Economic Development

Unit 6

What is Economic Geography?

• Study of how people provide for themselves, flow

of _________________, and patterns of economic

development & _______________.

• ______________________is a leading component

in development today

• Service-Based Economies:

What does development mean?

• ____________________: process of

improvement in the material conditions of

people through diffusion of

knowledge/technology

Continue…

• LDC’s challenge is to find _____________

to the global economy by taking advantage

of ______________________ in skills and

resources

What is globalization?

• _________________________: actions or

processes that involve the entire world and

result in making something worldwide in

scope

What determines development?

• Level of development can be created by:

1)

2)

3)

What is HDI?

• Human Development Index (HDI):

-

-

What is the economic factor?

• The economic factor is a state’s GDP per

capita

• Gross Domestic Product (GDP):

Continue…

• Average GDP top five states (not per capita)

What are the social/demographic

factors in HDI measurement?

Facts Continued about HDI…

• Highest HDI possible is 1.0 or 100%

• Highest ranking HDI states are mostly in

the Nordic Nations of Europe, the lowest

being in Sub-Saharan Africa

• Highest HDI state is Norway .943 (2011)

• The US is 4th with 0.910 (2011)

• One of the lowest is…..(extra credit opportunity)

What is the PQLI?

• The Physical Quality of Life Index (PQLI):

-Created by Overseas Development Council

-Looks at three factors: infant mortality, life

expectancy and literacy

-Three are averaged after being scored on a 0-

100 scale with 0 being the poorest/worst

What are some economic indicators

to distinguish MDCs from LDCs?

• 1) GDP per capita

• 2) Economic structure

• 3) Worker productivity

• 4) Access to raw materials

• 5) Availability of consumer goods

What are some examples of

economic structure?

• Typical workers in LDCs receive $2 per

hour, in MDCs it is $15 per hour

• MDCs tend to have minimum wage laws

• Types of jobs: people in MDCs have more

jobs in tertiary, quaternary and quinary

sectors, while LDCs have more in primary

and secondary sectors

What are some productivity

issues? • Productivity: value of a particular product

compared to the amount of labor needed to create it

-Higher in MDCs

• Value Added: the gross value of the product minus the cost of raw materials and energy

-Workers in MDCs produce more with less effort because of access to technology, machinery, tools, etc…

What does access to raw

materials include?

• Development requires raw materials that

will be manufactured

• Need energy sources

• MDCs started looking to colonies and other

states for raw materials after exploiting their

own resources

What does the availability of

consumer goods refer to?

• Wealth generated by MDCs is used to

purchase goods/services

• Most important are those related to

transportation, communication and

technology

What are social indicators of

development?

• Education and literacy (% of state’s adults

who can read/write)

• Health and welfare

What are some demographic

indicators of development?

• Life expectancy

• Infant mortality rate

• Natural rate increase

• Crude birth rate

What is GNI?

• Gross National Income (GNI): Total value

of goods/services produced by a state per

year plus net income earned abroad by its

nationalists; formerly called gross national

product

Continue…

• Argued that GNI is a more accurate

measure than GDP

• Some states experience a trade imbalance:

-Trade Surplus: (Exports > Imports) and

this adds to the value of an economy

-Trade Deficit: (Exports< Imports) and

this removes value from the economy

Formal Economy vs. Informal

• Formal Economy: legal economy that is

taxed & monitored by the gov. and is

included in GNI

• Informal Economy: economic activity that

is neither taxed nor monitored by a gov. and

is not included in GNI (illegal/black market

or uncounted activities)

What is PPP?

• Purchasing Power Parity: a monetary

measurement of development that takes into

account what money buys in different states

• Ex. Big Mac prices by states (2009):

-USA: $3.54

-Brazil: 8.02 Real ($3.45 US)

-Philippines: 98.0 Peso ($2.07 US)