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- Review Questions |
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GDP, GNP, PPP are THREE methods of measuring income ( No Lecture ) |
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There are FOUR types
of economic activities: Primary Activities, Secondary Activities,
Tertiary Activities, Quaternary Activities ( No Lecture ) |
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Economic Development |
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Factors affecting Economic Development |
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In-class project: Factors affecting economic development in Appalachia |
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Lenowisco |
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Globalization |
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Global Banking & Finance |
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International Division of Labor ( Previously discussed in Chapter 2 ) |
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Global assembly line |
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Global auto industry |
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Global apparel |
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Global office |
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Tourism & Economic Development |
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In-Class Project: Jethro, Ellie Mae & Tourism in Appalachia |
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GDP: Gross Domestic Product: is the economic measure
of the total value
of all materials, foodstuffs, goods, & services produced in a year inside one country |
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Economist also analyze per capita GDP 'per capita' means 'per person' | ||||
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GNP: Gross National Product: is the economic measure
of the total value
of all materials, foodstuffs, goods, & services produced in a year by the residents of one country whether they are in that country or not |
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Economist also analyze per capita GNP | ||||
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The US formerly used GNP to measure income, now, like the rest of the world, we us GDP | ||||
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PPP: Purchasing Power Parity: how much currency
is required
to buy a “market basket” of goods: |
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PPP adjusts GDP to lower levels in rich countries
PPP adjusts GDP to higher levels in poor countries |
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This is done because one $ will not buy a hamburger in the US,
but it will buy a day's food in Somalia |
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1. Primary activities are concerned directly w/ natural resources
extraction
This includes the Agricultural Sector & the Extractive Industries Sector |
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2. Secondary activities transform natural resources via
manufacturing
This includes the Industrial Sector |
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3. Tertiary activities include the sale & exchange of goods
& services
This includes the development of the consumer economy |
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4. Quaternary Activities include information processing
This includes the Service economy info, hi tech, financial sector, etc. |
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| U.S. is considered post-industrial: tertiary & quaternary activities | |||||
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The Geographic Division of Labor is based on these types of
activities
Peripheral nations are mostly engaged in primary activities, w/ some of the other activities Semi-Peripheral are mostly engaged in Secondary Activities, w/ some of the other activities Core Countries are mostly engaged in Quaternary Activities, w/ some of the other activities |
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Economic Development is the transformation of the nature &
composition
of the economy & usually implies increases in prosperity Process whereby simple, low-income national economies are transformed into modern industrial economies |
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Economic growth is not the same as economic development
The former implies quantitative growth only The latter implies quantitative growth, but more importantly qualitative growth, a movement up the hierarchy of economic types: agriculture, extractive, industrial, high tech, service |
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| Review: Types of economic activities: Primary, Secondary, Tertiary, Quaternary |
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The history of economic development is that in the early 1900's,
European colonialism ended
Economic development was not recognized as a social process until after WW II Former colonies & other countries had low living standards compared to the developed countries The colonies came to be known as developing countries |
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As concept of economic development emerges,
the concept of an developing /undeveloped country emerges |
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Economists usually rank countries as developed, developing or undeveloped
based on per capital income criterion |
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There are several problems w/ using this measure to determine economic
development
- may have oil rich nation w/ hi per capita income, but are otherwise undeveloped - problem of comparing dollars to denars & cost of living |
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GDP, GNP, PPP are THREE methods of measuring income |
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There are FOUR types
of economic activities: Primary Activities, Secondary Activities,
Tertiary Activities, Quaternary Activities |
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Examples of comparing economic development | ||
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The gap between rich & poor is over $20,000 and growing
Core: PPP GDP: $ 15,000 to $ 20,000 per yr. Periphery: PPP GDP: $ 750 to $ 7,000 |
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Geographical Path Dependence analyzes the relationship
btwn the present activities & the past activities of that place There are always different pathways to development according to the circumstances of the variations in factors involved |
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What is the Geographic Path Dependence of the coalfields? | ||
