Intro To Human Geography: People, Places,

1
Intro To Human GeographyPeople, Places,
LandscapesChapter 10Patterns of Development
Change

• Paul Sutton
• psutton_at_du.edu
• Department of Geography
• University of Denver

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Outline

• What is Economic Development?
• How can one compare countries Economies
• Measures of Gross National Product (GNP)
• Geography of Exchange Rates
• GNP and the environment
• GNP and the quality of Life
• Theories of Economic Development
• Global Patterns of Economic development
• National Economic Development Policies
• Transportation Information Infrastructure and
  relationships to Economic development
• Distribution of Wealth and Economic Development

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What is Economic Development?

• Economic Development Improving the economic
  productivity (as measured in money) of a nation.
• Questions (absolute or per capita?) (How is
  wealth distributed?)

4
Why do governments want economic development?

• to promote the general welfare, maintain
  domestic stability.
• Raise standards of living to maintain power and
  authority
• What effect is globalization having on economic
  development?
• How do national policies vary with respect to
  promoting economic development?

5
Analyzing and Comparing the Economies of
different nations

• Are national statistics apples and oranges?
• The word statistic is derived from the word
  state. Benjamin Disraeli (past prime minister
  of Britain) knew that countries count things
  differently and might even lie in order to
  exaggerate their power or achievement or to
  conceal relative backwardness, thus many national
  statistics are unreliable.
• .Lies, Damn lies, and Statistics
• Can we think of examples where countries might
  lie about Birth Rates? Poverty? Nuclear
  Capability?

6
Example of Problems with StatisticsJapan in
1989

• In 1989 the leading economic newspaper of Japan
  (Nihon Keizai Shumbun) reported the following
• Japan is the worlds richest country with total
  assests of land, stocks etc. of 43.7 trillion
• U.S. at that time only worth 36.2 trillion
  (according to the U.S. Fed Reserve Board)
• Japans per capita wealth more than twice U.S.
• The city of Tokyo worth more than the whole U.S.
• - Does this make sense to you?
• - Strikes me that Economics is a funny
  discipline

7
GNP and GDP definitions and problems

• GDP (Gross Domestic Product) the total value of
  all goods and services produced within a country
• GNP (Gross National Product) the total income of
  a countrys residents regardless of where income
  comes from
• Example I declare the state of Suttonia I
  make wind chimes and drums on my land and make
  100,000 a year doing so. I also invest in a shoe
  factory in Indonesia making Nike shoes with slave
  labor. I receive 60,000 a year from this
  investment. Four people live in Suttonia and
  only I am working. The GDP of Suttonia is
  100,000. The GNP of Suttonia is 160,000. The
  GDP/capita is 25,000 and the GNP/capita is
  40,000 The GNP/GDP is 1.6 as is the
  GNP/Capita/GDP/capita ratio. The income of the
  other four residents of Suttonia is zero. What
  does that say about the distribution of wealth in
  Suttonia? See The GINI coefficient on the next
  slide
• What do GNP and GDP mean relative to one another?
• GDP measures economic productivity of a space
• GNP measures economic productivity of a people in
  a space
• If GNP greater than GDP the people of that space
  are deriving some of their wealth from people
  outside that space
• If GNP is less than GDP the people of that space
  are producing wealth for people outside that
  space

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The GINI coefficient A measure of the
distribution of wealth
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What countries have what kind of GNP to GDP
ratios?

• Kuwait (1990) GNP/GDP 1.35
• United States (1990) GNP/GDP 1.01
• Canada (1990) GNP/GDP .95
• Ireland (1990) GNP/GDP .87
• Brazil (1990) GNP/GDP .86
• What number GNP or GDP is better for comparing
  peoples standard of living between nations?
  (mention GINI here)
• What number GNP or GDP is better for comparing
  nations internal economies?

