Transcript Economics Economic Development

Economics
Economic Development
Economic Development
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How advanced is a country?
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More Developed - MDC
Newly Industrialized – NIC
Less Developed – LDC
Human Development Index
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Developed by UN 1990, ranks countries by looking at
economic development & standards of living.
Indices & Data | Human Development Reports (HDR) |
United Nations Development Programme (UNDP)
Demographic Indicators
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Life Expectancy – average number of years a
person is expected to live.
Birth & Death Rates – average number of
children born and people who die in a year.
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Death rate is called Mortality Rate.
Infant Mortality Rate – number of infants who
die before 1st birthday in year.
Economic Indicators
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Gross Domestic Product GDP – the total
value of all goods & services produced
within a nation in a year.
GDP per capita – per person in a country
Social & Political Indicators
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Social
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Literacy Rate – percentage of people who can read
& write.
Number attending college, number of professionals,
housing, water supply & sanitation
Political
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Freedoms people enjoy, type of government,
tolerance of other viewpoints.
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MDC – higher life expectancy, lower birth
rate & infant morality, higher literacy
rates, more in college, more doctors,
better water supply & sanitation
LDC - lower life expectancy, higher birth
rate & infant morality, lower literacy rates,
less in college, less doctors, poor water
supply & sanitation
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US – MDC #4
France – MDC #14
Zimbabwe – LDC #169
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Bangladesh – LDC #129
Syria – NIC #111
Economic Activities – Primary
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Primary – basic, food production & extraction
of raw materials
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Examples – farms, ranches, fishing, logging,
mining.
LDC more people involved, MDC less people
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US only 3% of labor force
Primary Economic Activities
Secondary Activities
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Manufacturing & Production – taking raw
materials & adding value.
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Textiles, furniture making, processing food,
making steel
A Sawmill
Raw Material
Semi Finished
Product
Finished Product
Processes – To change Raw Materials into semi-finished or
finished products we must process them.
Processes
Tertiary Activities
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Deals with services – doctors, nurses,
teachers, retailer (stores & restaurants)
In the US, 80% of labor force
MDC have a higher percentage of their
labor force in Tertiary activities.
Communication
Radio, TV,
Newspapers
Administration
Office staff
Distribution
Transport,
Personal
Dentist,
Doctor,
Barber
Financial
Banks,
Credit Union
Services
Repair
Mechanic,
IT Technician
Business
Advertising,
Accountancy
Tourism/Leisure
Golf caddy
Hotel staff
Construction
Carpenter,
plumber
Teleservices
11811, Customer
support
Quaternary Activities
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Information processing & management
Examples: computer programmer, general
manager, researchers, product development.
Jobs require special training & education.
Only in the MDC
US Economy
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Leader in agriculture, manufactured goods &
global trade.
3 Factors = Economic success
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Abundant available natural resources
Skilled labor force
Stable political system
US cont.
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Ag – world leader – fertile soil, favorable
climate and early mechanization of farms
Industry – advanced technology, petroleum,
steel, chemicals, electronics &
telecommunication, lumber & mining.
Postindustrial Economy – manufacturing no
longer plays a dominant role; 80% of jobs are
in the service industry
US cont.
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Northeast – New England & Mid Atlantic
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America’s Gateway
Fishing, farming, trade.
Coal, iron ore, oil, lumber, manufacturing,
electronics, communication, chemical, medical
research, finance, tourism.
Rust belt – decline in the regions manufacturing
States ME, NH, VT, MA, CT, RI, NY, NJ, PA
US Cont.
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Midwest – America’s Breadbasket
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Farming – Fertile soil, adequate rainfall, favorable
climate.
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Corn, wheat, soybeans, meat, dairy
Trade, transportation, distribution – Great Lakes &
Mississippi & Ohio Rivers
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Feed more people than any comparable area in the world.
Chicago transportation hub.
Auto making & steel industries
States: OH, MI, WI, MN, ND, SD, NE, KS, IA, MO,
IL, IN
US Cont.
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The South – Sun Belt
Farming: cotton, tobacco, fruits, peanuts, rice
& livestock
 Air conditioning has allow area to grow. Many
companies leaving cold north for the south.
 Tourism & retirees also drawn to warm South
& West.
 States: TX, LA, AR, TN, OK, KY, WV,
VA, NC, SC, GA, FL, AL, MS
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US Cont.
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The West 
½ land of US, varied landscape, some
favorable landforms & climate, also deserts
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Air conditioning & irrigation allowed growth
Farming, ranching, fishing, logging, mining, oil
refining, tourism, film making, & computers
States: WA, OR, CA, NV, ID, MT, CO, WY, NM,
AZ, HI, AK
Economic Alliances
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NAFTA – North American Free Trade Agreement
– began on January 1, 1994. This agreement
removed most barriers to trade and investment
among the United States, Canada, and Mexico
with full implementation beginning January 1,
2008.
Economic Alliances
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European Union
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Economic and political union of 27 independent
member states which are located primarily in
Europe.
Purpose to create free trade zone
Austria, Belgium, Bulgaria, Cyprus, Czech Rep,
Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania,
Luxembourg, Malta, Netherlands, Poland, Portugal,
Romania, Slovakia, Slovenia, Spain, Sweden, & UK
EU Policies
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The EU has developed a single market through
a standardized system of laws which apply in
all member states.
Passport controls have been abolished within
the EU.
