Von Thünen rings: most intensive land use closest to market
Von Thünen Model
Agricultural land use arranges in rings around a central market
Closest ring: market gardening and dairy (perishable, can't travel far). Next: forest. Next: crop rotation. Furthest: ranching. Based on transport cost minimization.
Comparative Advantage
Comparative advantage: specialize in what you're relatively best at, then trade
Comparative Advantage
The foundation of international trade theory
Even if Country A is better at making both goods, it should specialize in its relative advantage. Country B makes the other. Both trade → both gain. Developed by David Ricardo.
Human Development Index
HDI (Human Development Index): Health + Education + Income = development level (0 to 1)
Human Development Index
The UN's measure of development beyond just GDP (Gross Domestic Product) per capita
Combines life expectancy (health), mean years of schooling (education), and GNI per capita (income). Scale 0–1. Norway consistently top. Better measure of human welfare than GDP alone.
Rostow's Model
Rostow's 5 stages: Traditional → Preconditions → Takeoff → Maturity → Mass Consumption
Rostow's Model
Countries move through five stages of economic development
Stage 1: traditional society. Stage 2: preconditions for takeoff. Stage 3: takeoff (rapid industrialization). Stage 4: drive to maturity. Stage 5: high mass consumption. Criticized as Western-centric.
1
Traditional society
2
Preconditions for takeoff
3
Takeoff — industrialization
4
Drive to maturity
5
High mass consumption
Core-Periphery Model
Core-periphery model: wealthy core exploits raw materials from poor periphery
Core-Periphery Model
World-systems theory: global economic inequality is structural
Core nations (wealthy, industrialized): high-value manufactured goods. Periphery nations: export cheap raw materials. Semi-periphery: in between. Wallerstein: this structure maintains global inequality by design.
Special Economic Zones
Special Economic Zones (SEZs (Special Economic Zones)): areas with different economic regulations to attract foreign investment
Special Economic Zones
How countries create islands of free market policy to attract investment
SEZs offer: lower taxes, relaxed labor regulations, reduced trade barriers, streamlined bureaucracy. China's SEZs (Shenzhen, 1980): transformed fishing village into megacity. Export Processing Zones (EPZs): focused on manufacturing for export. Maquiladoras: Mexican factories near US border. SEZs drive industrialization in developing countries.
Commodity Dependence
Commodity dependence: relying on raw material exports makes countries vulnerable to price swings
Commodity Dependence
Why resource-rich countries often fail to develop — the resource curse
Resource curse (Dutch Disease): natural resource wealth can harm broader economic development. Oil/mineral revenue: crowds out manufacturing, appreciates currency (hurts exports), funds authoritarian governments, fuels corruption. Norway exception: oil fund invested for future. Venezuela example: oil wealth, economic collapse.
Remittances
Remittances: money sent home by migrant workers — often exceed foreign aid in developing countries
Remittances
The financial flows that connect migrants to their home countries
Global remittances: ~$800 billion/year — dwarfs official development aid. Top recipients as % of GDP: smaller developing countries (Tonga, Tajikistan, El Salvador). Philippines, Mexico, India: top recipients in absolute terms. Counter-cyclical: increase when home country faces hardship. Household level: food, education, healthcare.
Global Value Chains
Globalization of production: global value chains. iPhone designed in US, components from 40 countries, assembled in China.
Global Value Chains
How modern products are made across multiple countries
Global value chains (GVCs): production fragmented across countries based on comparative advantage. Apple iPhone: designed in US, chips from Taiwan/South Korea, rare earths from China/Congo, assembled in China. 'Made in China' misleading — China adds only a fraction of value. GVCs make trade statistics complex.
The Informal Economy
Informal economy: economic activity outside government regulation and taxation — up to 50% of GDP in some countries
The Informal Economy
The large unregulated sector that official statistics miss
Informal economy: unregistered businesses, undeclared workers, untaxed transactions. Street vendors, domestic workers, day laborers. Up to 50-60% of GDP in Sub-Saharan Africa. 30-40% in Latin America. 15% in developed economies. Pros: flexibility, entry point for poor. Cons: no worker protections, no tax contribution, no credit access.