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Some problems with GNP and GDP measures

• Both GNP and GDP measure goods and services
  exchanged in markets. Many countries
  (particularly the LDCs have large informal
  economies in which goods and services are not
  traded in markets)
• How will the informal economy influence
  measures of wealth?
• Does this exacerbate or mitigate differences
  between MDCs and LDCs?
• Because these measures undercount rural
  subsistence farming etc. urban areas dominate
  measures of economic productivity
• Sao Paulo, Brazil (10 of Population, 25 of
  economy)
• Abidjan, Ivory Coast (15 Population, 70 of
  economy)
• (Does Abidjan strike you as a likely Primate
  City?)
• Could you survive for a whole year in the U.S.
  on 250?
• How could the women of Kenya double Kenyas
  GDP?

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The Geography of Exchange Rates and Purchasing
Power Parity

• GDP and GNP measures are often fail because there
  are No Common Measures of Value
• The value of products and services are measured
  in local currencies that are changeable and can
  be manipulated
• How much would you have to pay for a 5 lb bag of
  rice in Denver? Beijing? Rural India?
• Note It would be a fair question on the final
  for you to put the above prices in at least
  ordinal order by using geographic reasoning and
  knowledge

12
An interesting story about the U.S. Dollar
between 1985 and 1990

• Between 1985 and 1990 the U.S. Government
  intentionally lowered the value of the dollar
  relative to the Yen and Western European
  currencies by 50.
• This had profound consequences
• 1) American Goods cheaper to buy outside U.S.
  Thus U.S. Exports up 80
• 2) Foreigners invested Billions in the U.S. and
  millions more tourists to U.S.
• (note the Japanese make Hondas in Tennessee
  now ?)
• 3) In 1989 more tourism money to U.S. than out
  of U.S. (first time ever)
• 4) Summary results Goods out (Exports up),
  Investment Tourists in
• 5) Other results Real kicker for globalization
  Americans saw more foreigners on American
  soil, cultures exchanged yadda yadda yadda
• 6) American investment money stayed at home,
  Exports to the U.S. dropped,
• Many Foreign economies suffered
• What do you think happened to the price of a
  Lexus or a Volkswagen during that time?

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What is Purchasing Power Parity?

• PPP attempts to measure what goods or services a
  certain amount of money will buy at different
  places
• Just because the GDP/capita in Japan is 30,000
  does not mean that an average Japanese can buy
  the same amount of stuff that an American
  making 30,000 can.
• Great Example Some 40 million Indians live in
  households making incomes of over 900,000 rupees
  (This is equivalent to about 30,000 U.S.
  dollars) However, its purchasing power is about
  600,000
• Is it really appropriate to call India a poor
  country?

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Gross Domestic Product and the Environment

• Some Economists and their stupid accounting
  tricks
• 1) Standard Business Practice
• Machines and Buildings etc. counted as assets
• As they deteriorate (are used up) they are
  depreciated
• and this depreciation is called a loss.
• 2) Standard National Accounting Practice
• Call sales of Oil, Timber, Water profits
• Ignore the loss of natural resources as losses
• Call housing starts economic growth
• Ignore loss of housing from flood, fire,
  earthquakes

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An Oil Spill in Mexico
Good for the Economy? You betcha. Where best
U.S., Mexico, or Ecuador?
16
A wildfire in Laguna Beach
Do you think these people are hoping their homes
will burn down To help boost the local economy?
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Gross Sustainable Product

• If natural resources were treated as assets, then
  statistics might (would) demonstrate that
  protecting the environment is good economic
  policy
• Many people are working on a new statistic Gross
  Sustainable Product (GSP)
• The GSP would subtract the value of natural
  resources destroyed or depleted from the GNP
• A Costa Rica study showed that 25 of GDP
  dissappeared due natural resource losses
• A U.S. Study showed natural resource losses
  balanced by new resources found
• Incorporating impacts to productivity of
  renewable resources like fisheries, forests,
  agriculture, and water supplies and incorporating
  costs of impacts of loss of ecosystem services
  will further erode measures of GSP
• Is GSP a useful measure?