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Economic Development causes changes in FIVE major areas
a. structure of region's economic type of base: Agriculture, raw material extraction, industrial, info/ high tech, services b. form of economic organization (e.g., barter, pure capitalism, state capitalism, socialism) c. availability and use of tech d. basic living conditions e. physical framework or infrastructure |
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Uneven development is a problem that has plagued nations & their
economies:
e.g., a nation must have the infrastructure of roads, power, etc. to support an industrial base |
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An analysis of Gender & Development demonstrates
that in no country are Women better off than Men Core: Women have 85 to 95 % of wealth compared to Men Periphery: Women have less than 5 % of wealth compared to Men |
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Developers have found that women invest in new sectors of the economy,
whereas men are more likely to invest in traditional areas Women must go to new sectors to gain an economic foothold |
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Regional Patterns in Development are a form of uneven development | ||
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Regional Patterns in Development are explained by the unique interaction
of
factors affecting development & scarce resources, history of neglect, (history of exploitation), lack of investment, concentration of low skilled people, etc. |
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Explain how each of these has occurred in the Appalachians | ||
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In reality, many pathways exist to development
The same factors that effect econ development itself, also effect which pathway is followed |
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Regions are interdependent & Econ Development is based on geographic, physical & social factors | ||
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The First Historic Pathway to Development had phases, i.e. these SIX
phases
a. Hunter-gatherer economy b. Agriculture economy c. Raw Materials Extraction economy d. Industrial economy e. Info Processing / High Tech economy f. Services economy Most core countries followed this path to its end Most semi-peripheral countries are struggling in extraction or industry Most peripheral countries are struggling in H-G, Agricultural, extraction |
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We cannot yet foresee what the next type of economy will be for the
core countries
We now understand that the pathway to development for semi-peripheral & peripheral countries will not be the same path taken by the core countries Thus economists, social scientists, politician, business people, etc. are all attempting to discover the best pathway for each type of nation to take |
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There are EIGHTEEN Factors Affecting Economic Development | ||
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1. For Econ Dev, Location dictates centrality to resources, markets, competitors, suppliers, etc. | ||
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2. For Econ Dev, the State of the World System
significantly affects economic, political & other relationships |
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Today, most analysts believe we have one superpower
Other single superpowers include the ____________ Empire & the ____________ Empire During the Cold War we had ______ Superpowers During the WW1 Era & the Confuscian era there were no superpowers |
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3. For Econ Dev, a nation's Place in World System ( core,
semi-periphery, periphery )
affect whether a nation experiences a history of neglect & exploitation or history of imperialism |
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4. For Econ Dev, the Availability of Resources such as
people, land, minerals,
water, energy, cultivable land, etc. are important but not totally determinant |
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Japan & England have few resources while many peripheral nations have many | ||
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5. For Econ Dev, Societal Conditions such as political
freedom, patriarchy, religion
affect the economy because they affect "human capital" |
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6. For Econ Dev, Processing Costs such as Labor costs,
resources, technology, transportation
have a direct impact on any economic project |
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7. For Econ Dev, Infrastructure such as roads, power,
ports, warehouses, etc.,
are the necessary foundation for any type of economic development |
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Each type of economic system ( agriculture,
extraction, industry, etc.)
needs a specific type of infrastructure |
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Give an example of two types of different economic systems & their infrastructures | ||
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8. For Econ Dev, appropriate Technology Availability is
important.
Economies must have the physical technology & the expert systems necessary for their stage of development not just computer tech & telecommunications, but technicians, support services Nations must have appropriate must have Technical Systems |
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A common problem in economic development is that nations
often try to leap too far ahead in technological & economic development Russia & Stalin succeeded at this after WW2 China & Mao failed in the 50s & 60s |
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9. For Econ Dev, the Skill of People including educational
level, technology level,
ideology, etc. are important human capital features |
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10. For Econ Dev, the State of Industry includes such
factors as support services,
suppliers, subcontractors, market, chain of production, etc. |
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| Blank | 11. For Econ Dev, Market Availability includes such factors
such as
chain of production or final market: proximity? competitiveness? saturation / maturity? |
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| Blank | 12. For Econ Dev, Transportation Costs are an important
infrastructural cost
the basic forms of transportation are RR, air, semi trucks, river shipping, ocean shipping |
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| Blank | 13. For Econ Dev, Govt Policies include taxes, tariffs,
subsidies, labor conflict, war, etc.
