Unit 7

Industrial and Economic Development Patterns and Processes: the one-page sheet

7.1 The Industrial Revolution

The Industrial Revolution began in Britain in the late 1700s, when new machines and steam power met coal and iron. Factories clustered in towns, farmworkers moved to cities, a working class formed, and the hunt for raw materials and markets fed colonialism.

Industrialization is the spread of factories and machine work to a place. It needs new technology and the resources to run it.
The steam engine freed factories from rivers, so they clustered in towns near coal, workers and buyers.
More food from new farm methods fed the towns and freed farmworkers, so cities grew and the population rose.
Factories needed raw materials and markets, which fed colonialism and imperialism in Africa and Asia.
Industry spread from Britain to Belgium, the Ruhr, the US Northeast and, after 1868, Japan: at different times, by different routes.

factories can run anywhere there is coal, so they cluster in towns farmworkers move to towns (rural-to-urban migration) cities such as Manchester grow fast and crowd up, and a working class forms industrial countries tighten control over colonies (colonialism and imperialism)

industrialization: The spread of factories, machines and new sources of power to a place, so that goods are made in factories rather than by hand. It began in Great Britain in the late 1700s.

7.2 Economic Sectors and Patterns

Jobs fall into five sectors, from taking resources from nature to making the top decisions. Factories locate to keep total costs low: weight-losing industries near raw materials, weight-gaining ones near markets, and processing at break-of-bulk points. Core countries have mostly service and research jobs; the periphery more primary work.

Five sectors: primary (take from nature), secondary (make goods), tertiary (services), quaternary (information and research), quinary (top decisions).
Sort a job by what the worker does, not by what the firm sells.
Least cost theory: a factory locates where transport, labor and nearby-firm costs are lowest. Weight-losing industries go to the raw material; weight-gaining ones go to the market.
A break-of-bulk point is where goods change transport modes, such as a port; processing clusters there.
Countries often classed as core have mostly service, research and decision jobs; those often classed as periphery have more primary work; the semiperiphery is in between.

its maker weighs the costs of raw materials, labor, energy and transport the factory locates near the raw materials, as copper smelters do near Chile's mines the factory locates near its market, as soft-drink bottlers do near cities processing plants cluster there, as at Rotterdam

primary sector: The part of the economy that takes resources straight from nature: farming, fishing, forestry and mining.
secondary sector: The part of the economy that turns raw materials into goods, such as factories and building.
tertiary sector: The part of the economy that provides services, such as shops, transport, health care and teaching. Also called the service sector.
quaternary sector: The part of the service economy that creates and moves information, such as research, software and finance.
quinary sector: The part of the service economy where the highest-level decisions are made, by top officers of big firms and governments.
break-of-bulk point: A place where goods are moved from one kind of transport to another, such as from ships to trains at a port. Processing plants often cluster there.
least cost theory: A model that says a factory locates where its total costs of transport, labor and nearby firms are lowest. Weight-losing industries locate near raw materials, weight-gaining ones near markets.
core (world system): In world-system terms, the countries with mostly high-wage service, research and decision jobs and advanced industry. A model category, not an official list.
semiperiphery: In world-system terms, countries between the core and the periphery, with a large factory sector and growing services. A model category, not an official list.
periphery: In world-system terms, countries where many people do primary-sector and low-wage work, often exporting raw materials. A model category, not an official list.

7.3 Measures of Development

Development is measured with income measures (GDP, GNP, GNI per capita), social measures (fertility, infant mortality, literacy, health care, energy use) and composites: the HDI (health, education, income) and the GII (gaps between women and men, lower is better). Each shows something and hides something, such as inequality and the informal sector.

GDP counts production inside the borders; GNP and GNI count income earned by a country's people and firms anywhere. Per capita means per person.
The informal sector (unregistered, untaxed work) and unpaid work are missing from much of GNI.
The HDI combines health (life expectancy), education (years of schooling) and income (GNI per capita, PPP), from 0 to 1.
The GII measures gaps between women and men in reproductive health, empowerment and paid work. Lower is better.
Every measure shows something and hides something; name both, and compare indices within one edition.

