1. Industrialization models
APHUG Review

2. Industrialization
Process by which economic activities on earth’s surface evolved from producing basic, primary goods (food) to using factories to mass produce goods for consumption
Industrial Rev began in England in the late 18th c.
Types of ECONMIC ACTIVITY
Primary sector (agriculture) –uses raw materials from natural environment; largest in low income, pre-industrial nations (LEDCs) examples: farming, fishing, raising animals, forestry, mining
Secondary sector (industry)- transforms raw materials into manufactured goods; created late 18th c; examples: refining petroleum into gasoline, turning metals into tools and autos.
Tertiary sector (services)- involves services rather than goods; dominates post-industrial countries; based on computers and other electronic devices to process/store information; examples: construction, trade, real estate, government, transportation, retailing
Quaternary Sector- w/i tertiary sector; research and development, management, disseminating information, banking and finance

3. Newly-industrialized countries (NIC)
Compressed modernity-RAPID economic and political change that transformed the country into a stable nation with democratic political institutions
Examples of NIC-
South Korea-late 20th c- early 21st c- moved from poor, agricultural country to modern, economically strong with democratic institutions
Mexico- late 1980s dramatic economic growth due to abundance of oil

4. Economic Indicators of Development
GDP per capita – average income of people in the country; MDC’s greater than $20,000; LDCs about $1000; developing countries are in between
Types of jobs-MDC=fewer primary activity jobs, more in tertiary; LDC=opposite; NICs=mix of all three primary activities
Worker productivity-Workers in MDCs produce more because of access to more machines/technology; LDC rely more on human/animal power
Access to raw materials- countries develop more rapidly with access to mineral, oil, coal, natural gas, water, trees; ex. IR in England-access to coal
Availability of consumer goods- MDCs have enough wealth for needed good and services and for nonessentials; examples commonly used: cars, telephones, televisions
**economic development is often associated with social development: high rates of literacy, access to higher education, good health care=life expectancy, birth rates, death rates

5. Modernization Theory Westernization model
Britain was first country to develop
Prosperity, trade connections, inventions, natural resources spurred IR
Cultural environment favored change
Says tradition is the greatest barrier to change and growth
Ex: refusal to grant women equality

6. Rostow’s Stages of Modernization Theory
Modernization open to all countries
4 stages:
Traditional stage- build lives around families, local communities, religious beliefs; similar to ancestors; limited wealth; subsistence farmers
Take-off stage- often with gov encouragement; people experiment with producing enough goods not just for themselves, but to sell for profit; urbanization increases; IR; desire for material goods; family traditions diminish
Drive to technological maturity- technology accepted; people strive for higher standard of living; population reduced as children require more years of schooling; international trade expands
High mass consumption- luxury goods now become necessities; high incomes; most workers in tertiary services

7. Criticisms of Modernization Theory
Justification for capitalist systems to exploit poor countries
Has not/will not occur in many poor countries
Poor countries have MORE DIFFICULTY developing now due to globalization
Poor countries are BLAMED for now developing; blame the victim
**some say MDC should help LDC by encouraging them to control pop growth, increase food production, and use technology

8. Dependency Theory
Immanuel Wallerstein, 1974 using model of capitalist world economy, a global economic system based in high income nations with market economies
Traced economic inequality to colonial era when Europeans first took advantage of the world’s wealth
He divided countries into 3 types according to how they fit into the global economy:
Core countries-rich nations that fueled the world’s economy; took raw materials from poor countries; wealth goes to North Am., Europe, Australia, Japan (multi-national corporations
Countries of the periphery-low income countries drawn into world economy by colonial exploitation; continue to support rich countries by supplying with cheap labor and large markets
Countries of the semiperiphery- low income countries that fall somewhere in between, but are dominated by core countries
**world economies benefit rich nations and harms others by making them dependent on them
Lack industrial capacity; export largely oil, fruit, coffee; spend more than they take in; high foreign debt
**criticisms- allows for nothing but rich get richer, poor get poorer; too much blame placed on rich countries; does not account for hard work and ambition, family size and tradition

9. Self-Sufficiency Model
Encourages isolation of fledgling businesses from international competition
LDCs can only escape global inequalities by shielding local businesses from trade internationally and must encourage internal growth
Import taxes, expensive licenses on foreign business led to reduced quality of goods at higher prices (inefficiency) due to lack of foreign competition.
Example: India- increase in internally improved production, but with lower quality products (clothing)
** “Asian Tigers” (Hong Kong, South Korea, Singapore, Taiwan) –booming economies that used export-based industrialization-directly focusing on production that can be directly integrated into the global economy.
product life cycle- take a product that already exists, improve it, make it cheaper, then export in back the to innovator (automobiles and electronics)