Governments also affect Stability: businesses detest uncertainty more than anything |
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14. For Econ Dev, Investment Level determines how fast an economy
can change, grow & develop Does people have the confidence to invest in this locale? Examples: US, Russia, Iran |
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15. For Econ Dev, the Initial Advantage emphasized the
importance of an early start
Being 1st often better than being best Example: Microsoft windows may not be as good as other operating systems |
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16. For Econ Dev, Agglomeration Effects are the advantages
of clustering w/ other
firms, industries, countries, etc. AKA external economies: These are costs or benefits that arise from circumstances beyond the organizations control |
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There are SIX Causes of Agglomeration Effects | ||
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a. Backward links are strong, competitive, innovative suppliers | ||
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b. Forward links are strong, competitive, innovative markets, including producer markets | ||
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c. Ancillary (service) linkages include services & subcontractors | ||
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d. Economies of Scale assists agglomeration in that
it is more efficient to build bigger facilities which encourages suppliers etc. |
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e. Atmosphere reflects a community of interest among producers, govt,
research institutions, etc. which creates flows of resources, info, products |
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f. Social Capital consists of labor & infrastructure base are built | ||
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Areas such as SW Va are known for a good work ethic | ||
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17. For Econ Dev, the Localization Economies are impacted
by
the Agglomeration Effect of a location in FIVE areas a. Pool of specialized labor increases b. Increase in population c. Increase in support business d. Creates tax base e. Creates infrastructure |
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18. For Econ Dev, Urbanization Economies are impacted
by the Agglomeration Effects of an urban area |
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There are FIVE Factors affecting economic development in the core | ||
| Blank | a. Initial advantage | ||
| Blank | b. Agglomeration effects | ||
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c. Localization effects | ||
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d. Gunnar Myrdal held that Cumulative Causation
is a spiral of agglomeration & local effects
that attracts the entrepreneurial types: young, enterprising people w/ capital |
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e. Backwash effect occurs when in one
region saps resources of adjacent regions:
This helps explain why Economic Development is so uneven |
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There are SEVEN Factors affecting Economic Development in the Periphery | ||
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1. Spread effects are the positive impacts
of Econ Dev on a region or adjacent regions
(opposite of backwash effects) |
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2. Import Substitution is the process by which
domestic producers provide goods or services
that formerly were bought from foreign producers Import Substitution allows Periphery to become independent of the Core |
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Import Substitution allows the Periphery to become independent of the Core | ||
| Blank | 3. Agglomeration Diseconomies Mitigation is
the attempt by a nation to reduce
the negative effects of urbanization, industrialization, development such as - higher prices - traffic - waste disposal - higher taxes - pollution |
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4. Creative Destruction occurs because old
economies are always being replaced
by new economies Pac man economics: big firms takeover/eliminate little firms Example: Deindustrialization in today's core |
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Deindustrialization is the process
by whereby major industrial nations or regions
lose their industry, usually as a result of it moving to semi-peripheral or peripheral nations |
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5. Govt Intervention occurs because today
most governments take some responsibility
for stimulating their economies via THREE major strategies |
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a. Monetary policy:
- interest rates - money supply |
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b. Fiscal policy:
- govt investment - tax policies |
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c. Econ Development
Policy: govt subsidizes & building economic development
- grow poles - enterprise zones |
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6. Growth Poles are economic activities that
are deliberately organized
around one or more high-growth industries |
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to develop a particular hi-growth industry, e.g. propulsive industries
Both actually participate in a project |
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| Blank | 7. Enterprise Zones are government created
areas
in which policies are structured to encourage economic development Enterprise Zones usually have low taxes or are free of some other type of regulation |
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| Blank | Lenowisco |
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| Blank | In-class project: Factors affecting economic development in Appalachia |
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Lenowisco: Lee Norton Wise County | ||
