1. Industrialization and Economic Development Mini-Unit
AP HUG

2. Part 1: Classifying Development

3. What is Development?
The act of improving/advancing the quality of life (standard of living) of people.

4. What is sustainable development?
Sustainable development –is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

5. Past and Present Terms Used to Express Development
“Rich Countries”
“Poor Countries”
Developed
Undeveloped
More Developed
Less Developed
Time
Developed
Developing
First World (capitalist)
Third World
“The South”
“The North”
LEDC’s
MEDC’s

6. LEDCs/LDCs
Less economically developed countries (LEDCs) or Less Developed Countries (LDCs) these are the poorest of the developing countries.
They have major economic, institutional and human resource problems.
In 2009, 49 countries were labeled as LEDCs/LDCs
many are in Sub-Saharan Africa

7. MEDCs/DCs
More economically developed countries (MEDCs) or Developed Countries (DCs)- these are the richest of the developed countries.

8. The World of Haves and Have-Nots: UN Human Development Report
The richest 20% of the world's people consumes 86% of all goods and services
the poorest 20% consumes just 1.3%

9. The World of Haves and Have-Nots: UN Human Development Report
the richest 20% consumes:
45% of all meat and fish
58% of all energy used and
84% of all paper
has 74% of all telephone lines and
owns 87% of all vehicles

10. Haves
Americans spend $8 billion a year on cosmetics -- $2 billion more than the estimated annual total needed to provide basic education for everyone in the world

11. Have-nots nearly 60% lack access to safe sewers
Of 4.5 billion people in developing countries:
nearly 60% lack access to safe sewers
1/3 have no access to clean water
1/4 do not have adequate housing and
20% have no access to modern health services of any kind

12. Measuring Economic Development
All these are indicators of income
Gross Domestic Product
GDP – total value of goods and services produced in a country (US$)
Gross National Product
GNP – GDP that also Includes income from investments abroad (US$)
GDP/GNP per capita
Total value divided by the total population (per person)

13. National Income – Problems with using GDP/GNP
Black market/informal economy
Some economic activity not recorded – subsistence farming and barter activity, for example
Some economic activity is carried out illegally – building work ‘cash in hand’, drug dealing, etc.
Work of the non-paid may not be considered but may contribute to welfare – charity work, housework, etc.
A small proportion of the population can own a large amount of the wealth in a country.

14. Check out Angola and Equatorial Guinea: Why is their child mortality rate so high if their GNI is so high?

15. Classifying Development
Read through the ways to classify development.
What do you think is the most major difference between Developed and Developing?
Why do you think this?

16. Part 2 Development Diamonds

17. Development Diamonds
Development Diamonds illustrate relationships for 4 socio-economic indicators relative to averages of the countries in the same income group

18. Strengths of using the Development Diamond as a method of showing level of development
Development diamonds make it possible to assess a country’s achievements in both economic development and human development
You can compare countries and their development using 4 indicators, not just 1

19. It’s hard to determine development only with these 4 indicators
Weaknesses of using the Development Diamond as a method of showing level of development
It only shows where a country stands in comparison to “low income” groups, not middle or high income
It’s hard to determine development only with these 4 indicators
It cannot be used to compare countries of different income groups

20. Development Diamond Activity

22. 1. Which of the two “low-income” countries is most developed
1. Which of the two “low-income” countries is most developed? Justify your answer with the data.
Let’s “Unpack” this Question. What do you have to do to correctly answer this question?

24. Let’s “unpack” this question.
2. How does Ethiopia and India compare to the average for low-income countries?
Let’s “unpack” this question.
To effectively answer this question, what do you have to do?

26. Let’s use what we learned in Question 1, to answer this question.
3. Which of the two “middle-income” countries is most developed? Justify your answer with the data.
Let’s use what we learned in Question 1, to answer this question.

28. Let’s use what we learned in Question 2 to answer this question.
4. How does Botswana and China compare to the average for middle-income countries?
Let’s use what we learned in Question 2 to answer this question.

29. 1. 4 billion people struggle to survive on less than $1
1.4 billion people struggle to survive on less than $1.25 a day (World Bank 2005). How can they be helped?

30. Purpose The Goals were agreed to in 2001
The Goals were devised by the UN in 2000 and adopted by nations in 2001
The idea of course is to create a better world
Many nations are already falling short
But there are success stories

32. Part 3: Classifying Economic Activities

33. Primary Economic Activities
Definition
Extraction of natural resources
Examples:
Farming, mining, forestry

34. Secondary Economic Activities
Definition
Processing of raw materials into finished goods by manufacturing
Examples:
Steel manufacturing, furniture production, food processing

35. Tertiary Economic Activities
Definition:
Provision of services
Examples:
Retail, restaurants, tourism, police and fire provision, sanitation, advertising

36. Quaternary Economic Activities
Definition:
Information and knowledge processing
Examples:
Education, data processing, research and development, banking and finance, medical

37. Quinary Economic Activities
Definition:
Highest level decision making
Examples:
Top-level government officials, business executives, financial consultants

38. Part 4: The Theories Used to Explain the Global Development Gap

40. Rostow - Stages of Growth
Traditional Society
Characterised by
subsistence economy – output not traded or recorded
existence of barter
high levels of agriculture and labour intensive agriculture
Village in Lesotho. 86% of the resident workforce in Lesotho is engaged in subsistence agriculture.
Copyright: Tracy Wade,

41. Rostow - Stages of Growth
2. Transitional Stage
Development of mining industries
Increase in capital use in agriculture
Necessity of external funding
Some growth in savings and investment
The use of some capital equipment can help increase productivity and generate small surpluses which can be traded.
Copyright: Tim & Annette,