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GNP and Quality of Life

• How would you think that GDP/capita covaries
  with Energy Consumption, Food Supply, Literacy
  Rates, and Access to safe drinking water?
• The relationships are not always obvious. Is it
  possible for Mexico to have a lower Death rate
  than the U.S. and a lower life expectancy?
• Variability of Quality of Life index can vary
  more within a nation than between nations. Do you
  think the GINI coefficient could predict within
  country variation?

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The United Nations Human Development Index (HDI)

• 1/3(Purchasing Power Parity) (1/3) Life
  Expectancy (1/3) Adult Literacy
• A multi-variable Index
• Uruguay 30, South Korea 33, Saudi Arabia 84
  (lower score better) The HDI endices for these
  countries opposite the GNP/Capita (2,620,
  5,454, 7,070)
• These kinds of indexes are problematic because of
  debate over the variables to choose and the
  weights to be assigned to them
• Population Growth and Economic Development (next
  slide)

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The Relative Sizes of National Economies
This map type is called a Cartogram. What does
that mean?
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Per Capita Gross National Product
What could I reasonably expect you to remember
from this map?
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Categories of Per Capita GNP
Where are the People? Where is the money?
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Human Development Index (1994)
Looks like a map of money to me..
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Pre-Industrial, Industrial, and Post-Industrial
EconomiesCharacterizing the Nature rather than
the Magnitude of an Economy

• Recall the primary (mining, farming), secondary
  (manufacturing), and tertiary (service) sectors
  of an economy
• Sectoral Evolution Pre-Industrial, Industrial,
  and Post-Industrial economies have the largest
  proportion of their population in the primary,
  secondary, and tertiary sectors of their
  economies respectively
• White man shows up in Africa and observes that to
  become great like me an economy evolves from
  primary to secondary to tertiary. (any comments?)

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Pre-Industrial Societies
Many Societies today are still Pre-Industrial.
Despite the fact A large proportion of their
population works in the Agricultural Sector many
have difficulty feeding themselves.
How many of you work in Agriculture? Do you know
anyone that does?
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Industrial Societies

• As countries industrialize people move from
  agricultural labor to manufacturing. The
  proportion of workers in the primary sector
  diminishes as the proportion in the secondary
  sector increases. At some undefined point the
  economy is considered secondary or Industrial.
  In the U.S., for example, this transition
  occurred during WWI. (manufacturing employment
  exceeded agricultural employment) By 1925
  manufacturing emplyoment represented the largest
  single occupational group in the U.S.
• Is this progress?
• Upton Sinclair might Disagree?
• (do you know who Sinclair is?)
• What do WTO protesters have to do with this?

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Post Industrial Societies

• What happens after Industrialization? Some would
  argue exploitation. The standard line is that
  the workers of an Industrial society increasingly
  become involved in Service industries. Once
  that happens the economy is considered
  Post-Industrial. This happened in the U.S.
  sometime between 1929 and 1945. In 1990 the
  service sector of the economy represented over
  75 of the U.S. labor force. Where do you see
  yourself working in 5 years? Ironically some
  poor nations have large proportions of their
  population in tertiary or service sectors or
  their economies. GUESS WHY?
• Bob Dylans Song Sundown on the Union
• What does it say? (Who is Bob Dylan anyway?)
• What does Separation of Production
  Consumption mean to you?

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The Post-Industrial Economy

• You Live in a Post-Industiral Economy.
• What will you do for a living?
• Is it sustainable?
• To what extent are your needs met by the natural
  resources, labor, and capital in places outside
  the United States?
• The U.S. GNP/GDP ratio is almost 1.0Did the
  1985-1990 devaluation of the Dollar relative to
  Yen and EU ameliorate this situation?
• Ted Rall Cartoon BONUS PRIZE But Jean Paul
  Sarte said

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How do the sectors of the Economy contribute to
Gross Product?