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Lenowisco is a local development coalition covering Lee County, city of Norton & Wise County | ||
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ARC: Appalachian Regional Commission | ||
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ARC was established by President Kennedy in 1965
to promote economic development of the Appalachian region |
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ARC & Lenowisco had FOUR original goals
a. road building b. established 200 growth centers c. build infrastructure d. economic incentives: tax breaks |
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There are TWO Major Critiques of Lenowisco
a. Growth centers were too small & too numerous b. Built a good highway system but secondary roads are weak |
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Globalization is the interconnectedness of different parts of
the world
through economic, environmental, political, cultural, etc. convergence ( change ) |
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The Global Economy is specializing through Locational Flexibility | ||
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800 mm people are tied directly to global market
US, Europe, Japan are the core & have totally globalized economies Many other peripheral countries are partially globalized |
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Global culture(s) are rising & falling
Strong cultures are infectious. What is the most well known word in the world? |
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Global forces are so powerful, they are affecting the global environment | ||
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There are FIVE Features of the Global Economic & Cultural Systems | ||
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1. Complementarity occurs when demand in one place is complemented by supply in another | ||
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2. International Division of Labor: specialization of labor by country | ||
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3. Economies of Scale: efficiencies created by world scale operations | ||
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4. Transferability: the
ability to move capital, skills, technology, or products
creates deindustrialization in the core & economic development in the periphery |
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5. Spatial Diffusion: expansion,
relocation, hierarchical: the way things spread
through space over time |
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There are FOUR Factors Affecting Globalization & Local Economic Development | ||
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1. International technical systems: Today, the technological
systems
are almost all international in scope |
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2. International consumer markets
As late as the 70's only a few peripheral nations were open to international trade & only 33 % of the workers in centrally planned economies: SU, China, etc. & in the core countries 33 % workers not in the world system because of trade barriers, etc. Today, only 10% of the entire world's workers are outside of the global economy |
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3. International division of labor |
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4. Global Banking & Finance |
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Americanization is a powerful quality of Globalization |
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Globalization of banking & finance: $ creates $$ | |||||||||||
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1996 estimated a transfer of $3 - 7 tt / DAY --& only
10% has to do w/ the world economy
the movement of $$, bonds, etc. is an end in itself: forms of arbitrage: trading to gain short term advantage |
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International finance is dominated by finance in core countries including the "world institutions" of | |||||||||||
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- IMF | |||||||||||
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- World Bank | |||||||||||
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- WTO | |||||||||||
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There are NINE Developmental Factors affecting global banking | |||||||||||
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1. Institutionalization of savings: pensions, etc. established large pools of liquid capital | |||||||||||
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2. In 1973 oil rose 4X rose creating
rich oil nations who found Western Banks to save it
( imagine if oil rose 4X today to $4.50/ gal! ) |
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3. Oil rich countries expanded international banking operations | |||||||||||
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4. The Globalization of manufacturing
& trade meant that global corporations
needed global banks 24 hrs a day |
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5. The development of offshore banking
centers responded to the need
to launder money & avoid taxes |
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6. International economic development:
core lends $$ to periphery & semi-periphery
through the World Bank & private banks such as Morgan & Citgroup Borrowers incurred huge international debt |
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7. 1980s: Banking deregulation
under Reagan allowed banks to grow in size
& enter the stock market |
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8. US Trade deficit emerged as a result
of oil & foreign goods purchases
& created a pool of "Eurodollars" making the $ an international currency |
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9. Hot money is created by illegal income: drugs, economic development, other illegal activities | |||||||||||
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World economy in the 1970s sees the emergence of global banks
