.3 million employees in mainland
China, Foxconn is by far the country’s largest
employer
* It is not just factory jobs that bring benefits from Apple to China. Over 380 suppliers to cover almost every section of Apple’s smartphone
manufacturing industry: from expensive
components, such as display panels, to cheaper
elements such as printed circuit boards.
Negative Impacts of Apple’s Operations at the local and national level
Local
* High suicide
Work past legal overtime limits and harsh
Penalties for those who make mistakes.
* Rooms sharing with 10-12
people.
* Young children working
National
* Moved to Vietnam to be less reliant
Reasons behind the trends in tourism
- More affluence - since 1950 people have become wealthier. There is more disposable income. People also now have paid time off work for holidays.
- Greater awareness - through advertising or television programmes
- More car ownership - better travel
- Improvements in technology -
- More leisure time -
- More choice
Types of tourism
- Beach holidays
- Outdoor adventure
- Cultural/historic,
- Ecotourism
- Sustainable tourism provides tourism opportunities for visitors and jobs for locals while protecting the environment and culture from damaging change.
Tourism attractions
Human resources - are tourist attractions that have been made by people, such as the Eiffel Tower in France.
Physical resources - are the attractions that have been made by nature such as beaches or lakes.
Types of man-made tourist attractions include:
* art galleries
* architecture
* cultural monuments
* museums
* local traditions
* food and drink
* music and drama
* important historical or political sites
Physical tourism attractions
Physical resources are the natural features of an area which might attract tourists, such as:
* the physical landscape - such as beaches, mountains, rivers, lakes and glaciers
* ecosystems - such as rainforest or tropical grasslands
* weather and climate - most tourists seem to like it warm and dry
Advantages of tourism
- Tourism brings much needed investment into an area.
- Tourism provides employment for many local people, ranging from working in the hotels to selling trinkets on the beach.
- The money that tourism brings in can be used to improve the infrastructure of the area.
- Income from tourism may be used to help conserve the natural environment that is the reason why visitors come in the first place.
- The country can benefit from overseas investment, primarily in the tourist industry, but also in other related industries.
- Tourism may help to preserve local cultures and communities, as they become a tourist attraction.
Disadvantages of tourism
- In many resorts in LEDC’s very little of the money paid for the holiday actually reaches the country.
- The jobs for the locals are often badly paid, with very poor working conditions.
- The huge number of tourists coming to see it could easily damage the environment.
- Increasing numbers of tourists brings problems such as littering, pollution and footpath erosion.
- Overseas investment, in things like luxury hotels, can mean that the money goes back to the country of origin.
- Local cultures could be devalued by tourism.
Tourism in an LEDC – case study Kenya
Serengeti (a National Park in Kenya).
Positive impacts of tourism
* Conservation - national parks and conservation areas which protect wildlife.
- Employment
- Infrastructure - roads, airports and other facilities have been built.
- Investment profits from tourism have been invested in education and other programmes for local communities.
Negative impacts of tourism
* Environmental damage - roads and tracks for safari jeeps can erode grass cover, damaging plants and animals and disturbing local habitats. The removal of trees and other vegetation for the construction of roads can lead to soil erosion.
- Inequality - often the profits of tourism are reaped by wealthy landowners or the hotel and travel companies in MEDCs.
- Loss of traditional cultures - the Maasai’s way of life and traditional farming methods have been disrupted by the setting up of National Parks.
- Water cycle damage - diverting water for tourists can exploit local water reserves, leaving local people, plants and animals short of water. Tourist hotels sometimes dump waste into rivers.
The ecotourism approach
- Ensuring that tourism does not exploit the natural environment or local communities.
- Consultation with local communities on planned developments.
- Making sure that infrastructure improvements benefit local people and not just tourists.
Guidelines for eco-tourism
- Protect the environment - keep to footpaths, don’t leave litter or start fires.
- Don’t interfere with wildlife - don’t scare or feed the animals.
- Protect resources - don’t take too many showers or use air conditioning.
- Support local communities - stay in locally owned accommodation and buy produce from local people.
- Eat local food and drink
- Respect local customs and traditions - some communities are offended when tourists wear inappropriate clothes in religious places, strip off on the beach or behave in a rowdy manner. Locals appreciate tourists who try to learn the language and show an interest in their culture.
Basecamp Explorer: An example of sustainable eco-tourism in the Maasai Mara, Kenya
Of the 43 staff, 95% are local, including 10 women – promotes gender equality.
Extensive use of local material, including deadwood, and labour for construction. Buildings can be dismantled and taken away safely – no permanent damage.
Extensive use of solar energy. The cooker, water heaters and communication systems are powered by solar energy.
Have planted an estimated 25,000 trees since 2000, as part of restoring vegetation along the river near Basecamp. Done jointly with the local community.