• 1/3 Pop. primary, 1/3 Pop. secondary, 1/3 Pop.
  tertiary
• DOES NOT MEAN
• 1/3 GDP primary, 1/3 GDP secondary, 1/3 GDP
  Tertiary
• Value Added/worker greatest in Secondary
  (Manufacturing) (for now anyway ?)
• Millers get richer than Farmers Manufacturers
  get richer than Miners. Millers and Manufacturers
  typically get richer than their Sales Reps.
• This is one reason why some places get richer
  than others.
• Should the United States be concerned?

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Rostows Stages of Growth

• The natural evolution of peoples are to
  evolve from Hunter-Gatherer to Agriculture
  to Industrial to whatever.
• Is this Social Darwinism?
• Is it reasonable?

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Why are some countries Rich and some countries
Poor?

• Natural Environmental Endowments of Raw Materials
  etc. DO NOT explain National Wealth
• The Theory of Environmental Determinism has
  problems with this
• Adding Value to raw material is key to Wealth
• Downstream Activities are key to wealth
  creation because they are nearer the source of
  money.
• Processing, Manufacturing, Transporting,
  Advertising, Insuring, Marketing, and Financing
  the flow of goods is more profitable than
  extracting the raw materials they are derived
  from.

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How did this happen?

• Making things out of Copper Ore is more
  remunerative than the mining of the Ore itself
• Grinding Wheat into flour is more remunerative
  than growing the Wheat in the first place
• Raw Diamonds are valuable but the cutters,
  polishers, and sellers of Diamonds make more
  money than the Diamond miners.

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Conceptual Value Added

• The term Value Added has even been extended to
  conceptual value added, as in advertising. If a
  10million advertising campaign convinces people
  to spend 100 million more for Brand X than for
  Brand Y, when those brands are, in fact, nearly
  identical, then 90 Million of value has been
  added to Brand X conceptually. (pay no
  attention to the man behind the curtain) That 90
  million can provide a lot of jobs. The conceptual
  value added to products by the advertising
  industry in New York City today is far higher
  than the value added by manufacturing in many of
  the worlds greatest manufacturing cities. The
  trademark of a good is often more valuable than
  the good itself. Selling brand name cookies can
  be more profitable than the total sum of revenue
  generated by growing the wheat, sugar, eggs, and
  production of the cookies themselves. (the Girl
  Scouts are making a killing ?) The tertiary
  sector of the economy is chasing the secondary
  for value added domination.
• Note If the world begins to pay attention to
  the man behind the curtain and realizes there is
  no reason to pay a difference when there is no
  difference, what will happen to the U.S. economy?
• Does anyone out there get the man behind the
  curtain reference?

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The United Fruit Company

• Why is it that Oil producers can capture
  downstream activities but food producers cannot?
• How many alternative sources of oil are there?
  How many alternative sources of food products?
• The story of the United Fruit Company exemplifies
  the geography of Value Added. In the 19th
  century the company established banana
  plantations in Central America. Several countries
  came to depend economically on the export of
  bananas, and many aspects of their local cultures
  were consequently transformed. Their politics,
  for example, were manipulated internally by
  banana interests and externally by relations with
  the United States their social structures
  reflected peoples positions in the dominant
  export-oriented cash crop economy the peoples
  diet came to depend on imported staples. (ever
  bought clothes from Banana Republic ever
  wondered where the name came from or why?) The
  United Fruit Company owned the banana plantations
  and the ships that transported the bananas, and
  it marketed the bananas. Eventually many Central
  Americans began to resent the foreign control of
  the plantations, and they accused the company of
  Yankee Imperialism. The company responded by
  abruptly surrendering many of its plantations to
  local governments. This might sound like a
  financial sacrifice, but what really happened?
  The company was no longer tied to one supply (its
  own plantations), so it could bargain with
  several potential suppliers (and play one off the
  other). The producers increased production in
  order to raise their incomes, but they increased
  production faster than demand could be raised.
  This only lowered prices. Competition among the
  suppliers reduced the price of bananas still
  further. As a result, the new plantation owners
  got poorer. Transporting bananas and marketing
  them- adding conceptual value through name brand
  advertising- is considerably more profitable
  than growing them, and it supposedly causes far
  fewer headaches for the companys management.
  Eventually the company even changed its name to
  Chiquita Brands International, and it is now
  applying its valuable trademark to marketing
  other fruits from a great variety of sources
  worldwide. By focusing on downstream activities,
  the company transformed itself from a raw
  material supplier into a marketing company. Its
  profits fattened, while the countries that
  supplied the raw materiel got poorer. A similar
  tale could be told about almost any raw material
  or food supplier in the world today and its
  relationship with multinational corporations that
  control every aspect of handling and processing
  goods from the raw material to the final
  consumers. Compare the story of the United Fruit
  Company with the story of OPECs petroleum
  marketing networks. In that case, the suppliers
  of raw materials are themselves seizing control
  of downstream activities.