The US economy was stressed by Vietnam war 1973 oil rose 4X to $1.00 + The US core economy was challenged by the "WWII core" especially Europe & Japan By the mid 1980s, semi-peripheral nations develop, challenging core, especially Korea, India, etc. |
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These economic developments caused stagflation:
-- A Stagnated economy is called a recession or a depression -- Inflation is the general rise in prices Economists still do not have healthy way to deal w/ this Response of core to trade deficit/balance of trade: print more $$: short term solution: caused inflation |
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In 1975 the World's largest banks were spread evenly in the core
US 7 NY & LA Citibank earn 70% from international operations Europe 13 London, Paris, Berlin, etc. Japan 10 Tokyo, Osaka |
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In 1995 the World's largest banks were spread unevenly
US 1 NY: only Citibank (ranked 30th) Europe 10 Comparatively smaller than in the 70s Japan 18 Comparatively larger |
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Financial centers have reaped agglomeration effect in finances:
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Finical Centers are seen as centers of authority w/ critical mass of
people-in-the-know
about market conditions, finances, etc. They have thus become world cities Several TV stations track business news 24 hrs a day: CNNfn, MSNBC |
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"Old world" private banking centers mostly
function as havens for the rich
& are not into investment for growth |
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- Switzerland | |||||||||||
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- Kuwait | |||||||||||
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- Luxembourg | |||||||||||
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- Liechtenstein | |||||||||||
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- Canton | |||||||||||
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"New world" Off-shore financial centers | |||||||||||
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- Bahamas | |||||||||||
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- Bahrain |
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- Belize |
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- Cayman Islands |
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- Cook Islands | |||||||||||
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- Costa Rica |
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- Labuan |
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- Panama |
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- Vanuatu |
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Attraction of off-shore financial centers is a lack of regulations
Low or no tax setting Havens for undeclared income & hot money Discreet markets in which to deal currencies, bonds, loans without the attention of regulatory authorities in core countries: IRS, etc. |
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$ 300 bb / yr ends up in off-shore centers through tax evasion alone
Overall, 60 % of world's cash resides in these pirates coves of finance |
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The International Division of Labor has always existed,
but evolved rapidly on EIGHT fronts since the late 1950's |
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1. US has declined as an industrial, economic, & political power relative to rest of core. Why? |
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2. International division of labor has proceeded via deindustrialization |
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3. Producer services arise & displace manufacturing |
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4. Technology makes the world smaller |
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5. Globalization of consumer markets: international global
consumer tastes
US mkt. is now accustomed to foreign goods (after 20+ yr.), rest of world is moving that way |
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6. Trade blocks evolve: NAFTA EU ASEAN |
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7. Supra-national corporation |
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8. Other global organizations: IMF WTO UN World Bank GATT |
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Critique of the international division of labor by core
For workers there is competition w/ low wage workers For the economy there are many "technical problems" For the consumer there are product problems |
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Critique international division of labor by non-core
For workers there is often exploitation by multi-national corporations At the national level there is pollution economic imperialism At the individual level, there is a loss of local products, & people cannot afford the products they produce |
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The International Division of Labor makes the Global Assembly Line possible |
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Most global corporations are conglomerates who produce a variety of products |
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In 1973 global stagflation, a combination of stagnated economy (recession)
&
inflation, resulted as OPEC raised oil prices 2000: will we repeat this scenario? In 73, global strategies did not seem so efficient |
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Global Commodity Chain are global networks of
- labor - raw materials - production processes - markets which results in delivery of finished product |
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Commodity chains have grown longer --to global dimensions | ||
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There are FOUR Advantages of global assembly lines | ||