no single number can capture all of it it hides inequality, unpaid work and the informal sector it shows more of people's lives, but still as a national average the GII measures that gap, where lower is better

development: The process of improving the material conditions of people's lives, such as income, health, education and choices.
gross domestic product: Gross domestic product: the value of all goods and services produced inside a country's borders in a year, whoever owns the firms.
gross national product: Gross national product: the value of goods and services produced by a country's people and firms, wherever in the world they produce it.
gross national income: Gross national income: all income earned by a country's residents, at home and abroad. GNI per capita divides it by the population.
informal sector: Work that is not registered, taxed or counted by the government, such as street selling or day labor paid in cash.
Human Development Index: Human Development Index: a UNDP measure from 0 to 1 that combines health (life expectancy), education (years of schooling) and income (GNI per capita).
Gender Inequality Index: Gender Inequality Index: a UNDP measure of gaps between women and men in reproductive health, empowerment and the labor market. Lower means less inequality.
literacy rate: The share of adults in a population who can read and write.

7.4 Women and Economic Development

As places develop, more women go to school and take paid work, as in Bangladesh's garment industry, but a gender wage gap and unequal opportunity remain. Microlending, pioneered by the Grameen Bank, gives small loans for small businesses, mostly to women: it can raise income and schooling, but it is no cure for poverty on its own.

With development, more women go to school, have fewer children and take paid work, often in factories and services.
More work is not equal work: the gender wage gap (women's pay compared with men's) appears in most countries with data.
Women do most unpaid care work, which GDP leaves out.
Microlending makes very small loans, often to women in groups, to start small businesses: it can raise income and schooling, but it can also bring debt.
Policy matters: Iceland's equal-pay law (2017) and Rwanda's majority of women in parliament (since 2008).

more women can take paid work outside the home women gain income, but often at low pay and with risks a gender wage gap remains, even in rich countries microlending offers small loans, often to women in groups, for small businesses

microlending: Making very small loans, often to women in groups, to people too poor to borrow from ordinary banks, usually to start or grow a small business. Also called microcredit or microloans.
gender wage gap: The difference between what women and men earn on average, often shown as women's pay as a percent of men's.

7.5 Theories of Development

Rostow's stages say every country can climb one path from traditional society to high mass consumption. World system theory sees one world economy of core, semiperiphery and periphery. Dependency theory blames the periphery's poverty on its ties to the core. Commodity dependence ties a country to one export's price. Each model has assumptions and limits.

Rostow's stages: traditional society, preconditions for take-off, take-off, drive to maturity, high mass consumption. Limit: one Western path, no colonial history.
World system theory (Wallerstein): one world economy of core, semiperiphery and periphery; countries can move. Limit: tiers are hard to measure.
Dependency theory: the periphery is poor because of its dependence on the core, built by colonialism and unequal trade. Limit: East Asian growth through trade.
Commodity dependence ties a country to one export's price, as copper does for Zambia.
Never say a country "is in" a stage or tier as a fact: say its data are "consistent with" it.

he sees five stages, from traditional society to high mass consumption dependency theory says the periphery stays poor because of those ties world system theory sorts countries into core, semiperiphery and periphery, and lets them move its earnings rise and fall with world prices (commodity dependence)

Rostow's stages of economic growth: A model by W. W. Rostow (1960) that says countries develop through five stages: traditional society, preconditions for take-off, take-off, drive to maturity and high mass consumption.
world system theory: Immanuel Wallerstein's model of one connected world economy in which countries play core, semiperiphery or periphery roles, and can move between them.
dependency theory: A theory that says poorer countries stay poor because of their dependence on richer ones, built through colonial rule and trade in raw materials for factory goods.

7.6 Trade and the World Economy

Trade happens where places complement each other. Comparative advantage, the lower opportunity cost, decides who should make what, even when one country has the absolute advantage in everything. Neoliberal policies, tariffs, the WTO, trade blocs such as the EU and Mercosur, OPEC and IMF loans shape trade and make the world economy interdependent.

Complementarity: one place has what another needs, as Costa Rica's bananas and Canada's wheat.
Absolute advantage: making more of a good. Comparative advantage: making it at a lower opportunity cost. Trade follows comparative advantage.
Opportunity cost of one unit = what you give up divided by what you get, from the same day of work.
Neoliberalism cuts the government's role: fewer tariffs (taxes on imports), sold state firms, less spending. The WTO sets trade rules; trade blocs cut tariffs among members.
The IMF lends to governments in crisis, with conditions (structural adjustment). Debt and trade make the world interdependent.

