Monday 18 February 2013

Economic Acitivities and Economic Inequality


Economic Geography

 

Natural Resources

          Natural resources are materials in the natural environment that people value and use to satisfy their needs.

          Renewable resources are natural resources that are constantly being replaced or regenerated by the environment.

          Soil and fresh water are constantly being replenished by natural processes.

          Nonrenewable resources are resources that cannot be replaced once they have been used.

          Nonrenewable resources are minerals that formed within the earth’s crust over millions of years.

          Coal, oil, and natural gas are nonrenewable fossil fuels that formed from the remains of ancient plants and animals.

          Recycling and reduction of consumption are ways of stretching limited supplies of nonrenewable resources.

 

§  Renewable resources examples would be soil, water, and forests

§  Nonrenewable resources examples--fossil fuels (oil, coal, natural gas), and metals (gold, iron, copper, and bauxite)

 

Human Resources

 

   Human resources are man and his mind

   Human resources depend on level of education, whether it is skilled or unskilled labor, and are entrepreneurial or managerial abilities needed.

 

Capital Resources

 

   Capital resources are resources that can be used to make more, like money or tools

   key features of capital are the availability of money for lending, the level of infrastructure, the availability and use of tools, machines, and technologies

    

 

Energy Sources

 

         Modern industrial countries use energy to light cities, power vehicles, and run machines.

 

         Fossil fuels are the most important and heavily used source of energy, but oil and natural gas reserves are spread unevenly across the world and will not last forever.

         Nuclear energy is produced by fission, the splitting of uranium atoms in a nuclear reactor to release their stored energy, but many concerns surround the use of nuclear power.

         Water power uses the energy of falling water to generate electricity.

         Geothermal energy uses the energy that comes from the earth’s internal heat to produce steam to heat homes or make electricity.

         Solar energy is energy produced by the sun that is stored to heat water and homes and to generate electricityThree levels of economic activity

 

What are four different categories of economic activities?

Why are global trade patterns changing today?

What kinds of data indicate a country’s level of development?

 

         Primary economic activities are those that rely directly upon natural resources, of which hunting, gathering, herding, forestry, farming, and mining are examples.

         Subsistence farming is the practice of only growing enough to feed one’s family or village, and commercial farming is the practice of raising crops and livestock to sell on the market.

         Secondary economic activities are those in which raw materials are used to manufacture products of greater value.

         A cottage industry is a small-scale industry practiced in subsistence economies, while commercial industry turns out large quantities of manufactured goods.

         Tertiary economic activities are service industries, which involve firefighters, lawyers, and salespersons.

         Quaternary economic activities are jobs that focus on the acquisition, processing, and sharing of information, such as education and government.

 

Nations set up trade networks when they do not have all the resources and goods they want.

Goods that are sent out of a country are called exports, and goods that are brought into a country are imports.

Governments seek a favorable balance of imports and exports because too many imports can be damaging to a nation’s economy by increasing unemployment and the nation’s debt.

Trade routes are determined by geography, transportation technology, and international relations.

Modern technology is changing the nature of global trade, as computer and satellite networks allow business deals and payment transactions to be conducted electronically.

 

 

Economic activities and trade patterns affect a country’s level of development.

Modern industrial societies are considered to be developed, countries with lower levels of prosperity are considered to be underdeveloped, and nations showing evidence of progress are called developing countries.

The wealth of countries can be compared by looking at the per capita gross domestic product (GDP).

Developed countries enjoy a higher standard of living compared to developing and undeveloped countries.

Developed countries have higher levels of education and health care, and they have more transportation and communication facilities per person.

People in developed countries consume more food and live longer than people in poorer countries.

 

 

 

Energy resources and technology as it has changed over time:

 

 

Wood—deforestation

 

Coal--pollution, mining problems, competition with oil and gas

 

Petroleum--transportation, environmental considerations

 

Nuclear--contamination, waste

 

Solar or wind--cost, aesthetics

 

 

Patterns of land use

 

Most economic activities are relatively close to the natural resources they use; ex.-coal/steel,  grain/cattle, fishing/ocean, hydroelectric power/aluminum smelting.