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1. Standardized global production maximizes
the economies of scale
Corporations push the creation of global, standardized markets |
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2. Utilization of least cost methods | ||
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3. Independence from single source suppliers | ||
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4. Strategic alliances have FOUR Advantages
a. allow transnational corps to link up w/ local "insiders" to tap into local markets b. quick, inexpensive means to exchange info about technology, products, & processes c. reduce costs of product development d. spread costs of market research |
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Peripheral govts encourage subcontracting to their nation's businesses
They offer incentives to transnational corps: - Tax holidays - Export-processing zones (EPZ's) - Minimum bureaucracy - No foreign exchange controls - Available factory space, etc. |
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US & World Bank back regimes that support globalized production
Have pushed for austerity programs to make labor cheap in peripheral countries |
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The desire of many peripheral countries is to follow path of economic
development from
labor-intensive industry to capital-intensive, hi-tech goods as have Singapore & So Korea |
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The development of the early auto industry ( pre-globalization)
was characterized by an industry of small, entrepreneurial businessmen & inventors Many carriage makers, bicycle makes & mechanics were early innovators |
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Early success of American auto industry
is traceable to pioneering efforts in the creation of formally rational systems |
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There were FOUR early innovations in the formal rational systems
a. Bureaucracy ( Weber ) b. scientific management ( Taylor ) b. the assembly line ( Ford ) c. the divisional system ( General Motors: Sloan ) |
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Japanese industrialists transported these techniques to Japan | ||
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General MacArthur & industrialist named Demming
to head the Japanese Ministry of Industry & Technological Innovation ( MITI ) Demming also brought QCC's to Japan because the idea was rejected by Am auto makers |
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The Japanese added TWO formally rational systems, which American have
since adopted:
a. just-in-time inventory b. permanent employment |
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The Japanese also developed the other three types of rational systems
( Review: Rationalization ) |
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a. Substantive: utilized
value of subordination of the individual to the group
& even subordination of the individual to the corporation |
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Japanese worker was motivated by assembly line controls & group solidarity | ||
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b. Intellectual rationality: Japanese auto created & used more engineers than the US | ||
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Japanese accorded a significant role to intellectual rationality in
the auto industry
as a result of their societal value for learning & education |
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c. Practical Rationality:
Japanese auto developed QC's to involve line workers
in product improvement |
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Developing all 4 forms of rationality means developing systems,
corporate values, & hi & low skilled workers |
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Thus, Japanese utilize skills of their least-skilled workers & their best-trained workers | ||
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Americans have largely ignored both sets of workers,
expecting little more than a mindless eight-hour work day |
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Japanese auto outperformed US auto
by developing hyperrational systems while Americans continued w/ formally rational systems |
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US auto began to copy some Japanese techniques & so begin to catch up... to a limited extent | ||
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Hyperrationality in the auto industry was one major factor that
allowed it
to develop into a global system |
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Review: Rationalization & Hyperrationalization |
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Review: Globalization |
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The global auto industry produces 40 mm vehicles yearly from 10 global
corps
GM, Ford Toyota, VW, Nissan, Fiat, Peugeot-Citron, Honda, Mitsubishi, Renault, Chrysler (merged w/ Mercedes in 2000) |
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In 1996, the top 41 largest auto mfr's had 244 strat alliances to share parts & establish joint ventures | ||
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Ford Motor Company developed the first global assembly line
The Ford Fiesta was the first in series of Fords "world cars" The "World Car" became a negative selling point during the deindustrialization of the 70s Some Fords are now produced in 15 nations on 3 continents |
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See also: Fordism |
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Volkswagen's global assembly line produces in 16 nations on 5 continents |
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History of garment industry: 1800 to present | ||
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In the 1800s the Garment industry developed in urban areas of
core nations
Small firms used cheap, migrant or immigrant labor |