35
Output of Secondary Sector as Percentage of GDP
36
What is this a map of?

• Is the a map of A) Pop Urban B) Rice
  Production/Capita C) Pop with AIDS
• Note Darker Red is Higher number

37
What is this a Map of?
A) Automobiles/Capita B) HDI C) Total
Fertility Rate
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What is this a Map of?
A) GNP/Capita B) The Crude Death Rate C)
Kangaroos/Capita
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What is this a Map of?
A) Percent Urban B) Population Density C)
Infant Mortality
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Government Involvement in the National Economy

• Communism Govt owns the natural resources and
  the productive Enterprises in the name of the
  workers. Known as top down or command and
  control economy
• Example countries include Cuba, China
• Laissez-faire Capitalism Minimal government
  involvement in The business affairs of the
  country Example countries include United
  States, Britain
• Capitalism with State ownership of some
  industries. Many Latin American countries have
  nationally owned industries (e.g. Pemoco in
  Mexico). Many European nations have nationally
  Owned industries (25 GNP France, 11 in Germany)
  However, Privatization of these industries is
  running rampant particularly in Eastern Europe.
• State Directed Capitalism Many Asian countries
  do not own the private enterprises however,
  their governments plan and regulate Their
  economies. This kind of situation is often
  referred to as an Industrial Policy
• Example story South Korea is considered a
  capitalist, free-market economy, yet the
  government proposes national economic plans and
  subsidises some new industries. Industry is
  dominated by combinations of corporations that
  are affiliated by inter-locking dictatorships and
  ownership. Japan and Taiwan are similar. In the
  U.S. such situations/relationships would be
  broken up as illegal trusts.
• Fascistic top down Industrial Policy while not
  communism has its strengths and many people
• Feel that the U.S. should adopt some sort of
  Industrial Policy to fight forces outside the
  U.S.

41
Domestic Economic Geography

• Countries try to organize their population,
  territory, and resources for economic production.
• Education, Training, National Pride, and
  political stability are key to successful nation
  building
• Internal Population Mobility Workers are
  expected to move to jobs. Countries try to
  maintain spatially homogenous unemployment.
  Large spatial variability suggests inefficiency.
• Why do people still live in Buffalo, NY?

42
States with Frontiers

• Manifest Destiny and other propaganda motivated
  much of the American population west. We occupied
  valuable territory and have benefited greatly
  from westward migration.
• Brazil has similar concerns. They located their
  planned capital city Brasilia in their
  hinterlands. With economically and ecologically
  disatrous results.
• The Island of Java is only 7 of Indonesias
  territory yet it houses 60 of its population.
  The government has made efforts to spread its
  population with little success.
• Russia has similar problems with Siberia
• Canada and many African nations have similar
  spatial distribution of population problems.