EU policies aim to ensure the free movement
of people, goods, services, and capital.
Enact equal laws, maintain common policies
EU Policies
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The EU has established a single market across
the territory of all its members.
A monetary union, the eurozone, using a single
currency – Euro.
In 2010 the EU generated an approx. 16.242
billion international dollars of global gross
domestic product (GDP) = largest economy
in the world.
Largest exporter and importer of goods and
services.
Biggest trading partner to China, India, and the
United States.
EU Problems
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The Euro was to be a currency which would replace
the U.S. dollar, but in 2009, a debt crisis arose.
In 2010 the debt crisis was mostly centered on events
in Greece = cost of financing government debt.
On 2 May 2010, the eurozone countries and the IMF
agreed to a loan for Greece, it failed.
It was followed by a €85 billion rescue package for
Ireland in November.
That was followed by a €78 billion bail-out for Portugal
in May 2011.
October 2011 – Greece bailout still a problem.
Global Implications of Crisis
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EU losses could extend to American
banks, which have large exposures to debt in
France and Italy.
On top of this, American exports to the
European Union could suffer if the crisis slows
European growth and causes the euro to
depreciate against the dollar.
The EU crisis also affects the cost of oil and the
U.S. stock market.
Economic Alliances
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ASEAN – Association of
South East Asia Nations
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Alliance that promotes
economic growth, peace, &
cooperation in SE Asia
Members – Brunei,
Cambodia, Indonesia, Laos,
Malaysia, Myanmar,
Philippines, Singapore,
Thailand, & Vietnam
OPEC
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Organization of Petroleum Exporting Countries
Mission: is to coordinate and unify the
petroleum policies of its Member Countries and
ensure the stabilization of oil markets in order
to secure an efficient, economic and regular
supply of petroleum to consumers, a steady
income to producers and a fair return on capital
for those investing in the petroleum industry.
Members: Algeria, Angola, Ecuador, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia,
United Arab Emirates, Venezuela
Outsourcing
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the act of one company contracting with
another to provide services that could be
performed by in-house employees. These jobs
are handled by separate companies that
specialize in each service, and are often located
overseas.
Advantages
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Saves money, cheap labor
Allows companies to focus on product development
Outsource companies have specialized technology
that the company can’t afford to buy.
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Finance & Accounting
Recruitment Process
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Human Resources
Outsourcing
Legal Processing Outsourcing
Business Process
Outsourcing
Cloud Computing
Marketing
Telecom Expense Mgt
Selling Outsourcing
Outsourcing Relationship Mgt
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Contact Center/Call
Center
Advisor Support Center
Nearshoring
Travel & Hospitality
Tech Sourcing Directions
Data Center Services
Finance & Accounting
Document Management
and BPO Improvement
Telecom Expense
Management
Legal Corner
Russia: A Vast Offshoring
Frontier
China Trends &
Opportunities
Outsourcing
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Disadvantages:
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eliminates direct communication between company and its
clients.
prevent building solid relationships with customers
leads to dissatisfaction on one or both sides
not being able to control some aspects of the company
may lead to delayed communications & project
implementation.
sensitive information is more vulnerable
dependent upon its outsource providers, if outsource
provider backs out on their contract suddenly.
Infrastructure
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The basic support systems needed to keep an
economy going.
Includes:
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Transportation – Most important
Communications – how linked to the world
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Internet & Satellite communication
Power
Water & Sanitation
Education Systems
What is Development?
DEVELOPMENT:
Reaching an acceptable standard of living for all people by
improving economic and social conditions.
DEVELOPING COUNTRY:
Low- and middle-income countries in which most people
have a lower standard of living with access to fewer
goods and services than do most people in high-income
countries.
There are currently about 125 developing countries with
populations over 1 million; in 1997, their total population
was more than 4.89 billion.
Levels Of Development
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Developed
Quaternary
Stage 3/4 Populations
Newly Industrialized
Modern cities
Poor rural area
Secondary Economic Activities
Tertiary Activities
Stage 2 populations
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Developing
Agricultural/Primary Activities
Poverty
Stage 1 population characteristics
Less Developed Country
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low national income, GDP
high rate of population growth
High unemployment, & dependence on
commodity exports.
Majority of nations in Asia, Africa, and Latin
America,
Low development of infrastructure
LDC
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The Least Developed Countries represent the
poorest and weakest segment of the
international community.
More than 880 million people (about 12% of
world population), but account for < 2% of
world GDP & about 1 % of global trade in
goods .
Newly Industrialized Country
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A country whose level of economic
development ranks it between the less
developed and more developed classifications.
Have moved from an agriculture-based
economy & to a more industrialized, urban
economy, & developing infrastructure.
NIC
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NICs usually share some common features, including:
Increased social freedoms and civil rights.
Strong political leaders.
A switch from agricultural to industrial economies,
especially in the manufacturing sector.
An increasingly free enterprise economy, allowing free
trade with other nations in the world.
Large national corporations operating in several
continents.
Strong capital investment from foreign countries.
Political leadership in their area of influence.
Lowered poverty rates.
More Developed Country
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A country with high levels of economic
development & infrastructure.
Indicators of development:
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low birth rate (< 10) & infant mortality rates
(< 12 per thousand)
less than 10% of the workforce in agriculture
high levels of nutrition, secondary schooling,
literacy, electricity consumption per person,
and GDP per capita—generally above $US
20, 000 per capita.