Economic Development

Traditional

Command

Market

Types of Economic Systems

Traditional Style

1. Subsistence farming – farming for family consumption

2. Barter and trade

3. Rural areas, low technology

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Cottage industries

The making of handicrafts and

handlooms forms the core of the

cottage industries in India

Dried catfish production drying racks in Myanmar

Watermelons

village distribution center

Pottery is an age old cottage

industry in Bangladesh

Command Economy

1. Central planning

2. Govt controls price/supply

3. Govt controls location of business

4. All citizens “share”

What kind of government is this type of economic system

usually associated with? Has it been successful?

Commercial/market/free enterprise

a. People choose products to buy

b. Driven by profit

c. specialization even in agriculture.

d. Work for money so you can buy goods

e. interdependence

Draw this on your paper

Traditional

Market

Command

Sort the following vocabulary into three categories:

Traditional, Market, Command. Terms may appear in more than one column

Entrepreneur Market Capitalism

Barter Cottage industry Subsistence

Free enterprise Equality Opportunity

Cost Class Specialization

Communism Socialism Innovation

Stagnation Manufactured need Resource allocation

Scarcity Choice Profit

Incentive Competition Cooperative

Common ownership Free association

Types of Economic Activity

1) primary

a) Use natural resources on site (ex. Steel mill at an iron ore mine)

Copper Mine Forestry

2) secondary

a) Factories use materials (usually shipped to them) to produce something new

b) Can be located “on site”

3) Tertiary

a) Provide services

b) Store clerks etc.

c) Located where people are

4) quanternary

a) process, administer, and disseminate information.

b) used to describe "white collar" professionals working in education, government, management, information processing, and research.

c) Can be located anywhere given the technology

How would you classify jobs at Blue Bell?

Primary

Secondary

Tertiary

Quaternary

Levels of Economic Development

1. Developed (more developed - MDC) and developing (less developed - LDC)

2. resources are uneven

3. Historical factors

5. Characteristics of Less Developed vs. Developed Countries

Developed Countries

High standard of living Modern transportation and communication— infrastructure Good medical care Adequate clothing The majority follow modern ways of life

Less Developed Countries

DO NOT have a high standard of living

DO NOT have modern transportation

DO NOT have good medical care

Do NOT have adequate clothing The majority follow traditional

ways of life

This Nigerian woman is gathering water from a local

pond, which is used as a source of drinking water. Credit: Photo by E. Staub, Courtesy of CDC and the Carter Center

More developed regions

Anglo-America – Western Europe

Eastern Europe – Japan

South Pacific

Less developed regions

Latin America – East Asia

Southeast Asia – Middle East

South Asia – Sub-Saharan Africa

What do the MDC’s have in common?

South Korea, Taiwan (ROC), Singapore, and Hong Kong’s economies more developed

than their neighbors’ economies. Why?

Eastern European countries are considered MDC’s but are also considered “in transition”.

Why?

What do the LDC’s have in common? What are the concerns with labeling all of these

regions the same?

Human Development Index (developed by the UN)

1. Life Expectancy

2. Gross domestic product per capita

3. Literacy Rates

Demographic Indicators

GDP

Life Expectancy

Literacy

Infant Mortality

unemployment

What does each tell us about a country?

United States

GDP per capita - $49,000

Life expectancy – 79

Literacy – 99%

Infant mortality – 6

Unemployment – 9%

Push or Pull factors?

Mexico

GDP - $14,800

Life expectancy – 77

Literacy – 86%

Infant mortality – 17

Unemployment – 5%

Push or Pull factors?

China

GDP - $8,500

Life expectancy – 75

Literacy – 92%

Infant mortality – 15

Unemployment – 6.5%

Push & Pull factors?

Haiti

GDP - $1,300

Life expectancy – 62

Literacy – 52%

Infant mortality – 52

Unemployment – 41%

Push & Pull factors?

Ghana

GDP - $3100

Life expectancy – 61

Literacy – 67%

Infant mortality – 15

Unemployment – 11%

Push & Pull factors?

IV. Globalization Globalization – economic partnerships business

to business or country to country

For example: Exxon Mobil has branches on every continent – each one may have a different purpose –

*Drilling – US

*Refining – China

*Communications – India

*Advertising - Europe

In the 1700’s, most were subsistence farmers…

The Industrial Revolution changed our production capabilities…

Growth during the industrial revolution required natural resources

Those with access to the most resources were the “winners”

2009 Data

Demand drives the market, if something breaks the chain then the global market will slow down…

Developed countries demand began to slow in the 1970’s..

Developing countries consumers were far from markets and transportation/skills were inadequate…

Began OUTSOURCING

Outsourcing is sending low skill work to other countries because it’s “cheap” -

This keeps prices in developed countries lower

Forces developed nations workers to increase skill level or be “outsourced”

All countries are competing now for markets and resources

2) Has led to conflict in some regions of the world.

Golan Heights – water

Israel and the Palestinian crisis -- water

along the Sahel-Saharan fringe -- close correlation

between conflict and rainfall. There is competition over land

for grazing in pastoral areas and, further south, conflict

between farmers and pastoral communities.

Somalia -- water and water points.

Rwanda and Burundi, --agricultural land

Chad -- agricultural land and pasture.

Darfur -- land and resources

Cold War—resources and markets

Sierra Leone and Liberia—coltan (which is needed to make

electronic equipment) and diamonds

Iraq and Kuwait – oil

Nigeria, Kurdistan, Niger and between South and North

Sudan – oil

Spratly Islands – oil

Iraq vs Kuwait – oil

In Angola, civil war for money from diamonds, ivory, oil and

other resources

Etc.

Trade Blocs

a) NAFTA —US, Canada, and Mexico—eliminating trade barriers

European Union (EU) trades within group and taxes imports from non members.

2) Transnational Corporations

Operate factories in countries other than their headquarters

Activity #2: How can less developed nations advance their standards of

living?

Scenario: A billion-dollar company is looking to invest and move its

headquarters to one of these countries: Qatar, China, Botswana,

Azerbaijan, Republic of Congo, Angola, East Timor, Iraq, Liberia,

Afghanistan, Uzbekistan, or Turkmenistan.

Form groups and have each group choose one of these countries to

research the following information: average life expectancy, infant

mortality rate and literacy rate.

The students will present their information and discuss why their country

offers the best opportunity to grow a business, and how the development

of that country might be further promoted through social programs.

Finally, (on their own paper) ask the students to make their choice for

placing the new headquarters. Explain their reasoning. Also, suggest

what social programs should be implemented to assist that country.

Activity#3: What is the connection between the levels of

development and different types of economic activities?

Have students define primary, secondary, tertiary and

quaternary economic activities, and provide examples of each.

Then ask students to research the main types of economic

activities found in Mexico and classify them. What is

Mexico’s level of economic development?

How did NAFTA change Mexico’s typical economic

activities?

How are current concerns with drug trafficking affecting

Mexico’s economic development?

Activity #4: How does globalization affect you?

Students will choose 25 items from their classroom or

home and write down where these items are from

around the globe.

Identify the location of these items on a map

indicating the possible paths these items took before

arriving in the United States.

Are there any trends?

Predict the changes you think globalization will bring

about in future.