43
National Transportation Infrastructures

• Transportation and Communication Infrastructures
  enable economic, population and information
  mobility.
• Problems arise when transporation corridors are
  undeveloped (e.g. Columbian oil fields controlled
  by rebels and drug dealers.)
• Economic growth in profoundly enabled by
  transportation. India is working on this.
• Africa is characterized by Tap Routes which
  benefit foreign exploitation more than
  pan-African development

44
National Communications Infrastructure

• You have lived in the buzz of the information
  economy. You cant eat information, you cant
  drive it, nor will it build your house
  nonetheless, it is clearly a tertiary if not
  fourth economy. Only time will tell how valuable
  information is.
• In any case, a wealth of diverse sources of
  information supports both economic efficiency and
  development, and political liberty.
• How Diverse is the information you presently
  receive? Why?
• The U.S. and Canada have 40 of the worlds
  phones. Africa 1
• This is changing rapidly (see next slide)
• Information is a very unusual commodity. We could
  spend a whole quarter on this issue and only
  scratch the surface.
• Any comments on your impressions of the Info Age
  you live in?

45
New Paths for Economic Development

• Wireless technology like Cell Phones are changing
  old ideas of economic development
• Poor nations can develop sophisticated
  communications infrastructures without building
  expensive Land-Line com networks.
• If China industrializes on the established
  patterns of Western Europe and the U.S. their CO2
  emissions will dwarf historical emisssions.
• Is there an energy consumption analog to the
  communications revolution/bypass. I hope so.

46
National Spatial Data Infrastructure

• Some people are arguing that Spatial Data that
  can be used in Geographic Information Systems
  also have institutional and public good value.
• A good NSDI allows for more efficient use and
  allocation of resources, better urban and
  regional planning etc.
• There is a huge digital divide in terms of
  hardware, software, data, and human capital

47
National Trade Policy

• Why do countries vary in the degree to which they
  participate in world trade and circulation?
• To develop their own economy.
• To ensure National Security.
• To protect/maintain cultural identity.
• Two Distinct approaches to addressing above
  concerns
• Import-Substitution Export-Led

48
Import Substitution

• Some countries subsidize infant industries in
  the hope that they will eventually achieve
  economies of scale and be able to compete in the
  global market place. (e.g. Brazil computers,
  BTW it didnt work)
• The philosophy of Import Substitution is one of
  self-sufficiency and potential independence
• Countries that chose Import Substitution as
  national economic polices fell behind countries
  that chose Export-Led policies. However, the
  tides are turning and debate is growing as to
  what policy is best.
• The U.S. protects its textile workers with
  subsidies to the tune of 145,000 per job saved
  per year in the U.S.
• Cheap labor outside the U.S. raises difficult
  questions

49
Export Led

• Export Led National economic policies have been
  the darling policy of economists in the recent
  past.
• Nations that adopted Export Led Policies (the
  Asian Tigers) have enjoyed greater economic
  growth than nations adopting Import
  Substitution Policies.
• Export Led policies rely on global capital
  markets to facilitate international investment
  and global marketing networks to distribute
  products.

50
Import Substitution vs. Export Led National
Economic Policies

• In many respects the debate of Export-Led vs.
  Import Substitution led economic growth national
  policy is a debate about globalization vs. Local
  or Regional Diversity.
• Export-Led economic policy essentially recognizes
  and accepts dominant patterns of power and will
  ultimately result in a world of powerful Chinese,
  Americans, Europeans, Japanese, and eventually
  every ethnicity/nationality However, the
  differences will dissappear and the international
  distribution of wealth will be uniform across the
  globe. The internal distribution of wealth will
  NOT be uniform.
• Import Substition economic policy is an attempt
  at fighting globalization, maintaining national
  identity, and establishing independence
  culturally, economically and ideologically.

51
Some Comments on GlobalizationWhats Better, a
homogenous globalized world or, a world of
differences economically, socially, and
culturally?

• Once were homogenized we wont lynch people
  because they are black, hate them because they
  are Jewish, or blockade them because they live in
  Iraq. (Sounds good to mebut)
• Will Mc-Gumbo from McDonalds really taste as
  good as a down-home gumbo from New Orleans tastes
  today?
• Will the allure of Mulan or Dark Angel really
  work once the differences she derives her
  identity from are gone?
• (The media (particularly Disney) play strange
  roles in the forces for globalization Bigger
  Markets eh?)
• Are we ready to celebrate diversity? Pay for it?

52
What is this a map of?

• Everything and Nothing. In a globalized
  world.