Tourism and Geography
Tourism geography: global north to global south flows. Ecotourism, heritage tourism, medical tourism.
Tourism and Geography
How tourism shapes places and economies
International tourism: ~1.4 billion arrivals/year (pre-COVID). France, Spain, US top destinations. Tourism can: provide foreign exchange, create jobs, fund conservation, but also: damage environments, create dependency, exploit local cultures. Ecotourism: low-impact, nature-based. Medical tourism: travel for cheaper/better healthcare.
Dependency Theory
Dependency theory: developing countries are poor because wealthy countries keep them dependent on raw material exports
Dependency Theory
A critical perspective on why global inequality persists
Prebisch-Singer thesis: terms of trade favor manufactured goods over commodities — developing countries' export revenues buy fewer imports over time. Wallerstein's world-systems theory: core (wealthy, manufactures), semi-periphery (middle), periphery (poor, extracts resources). Structural inequality built into global economic system.
Mnemonic
What it means
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🎓 Common Exam Questions
Q: What is the HDI (Human Development Index) and how does it improve on GDP alone?
A: HDI (Human Development Index): developed by UNDP (1990) as broader measure than GDP per capita. Three dimensions: Health (life expectancy), Education (mean years and expected years of schooling), Income (GNI per capita in PPP dollars). Scored 0 to 1 — above 0.8 is very high development. GDP limitation: a country can have high GDP but poor health, terrible inequality, and low education. HDI captures whether economic growth translates to human wellbeing. Limitations: still misses inequality (IHDI adjusts for this), gender inequality (GII — Gender Inequality Index), and multidimensional poverty (MPI).
Q: Explain Rostow's stages of growth and the main criticisms.
A: Rostow's 5 Stages (1960): (1) Traditional Society — subsistence agriculture. (2) Preconditions for Takeoff — infrastructure, commercial agriculture. (3) Takeoff — rapid industrialization, savings and investment rise. (4) Drive to Maturity — diversification, technology spreads. (5) Age of High Mass Consumption — service economy, consumer goods widespread. Significance: influenced post-WWII development policy and foreign aid. Criticisms: assumes all countries follow the same Eurocentric path; ignores colonial history; dependency theorists argue the global system prevents poor countries from reaching higher stages; China and East Asia followed very different paths.
Q: What are global value chains (GVCs) and how have they reshaped economic geography?
A: Global Value Chain (GVC): the full range of activities in producing a product distributed across multiple countries. Example: Apple iPhone — designed in California, components from Japan, South Korea, Taiwan; assembled in China. GVCs have fragmented production — companies seek cheapest location for each stage. Effects: created manufacturing jobs in Vietnam, Bangladesh, Mexico; but also vulnerabilities (COVID-19 disrupted GVCs globally); concentrated profits in design and branding (wealthy countries) vs assembly (lower wages). GVCs made the geography of production more complex and interdependent than ever before.
Q: Compare the core-periphery model and dependency theory as explanations for global inequality.
A: Core-periphery model (Wallerstein's World Systems Theory): global economy divided into core (wealthy, industrialized — US, Europe, Japan), semi-periphery (transitioning — Brazil, China, India), and periphery (poor, raw material exporters). Core extracts value from periphery through unequal trade and investment. Dependency theory (Frank, Prebisch): developing countries are underdeveloped because of their relationship with developed countries — not despite it. Colonial history created export economies geared to serving core needs. Both challenge the assumption that free trade and foreign investment automatically benefit poor countries.
Q: What is commodity dependence (Dutch Disease) and how do countries escape it?
A: Commodity dependence: economy dominated by raw material exports. Dutch Disease: commodity boom causes currency appreciation, making other exports (manufacturing) uncompetitive — damaging diversification. Named after Netherlands gas discovery 1959. Examples: Nigeria (oil), Zambia (copper), Venezuela (oil). Escaping: Industrial policy — protect and subsidize manufacturing (South Korea, Taiwan). Sovereign wealth funds — save commodity revenue for price falls (Norway oil fund). Diversification into tourism, services, technology. Education investment to build human capital. The resource curse: countries with abundant natural resources often have slower growth, more corruption, and worse institutions.