Unit 7 Topic 7 Flashcards
What is Weber’s Least Cost Theory?
An economic theory that proposes that firms will choose the production methods that minimize their costs, in order to maximize their profits.
-Influential in shaping economic policies related to trade and investment
What are some factors and assumptions in Weber’s Least Cost Theory?
Factors: Cost of labor, raw materials, capital, transportation, other costs
Assumptions: Firms are rational; Firms will take into account all factors
What is agglomeration?
Refers to the clustering of economic activity in a particular area or region
-Could be caused by a variety of reasons: availability of skilled labor, transportation, infrastructure, presence of complementary industries, etc.
-Can lead to increased efficiency and productivity.
What is an example of agglomeration?
VERY IMPORTANT TO KNOW;
Silicon Valley, California - Concentration of technology firms
What are growth poles?
Centers of economic activity that are targeted for development in order to stimulate economic growth and development in a certain area.
-Based off the beliefs that economic growth can spread to surrounding regions
What is an example of growth poles?
Songdo International Business District in South Korea; built near Seoul as a growth pole to stimulate economic growth and development in the region
or
Taikoo Sugar industry in Hong Kong
What is Just-In-Time Delivery?
A production and logistics management system that aims to minimize inventory and reduce waste by delivering goods and materials to the production process just in time to be used.
-Aims to reduce costs and increase efficiency
-Aims to eliminate the need to store raw materials and finished goods
What is post-Fordist production?
Refers to a shift in the way goods are produced, characterized by a move away from mass production and towards more flexible, customized production methods.
-Relies on advanced technologies (automation/computerization)
-More responsive to changes in consumer demand
What are economies of scale?
Refers to the cost advantages that a firm can achieve by increasing its scale of production.
-Firms may be able to reduce its average costs by taking advantage of efficiencies
-Allows firms to produce goods at a lower cost than their competitors
What is outsourcing?
The business practice of hiring an outside company to perform services or create goods that were traditionally performed in-house by the company’s own employees and staff.
-Led to a decline in jobs in core regions
-Increased jobs in newly industrialized countries (NICs)
What is offshoring?
The practice of moving a business’s operational processes or service to another country, often to take advantage of lower costs or labor rates there.
-Led to a decline in jobs in core regions
-Increased jobs in newly industrialized countries (NICs)
What are SEZs?
Special Economic Zones; Designated areas within a country that have special economic regulators that are more favorable than the regulations that apply in the rest of the country.
What are some characteristics of SEZs?
-Often established to encourage economic development/foreign investment
-May offer a range of incentives: tax breaks, access to infrastructure, etc.
-Typically located in developing countries or areas that are underdeveloped/disadvantaged
What are some examples of SEZs?
Shenzhen Special Economic Zone in China, The Dubai International Financial Centre (DIFC) in the U.A.E., The Export Processing Zones (EPZs) in Kenya
What is industrial agglomeration?
Spatial clustering or concentration of industrial production
-Focuses on function linkages