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From 1900-1950 the larger firms emerged
and their success was based on mass production & mass markets |
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In 1960 less than 7 % of US apparel was imported | ||
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From 1950-1980 the deindustrialization of the garment industry
resulted in its movement to the South for cheaper labor & to avoid unionization |
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From 1950-present the deindustrialization of the garment industry
resulted in its movement to peripheral & semi-peripheral nations |
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In 1980 more than 80 % of US apparel was imported | ||
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The Table of global sourcing by US retailers demonstrates the hierarchy
inherent in the garment industry |
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Garment production in Core Nations consists of major Fashion
Corporations
who produce hi-end apparel such as women's fashion, outerwear, lingerie, infant wear, men's suits, etc. This production line is based on frequent style changes & hi quality finish This production line requires short production runs & greater contact btwn manufacturers & buyers Thus they are set in urban areas of core |
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Garment production in Semi-Peripheral Nations consists of Fashion
Corporations,
Department stores, Mass Merchandising Firms & some Discount Stores There are fewer & less dramatic fashion changes in this market This production line produces medium quality goods This production line has longer production runs |
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Garment production in Peripheral Nations sells to Mass merchandising
firms,
Discount Stores, & Small importers |
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US garment production has many sweatshops | ||
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Los Angeles: 120,000 garment workers: 80% from Mexico & Central America | ||
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San Francisco: Levi Strauss headquarters
600+ suppliers in 50+ countries W/drew contracts from China, Burma, Peru because of human rights violations |
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NYC: Liz Claiborne Clothing
80% manufactured overseas, mainly in Far East 300+ foreign suppliers No single supplier manufactures more than 5 % of their total Has moved many operations back to US to control quality & to get quicker response to changing fashion In 1994, production of 1 mm sweaters moved from Asia to Brooklyn In 1995 showcase factory opened in NYC's Chinatown, operated by Hong Kong manufacturer |
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Beaverton, OR: Nike headquarters
World's largest sports apparel corporation $2 bb / yr Most production in low-wage peripheral nations Once had production primarily in US & UK Today, all production subcontracted to So & East Asia First in Japan, then in So Korea & Taiwan Moving to Indonesia, Malaysia, China Nike & Michael Jordan attacked for labor rights issues |
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The Front-Office is that part of an organization where transactions
occur
that directly deal w/ the customer |
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Front-Office Transactions include business services such as sales,
customer help,
complaints, exchanges, etc. |
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The Back-Office refer is the part of an organization where transactions
occur
that support the function of the organization |
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Back-Office Transactions include routine record keeping, banking, financing & accounting | ||||
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Front & Back Offices have been separated from the main organizations
in major metro areas & moved them to a. On-Shore locations in less developed areas in small town & suburban locations b. Off-Shore locations in Peripheral & Semi-Peripheral nations |
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On & Shore Offices are made possible by the growth in electronic
offices
This type of growth has expanded in the quaternary sector |
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On & Off-Shore Offices developed for the same reasons as
deindustrialization:
a. cheaper labor b. cheaper office space c. less regulation of labor d. avoid unionization |
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Examples of On & Off-Shore Offices | ||||
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The Scope of Tourism is such that by 2000, tourism is the largest single
item in world trade
1 in 15 wkrs work in tourism, for 150 mm Tourism workers worldwide |
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The major occupations in Tourism include: transporting, feeding, housing, guiding, amusing | ||
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Only 10% of Americans have passports
Most tourism is done in home country |
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1970: 147 mm tour trips abroad
1995: 650 mm tour trips abroad 2010: estimated to be 1 bb tour trips abroad |
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International tourism is increasing in breath: now 1/8 of people go
to peripheral nations in Africa, Asia, & Latin America |
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Investment in tourism is relatively low compared to agriculture &
industry
because Tourism has a low-cost infrastructure There are no heavy plants and little hi tech equipment |
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The cost of creating 1 job in tourism is less than 20 % of a manufacturing
job
& less than 2 % of hi technology job |
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Typically, only 40 % of the cost of a trip is reaped by the local region
If trip involves foreign owned hotel, falls to 25% Who gets the $$ & why? |