 

Not all nations are close to the resources they use: ex.--Japan has limited natural resources, but they are a major industrial power and the United Arab Emirates (UAE) have lots of oil, but no major industries.

 

Examples of technology creating demand

 

Some new technologies have created a demand for a particular natural resource--steam engine and coal, internal combustion engine and gas, computer chips and skilled labor.

 

Costs and benefits from using natural resources

 

Costs

 

    1.  Resource depletion.

    2.  Environmental destruction       

    3.  Health problems

 

Benefits

 

   1.  Helps us produce goods and services.

   2.  It creates employment opportunities

    3. It helps develop new technologies

 

 

 

 

The effects of unequal distribution of resources

 

Because resources are distributed unequally around the world, it causes several things to happen:

 

1.  Interdependence of nations -- they must trade with each other to acquire the goods they do not possess.

 

2.  Uneven economic development (rich and poor countries).

 

3.  Energy producers and consumers.

 

4.  Imperialism (one country dominating another).

 

5. Conflicts over control of resources.

 

 

Developed nations are generally urban. Most people in developed nations work in secondary and tertiary areas. Most developed nations have a high GDP. Most developed nations have a highly educated population.

 

Indicators of standard of living and quality of life

 

A nation has a high standard of living and a high quality of life if…

 

§  the population growth rate is low

§  the population age distribution is even

§  The literacy rate, life expectancy rate and percentage of urban people is high

§  the infant mortality is low

 

Why do countries trade?

 

   To import goods and services they need

   to export goods and services they can sell for profit

 

What influences economic activity?

 

1. A country’s access to human, natural and capital resources.

 

Do they have a skilled workforce?

Do they have natural resources?

Are their transportation and communication networks modern, outdated or nonexistent?

Do they have access to new technology?

 

 

 

2. A country’s location and ability to exchange goods.

 

Are they landlocked?

Are they an island or coastal nation?

How close are they to shipping lanes?

What is their access to communications?

Are they members of a political or economic alliance that provides access to markets? (Examples would be, the European Union (EU), North American Free Trade Agreement(NAFTA))

 

What is comparative advantage?

 

   Comparative advantage means a country will export goods and services that they can produce at lower relative costs than other countries.

 

What are the effects of comparative advantage?

 

   Enables nations to produce goods and services they can sell for profit

   influences the development of industries (ex. steel, aircraft, automobile, clothing)

   supports specialization and efficient use of human resources

 

Examples of countries and their use of resources

 

   Japan--highly industrialized despite limited natural resources

   Russia--has numerous resources but many are not economically profitable to actually develop

   United States--diversified economy , specialized industry, abundant resources

   Cote d’Ivorie--limited natural resources, but they use cash crops to buy manufactured goods

   Switzerland--has limited natural resources, but produces goods on a global scale

 

What are the effects of unequal distribution of resources?

   Unequal distribution of resources causes countries to specialize in the goods and services they produce.  It also encourages countries to trade with one another for the goods they can not produce themselves.  It allows only some to make a profit.

 

How has economic interaction changed over time?

 

   Labor has moved from individual homes (cottage industry) to factories to offices to telecommunications.

   There has been a large migration from rural to urban areas.

   Industrialized countries now export labor intensive work to developing nations.

   Trade alliances have grown in number.

   Service industries (tertiary) have grown in number.

   Financial service networks and international banks have increased.

   Products have become internationally assembled instead of everything being made in one location (ex. vehicles, electronics).

   Modern transportation networks that allow for rapid and efficient exchange of goods and services (ex.  Federal Express, UPS, US Postal Service) have grown.

   Widespread marketing of products has increased (ex. Fuji, Nike, etc).

 

Examples of Economic Unions

 

   EU--European Union

   NAFTA--North American Free Trade Agreement

   OPEC--Organization of Petroleum Exporting Countries

   ASEAN--Association of Southeast Asian Nations

 

Advantages of Economic Unions

 

   They allow for more efficient industries

   They have access to larger markets

   They have access to more human, natural, and capital resources without restrictions

   They have a greater influence on world markets

 

Disadvantages of economic Unions

 

   They cause some industries to close

   Certain industries become concentrated in particular countries while forgetting the smaller ones.

   Agribusiness is replacing the family farm.

   There is often difficulty in agreeing on common economic policies.