Chapter 4, Section 5

Economic Geography

Economic Geography 4.5

• An economy consists of the production and exchange of goods and services among a group of people

• The way people choose to produce and exchange goods is called as economic system– Traditional Economy - trade without money, or “barter”– Command Economy – production determined by government,

who also owns the means of production, and does not necessarily reflect the consumer demand: communism

– Market Economy – Production of goods and services follows consumer demand: capitalism, free enterprise

– Socialism – where government may own major means of production, but market consumer demand is followed

Economic Activities

• Subsistence Agriculture – just enough to feed the family• Commercial Agriculture – producing a surplus for the market• Cottage Industry – on a small scale, often family-owned and operating

out of the home• Commercial Industry – serving the needs of people in a large area

– Primary Activities – taking raw materials from the environment: forestry, fisheries, mining

– Secondary Activities – changing the form of the raw materials: manufacturing, food processing and packing

– Tertiary Activities - providing business or personal services: education, healthcare, lawyers, retailers

– Quaternary Activities – providing information, management and research services by highly-trained persons: web services, think-tanks, research universities

• The more developed the economy, the greater the number and variety of activities

Natural Resources are materials on or near the earth

• These materials only become resources when society has a use for them: cultural definition of resources

• Like everything, they are unevenly distributed around the earth

• Usually divided into three groups– Renewable – can be replaced through nature: trees,

seafood– Non-renewable – cannot be replaced once they are

removed from the earth: iron and other ores, fossil fuels (oil, natural gas, coal)

– Inexhaustible Energy Sources – unlimited in quantity: sunlight, geothermal heat, winds, tides

Developed economies require basic support systems called infrastructure

• Transportation: roads, railways, ports and airports

• Communications systems: Strong economies are linked internally and externally by Internet and satellite communications

• Water, sanitation, electricity and gas networks, and education systems

Geographers compare economies using a variety of statistics

• Per-capita Income – the average amount of money earned by each person in a political unit

• Gross National Product(GNP) – the total of goods and services divided by the number of citizens

• Gross Domestic Product(GDP) – the total of goods and services divided by the number of people within the boundaries

Development Levels

• Developing Nations – have low GDP, lack an industrial base and struggle to meet their people’s basic needs

• Developed Nations – have high GDPs, a varied economy, especially with quaternary activities

Mali

India

China

Japan

USA