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The effects of tourism are not always strong at local level because
a. A large part of the cost of tourism is transportation, which is reaped by transnational corporations b. Transnational corporations own many tourism assets: hotels, tourist attractions, entertainment centers, etc. So profits often return to core countries c. Tourists & Tourism is concentrated in the Core Nations in that 20 affluent countries yield 70% of tourists & most of their spending benefits major corporations |
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Tourism often creates economic vulnerability in a region
All industries have some level of risk/volitility Tourism, like all hi-end aspects of consumption depends on style & fashion Thus a region may lose it's popularity |
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Some destinations are sought because of their remoteness & "natural"
undeveloped qualities
Thus through their own success, they become congested & thus less popular |
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Examples of Destination Destruction | ||
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Another common risk of tourism is that it displaces traditional occupations
of agriculture, resource harvesting, industry, etc. This decreases the diversity in the economy, making it more susceptible to fluctuations |
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The local benefits of tourism are limited to only some sectors of economy
Who does Tourism provides income to ? |
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Tourism can help or hurt
a. indigenous lifestyles, regional cultures, arts & crafts b. wildlife preservation c. environmental protection d. the conservation historic buildings & sites |
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The local disadvantages of tourism include harm to indigenous cultures
Adulterate & debase indigenous cultures Unsightly development Pollution Environmental degradation |
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Examples of Tourist related environmental degradation | ||
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Exploitative relationships package Lifestyles & Regional cultures
for sale
Cultures & Artifacts lose their original meaning & become trinkets Traditional ceremonies become acts Artifacts are manufactured not for original use, but as collectors items |
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Alternative tourism has developed which has less of an impact
But to date, alternative Tourism has existed mostly for the wealthy & the environmentally concerned who are willing to spend more than the average tourist |
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Alternative Tourism emphasizes respect for the local culture &
the environment including:
self-determination, authenticity, social harmony, preservation of the environment, small-scale development, the use of local techniques, materials & architectural styles |
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Alternative Tourism must be aimed at tourists who are both
wealthy & environmentally conscious Not a large market, but growing |
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In-Class Project: Jethro, Ellie Mae & Tourism in Appalachia |
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Ecuador: Alternative Tourism |
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Costa Rica: Alternative Tourism |
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REVIEW QUESTIONS
FOR CG 7: ECONOMIC DEVELOPMENT
1. _______________________ is the economic indicator
which measures the total value
2. This type of economic activity includes the development of the consumer economy: ____________________ 3. Economic Development is the transformation of the ____________________
& ____________________
4. One of the areas that Economic Development causes changes
5. The First Historic Pathway to Development had _______________ . One example is __________________ 6. List 5 Factors Affecting Economic Development a. _____________________________________
7. Other single superpowers include the ____________ Empire & the ____________ Empire 8. A factor of Econ Dev is _________________________
such as political freedom, patriarchy, religion
9. List 2 of the causes of Agglomeration Effects a. _____________________ b. _____________________ 10. List 2 factors affecting Economic Development in the Periphery a. _________________ b. __________________ 11. Lenowisco is an acronym for a. ______________ b.______________ c. ______________ d. _____________ 12. One of the Factors Affecting Globalization & Local Economic
Development is _______________________
13. List 2 Factors Affecting Globalization & Local Econ Development a. ________________ b. ________________ 14. IMF stands for a. _____________________ b. ____________________ c. ____________________ 15. In 1995 this nation has the world's largest banks: _____________________ 16. List 2 advantages of global assembly lines a. ________________________ b. _______________________ 17. List 2 incentives that peripheral governments offer to transnational
corporations
18. _______________ also brought QCC's to Japan because the idea was _______________ by Am auto makers 19. Japanese auto outperformed US auto by developing _______________
systems
20. Name 2 Core countries with significant garment production a. __________________ b. __________________ 21. Levi Strauss headquarters withdrew contracts from China, Burma, Peru because of _________________ violations 22. On & Off-Shore Offices developed for the same reasons
as deindustrialization. List two reasons:
23. Name a place ( City & State) that has an On-Shore Office: __________________ & ____________________ 24. Exploitative tourist relationships package Lifestyles & Regional __________________ for sale 25. Give 2 examples of how Alternative Tourism emphasizes respect
for the local culture & the environment:
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