the country that gives up less has the comparative advantage in that good both end up with more goods than they could make alone tariffs fall among members, so trade among them grows, and members share some sovereignty the IMF lends with structural adjustment, and crises spread through an interdependent world

complementarity: When one place has a supply of something that another place needs, so trade between them makes sense.
comparative advantage: The ability to produce a good at a lower opportunity cost than another country: giving up less of other goods to make it. Trade follows comparative advantage.
absolute advantage: The ability to produce more of a good than another country with the same resources.
neoliberalism: Policies that shrink the government's role in the economy: freer trade, lower tariffs, selling state-owned firms and cutting government spending.
trade bloc: A group of countries that lower or remove tariffs and other trade barriers among themselves, such as the European Union or Mercosur.
International Monetary Fund: The International Monetary Fund: a body set up in 1944 that lends to governments in financial trouble, often on conditions such as spending cuts and open markets (structural adjustment).

7.7 Changes as a Result of the World Economy

Cheaper transport and communication let firms outsource work, so older industrial regions deindustrialized while newly industrialized countries grew, often in special economic zones. Production split into an international division of labor run on post-Fordist, just-in-time methods. Agglomeration clusters firms; a growth pole spreads growth outward through the multiplier effect.

Outsourcing moves work to other firms, often abroad; deindustrialization is a region's loss of factory jobs.
Newly industrialized countries such as South Korea grew through export factories; special economic zones (China's Shenzhen, Mexico's maquiladoras) drew them.
International division of labor: stages of one product in different countries. Post-Fordism: flexible small batches and just-in-time delivery, unlike Fordism's mass production.
Agglomeration: many firms cluster for shared benefits (Silicon Valley). Growth pole: one key project spreads growth outward (BMW near Spartanburg).
The multiplier effect spreads gains when a plant opens and losses when it closes.

firms outsource work to places with lower costs those regions deindustrialize, and the multiplier effect costs more jobs factories arrive, migrants follow, and newly industrialized countries grow an international division of labor forms, run by flexible post-Fordist methods such as just-in-time

outsourcing: Hiring another firm to do part of a company's work, often in another country where costs are lower (offshoring).
deindustrialization: The decline of factory jobs and industry in a region, as factories close, move away or replace workers with machines.
newly industrialized country: A country whose economy has shifted quickly from farming toward factories and exports, such as South Korea from the 1960s.
special economic zone: An area with lower taxes, fewer rules and cheaper land for firms making goods for export, such as Shenzhen, China. Free-trade zones, export-processing zones and Mexico's maquiladoras are related forms.
international division of labor: The split of the stages of making a product among different countries, by their skills and costs.
post-Fordism: Flexible production in smaller batches, spread among many firms and places, with just-in-time delivery; it followed Fordism, the mass production of identical goods on assembly lines in one large plant.
multiplier effect: The way new jobs in one industry create more jobs in others, as workers spend wages and suppliers grow; it also works in reverse when a plant closes.
agglomeration: The clustering of many firms in one place because being close lets them share workers, suppliers, services and ideas.
just-in-time delivery: Delivering parts to a factory just when they are needed, so little stock is kept.
growth pole: A key industry or major investment, often planned, whose growth spreads to the region around it through the multiplier effect.

7.8 Sustainable Development

Sustainable development improves lives now without harming future generations. Resource depletion, mass consumption, pollution and climate change make it hard. The UN Sustainable Development Goals (2015, for 2030) set shared targets, and ecotourism can make protecting nature pay, though it has limits. Responses work at global, national and local scales.

Sustainable development improves lives now without harming future generations' ability to meet their needs: economy, society and environment together.
Threats: resource depletion, mass consumption, pollution and climate change.
The 17 Sustainable Development Goals (UN, 2015, for 2030) include no poverty, gender equality, clean energy and climate action.
Ecotourism (Costa Rica, the Galápagos) can make protecting nature pay, but crowding, flights and outside ownership limit it.
Responses work at every scale: global goals, national energy policy, local reserves.

demand for energy, materials and food grows they run out, and the jobs that depend on them go too pollution and climate change harm places, often poorer ones most development can improve lives while protecting the future, if it is well managed

sustainable development: Development that improves people's lives now without harming the ability of future generations to meet their own needs, balancing the economy, society and the environment.
ecotourism: Tourism to natural areas that aims to protect the environment and benefit local people, for example by hiring local guides and limiting visitors.
Sustainable Development Goals: The Sustainable Development Goals: 17 goals adopted by all UN member states in 2015, to be reached by 2030, such as no poverty, gender equality and climate action.