Why do levels of economic development vary and how can they lead to inequalities?

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  • Created by: emma why
  • Created on: 01-04-14 11:47
Why have some countries climbed higher up the economic stairway than others?
The answer lies in the factors that energise or drive economic development
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What are the basic energising inputs?
Natural resources, technology, enterprise, innovation and labour
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What are the internal energisers?
Initial advantage, business culture and government intervention
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What are external energisers?
Economic globalisation, geopolitics, TNCs and international agencies
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What are major ongoing outcomes?
Sectoral shifts, higher productivity, spatial inequalities, social change, greater mobility, rising living standards, better quality of life, environmental impacts, cultural significance, more democracy
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Define basic energising inputs
Availability and exploitability of a mix of physical and human resources
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Define external energisers
External factors which together create a sort of scenario that has the potential to encourage economic development
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What are the most obvious external energisers today?
Economic globalisation, trade, aid and growing markets for wide range of goods and services
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How can geopolitics and strategic considerations stimulate economic growth?
E.g. when MEDCs look to secure future supplies of oil and other important natural resources - main players are the TNCs and to lesser extent international agencies
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What is a TNC?
Transnational corporation
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Give examples of international agencies
United Nations, World Trade Organisation and the World Bank
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Where do internal energisers come from?
Within the country
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What are particular significant internal energisers?
Government intervention, business culture and initial advantage
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What does initial advantage involve generating?
A momentum that is often boosted by the process of cumulative causation
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What is business culture?
The practices, ambitions and effectiveness of 'native' busineses
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Cumulative causation
Process which perpetuates the exploitation of some initial advantage, a matter of capitalising on being first in field. Success breeds more success and prosperity
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What is a negative of cumulative causation?
Drains investment and labour from other areas
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What is initial advantage?
The advantage that accrues to a firm, city, region or country as a result of being first.
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What are examples of where initial advantage may apply?
Introduction of new product, exploitation of new resource, commercial application of new technology or opening up of new market
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What happens once the initial advantage has been seized?
Process of cumulative causation sets in to reinforce the benefits to be gained
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In summary, how can economic development be energised?
Meeting a range of internal prerequisites AND taking advantage of external opportunities
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What are internal prerequisites for economic development usually to do with?
Resources, politics and business culture
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What is an example of an external opportunity?
Those created by expanding global economy
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What explains why the countries climb the stairway at different speeds?
Varying degrees to which internal prerequisites are met and advantage taken of external opportunities as well as relative timing.
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Which country's are today's most advanced?
Those that meet energising factors most fully and did so from an early date
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What are the case studies for inequalities created by varying levels of economic development?
China, Japan and Bangladesh
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What is the world's most powerful economy?
USA
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What is the world's second most powerful economy?
Japan
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Why Japan's Economic Strength is Surprising - Resources
Possesses few mineral or energy resources
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Why Japan's Economic Strength is Surprising - Industrialisation
Did not start to industrialise until the second half of the nineteenth century
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How long before Japan did the UK start industrialising?
Nearly 100 years before
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Before the second half of the nineteenth century, what kind of country was Japan?
Isolated and largely agrarian
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Why Japan's Economic Strength is Surprising - Infrastructure
Physical and industrial infrastructure lay in ruins at ened of World War II
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How many phases can be seen in the growth of the Japanese economy since 1950?
A high growth phase (from around 1955 up until approximately 1975) and a low growth phase up to the present day
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Japan's high growth phase - what did the average annual growth exceed on a number of occasions?
10%
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In the low growth phase of Japan's economy what has happened in some yeasr?
The economy has actually contracted
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What is important to note about real economic growth?
It is cumulative - every year of percentage growth adds to the overall mass of the economy
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Why is it unsurprising that over a 55 year period there has been a gradual reduction in Japan's percentage growth rate?
Due to the fact real economic growth is cumulative
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Secondary sector, manufacturing, is widely seen as having been the powerhouse of economic development. What can be said about this sector?
It has seen the least change since 1955
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What was the highest value for secondary sector employment in the period 1955-2005?
34%
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What was the figure for secondary sector employment in 1955 in Japan approx?
22%
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What was the 2005 figure for secondary employment in Japan?
25%
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Which sector has had the most greatest change in Japan?
Tertiary sector
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Since when has the tertiary sector especially grown in Japan?
Particularly since 1995
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In 2005 approximately what percentage of Japan's GDP was occupied by the tertiary sector?
75%
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What is the significance of the importance of the tertiary sector?
It is widely recognised as a good barometer of economic development
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In how many years did Japan achieve a spectacular recovery from the destruction and debt following Second World War?
Twenty five years
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What are internal energising factors in Japan's economic development?
Human resources, government intervention and business culture
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What are external energising factors in Japan's economic development?
Trade, overseas direct investment (ODI) and aid
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What is significant about Japan's labour force?
Has plenty of labour as population is well above 150 milllion
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What are the strengths of Japan's labour force?
Strong work ethic and health attitude to wealth, willingness to embrace new work practices and new technology.
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What is significant about the fact that Japan's workers have strong loyalty to their employer?
As a result there has been no real development of trade unions
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What is the one problem of Japan's labour force?
As Japan has prospered so the labour force has expected higher wages and salaries
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What explains the fact that much of Japanese manufacturing has moved abroad?
Rising cost of Japanese labour
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What is Japan often cited as the supreme example of?
Free-market economy
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What is a free-market economy?
An economy in which there is no government intervention and market forces prevail
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Is Japan really the superem example of free-market economy?
No, since WIII economy has been carefully managed by the government in a number of ways
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How has government intervention of slight undervaluation of the Yen influenced the Japanese economy?
To the benefit of exports but was not so good for imports
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What other government intervention on economy has there been in Japan except from slight undervaluation of yen?
Strict control of banks
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Who is much of Japan's economic power and wealth in the hands of?
Small number of huge trading companies with considerable overseas business interests
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What are examples of Japan based TNCs?
Sumitomo, Fuji, Matsushita, Mitsubishi, Mitsui
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How have the TNCs played a vital role in Japan's economic development?
Pioneering new production techniques such as just-in-time system, seeing commercial spin-offs from new technology and undertaking thorough market research at home and abroad
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What is the just-in-time system?
Manufacturing system designed to minimise the costly holding of large stocks of raw materials and components.
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What does the just-in-time system minimise?
Costly holding of large stocks of raw materials and components
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What does the just-in-time system rewquire?
Efficient ordering and reliable delivery of inputs
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Which Japanese TNCs first introduced the just-in-time system to the UK?
Car manufacturers such as Nissan and Honda
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Card 2

Front

What are the basic energising inputs?

Back

Natural resources, technology, enterprise, innovation and labour

Card 3

Front

What are the internal energisers?

Back

Preview of the front of card 3

Card 4

Front

What are external energisers?

Back

Preview of the front of card 4

Card 5

Front

What are major ongoing outcomes?

Back

Preview of the front of card 5
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