42. Rostow - Stages of Growth
3. Take off:
Increasing industrialization
Further growth in savings and investment
Some regional growth
Number employed in agriculture declines
At this stage, industrial growth may be linked to primary industries. The level of technology required will be low.
Copyright: Ramon Venne,

43. Rostow - Stages of Growth
4. Drive to Maturity:
Growth becomes self-sustaining – wealth generation enables further investment in value adding industry and development
Industry more diversified
Increase in levels of technology utilised
As the economy matures, technology plays an increasing role in developing high value added products.
Copyright: Joao de Freitas,

44. Rostow - Stages of Growth
5. High mass consumption
High output levels
Mass consumption of consumer durables
High proportion of employment in service sector
Service industry dominates the economy – banking, insurance, finance, marketing, entertainment, leisure and so on.
Copyright: Elliott Tompkins,

45. Assumptions Made by Rostow’s Model
all countries have similar development trajectories
intrinsic factors like culture and natural resources don’t impact development
countries that undergo development at different times in history will undergo the same processes
all countries have the same access to development
the goal and purpose of all economies is to increase productivity and material consumption.

46. Developmentalism
The notion that every country and region will eventually make economic progress toward a high level of mass consumption if they only compete to the best of their ability within the world economy.
Rostow’s Model keeps this myth alive.

47. Limitations of Rostow’s Model
The weakness is that it’s not fair to compare today’s poorer countries to those that were the first to take off. Those that took off first didn’t have to compete in a global market.
it is difficult to say whether all countries will eventually conform to Rostow’s Model.
It is unlikely that Rostow’s model will be universally applicable.

48. Dependency Theory
This theory blames the underdevelopment of the developing world on exploitation by the developed world (Andre Frank, Chicago, 1966)
Frank argued that:
Poverty in the developing world arose through the spread of capitalism (countries were wealthy before Europeans colonized)
The development of the rich was achieved by exploitation of the raw materials in the developing world.
Developing countries became dependent on rich countries

49. Neocolonialism
the geopolitical practice of using capitalism, business globalization, and cultural imperialism to influence a country, instead of direct military or political control.

50. World Systems (core/periphery) theory
This theory is based on the history of the capitalist world economy. Countries fall into three economic levels, and can move from one level to another if their contribution to the world economy changes.

52. The CORE
North America
Western Europe
East Asia
Main trade flows are between these three areas.
Countries in this core have diversified economies, with high output, high purchasing power and large domestic markets. These are the manufacturers.

53. SEMI PERIPHERY
A wide range of countries.
First waves of NICs – South Korea, Taiwan, Hong Kong, Singapore
2nd Waves: Malaysia, Mexico, South Africa
BRICs – Brazil, Russia, India, China.

54. THE PERIPHERY
LEDCs. Mainly Africa.
Small domestic markets, lack of infrastructure, population increase, low economic output, low levels of economic diversification, high agricultural population.
Outside this core, the global periphery is a location of cheap raw materials or cheap manufacturing or a market for the core to “dump” their surplus products.
Raw material Producers

56. Part 5: Growth and Diffusion of Industrialization

57. Industrial Revolution
Began in the late 1700s in England and led to the huge growth of the world population for the next two centuries as industrialization diffused outwards.

58. The Industrial Revolution
Why did it begin in the Great Britain?
capitalist system
people free to form businesses
education
patent system encouraged development
labor:
Jethro Tull’s seed drill (1701) and other developments > improved productivity in farming > people can leave farms and work elsewhere

59. The Industrial Revolution (cont)
Why did it begin in the Great Britain?
raw materials (iron ore, coal)
rivers, canals, harbors (ease in trade)
small, compact size (iron and coal near rivers and harbors)
existing banking system (borrow $ to buy machinery)
stable political system
colonies (guaranteed markets, additional raw materials)

60. The Industrial Revolution (cont)
Key developments
James Watt patents the steam engine (1769)
wood replaces running water as source of energy
changes location of machinery
was located by running water (streams, rivers)
now can be located wherever wood exists (more flexibility)

61. The Industrial Revolution (cont)
Effects
economic: more goods at lower prices
social: available labor leaves farms and clusters in cities
political: surplus labor > mistreated workers > liberalism and communism

62. The Industrial Revolution (cont)
Effects
technological: > railroad, steamship
agricultural: > 2d Agricultural Revolution
increased productivity
use of machinery > larger farms > enclosures

63. Globalization
Globalization refers to how the world is increasingly inter-connected.
It is most closely associated with the transnational activities of huge corporations, which operate sometimes in alliance with and sometimes against states.

64. Fordism
The process of using assembly line techniques in manufacturing and is attributed to Henry Ford

65. Commodity Chain
A chain of activities from the manufacturing to the distribution of a product.
Example: The clothing Industry
Growing of cotton
Textile mills to create cloth
Garment factories where stiching occurs
Firms for design
Retailing and selling to the consumer

66. Transnational Corporations
Companies that have facilities and processes spread among several countries.
Found at the high-profit end of the commodity chain and specialize in brand names, high technology and design and marketing.

67. Theory of Comparative Advantage
countries should specialize in producing those goods of which they are relatively more efficient producers
these countries should then trade with the rest of the world to obtain needed commodities
if countries do specialize this way, total world production will be greater

68. Outsourcing
The practice of shifting production of a product to a third party either in the country in which you are based or in an other country.
(part of comparative advantage)
Taking advantage of less expensive labor

69. Maquiladoras
Foreign-owned assembly companies located in the United States/Mexico border region.
These companies are able to take advantage of cheaper labor, tax breaks, lax environmental regulations while operating close the the markets for the products.

71. Review for Mini Quiz (Friday)
15 multiple Choice
1 FRQ
FRQ is connected to Rostow’s Model. It is important to know:
Each stage of the model (name and description)
The limitations of the model
Assumptions made by the model