Quiz 15 - Globalization

Autarkic - self-sufficient economies that try to minimize international trade by producing most goods and commodities on national territory.

automation - the substitution of capital for labor in the form of labor-saving devices; this is what spurred the Industrial Revolution.

Bracero program (1942-1964) - U.S. program initiated to allow male mexican workers to work in the U.S. when labor was short in WWII.

conductive business climate - a term that has come to mean low taxes, low utility cost, and low wages paid to workers- but workers with a good work ethic and high productivity.

Direct foreign investment (DFI) - when an economic entity such as a large transnational organization decides not simply to market its products in a foreign country but to actually build a facility there, e.g., Nissan in Smyrna, TN.

Distribution costs - In Weber’s theory for the location of industries, the costs associated with the distribution of the finished product of the manufacturing process to its final markets. Other things being equal, these will be higher than the assembly costs.

Exploitive strategy - a development strategy that is similar to that of many colonial powers: using development capital to exploit the natural resources of the area often for self-serving reasons.

Flota - literally fleet; protected and controlled convoy of vessels sailing between Seville and designated Spanish colonial Caribbean ports, including Cartagena, Nombre de Dios, Panama, Vera Cruz, and Havanna.

Footloose industry - an economic activity that is not so tied to the natural resource base; such an industry might locate anywhere and be successful; many high-tech industries are said to be locationally footloose.

Ford, Henry - innovator in the automobile industry; in the teens, he really revolutionized the industry with the notion of interchangeable parts and the assembly line method of production, making automobiles affordable to the masses.

Friction of distance - the costs associated with moving people, goods, or commodities across space; the longer the journey, the higher the cost and the greater the friction between places.

Globalization - the increasing interconnectedness of different parts of the world through common processes of economic, environmental, political, and cultural change.

Gross good - a weight-losing good in the process of manufacturing; that is, the weight of the localized raw materials is greater than the weight of the finished product, creating a material index greater than 1.0.

Host country - the country that a transnational corporation decides to set up shop in; there are a variety of protective measures that the host country can adopt to assure that the transnational corporation does not exploit its relationship.

Import Substitution Industrialization (ISI) - a policy widely adopted in post-World War II Latin America to encourage manufacturing on national territory; imports were reduced by high tariffs;

Industrial revolution - started with automation being introduced into the textile and apparel industry in the Midlands region of Great Britain in the 1740s and spread to Europe and America as well as to other sectors of the economy somewhat later.

Joint venture - a venture jointly sponsored by a government and a private entity such as a large transnational corporation.

Lebensraum -  literally living space; term coined by German geographer Friedrich Ratzel to explain why states had a right to grow; became part of Nazi ideology, and the world was frequently used by Hitler in relation to his expansionist aims in Slavic lands.

Maquiladora - in Spanish, a place where one pays a miler for grinding grain into flour; colloquially the term refers to an assembly plant using cheap Mexican labor, many of which established under the Border Industries Program (1965) on Mexico’s northern border with the United States.

Market orientation - the preference for market locations by industry because the freight rates on raw material assembly are usually less than the freight rates on product distribution due to the nature of the freight rate structure in the United States.

Mass market - a system of exchange adapted to large-scale production and consumption.

Material index - a key in Weber’s theory of the location of manufacturing; goods may be categorized into three different types depending on the ratio of the weight of localized raw materials to the weight of the finished product; if that ratio is greater than 1.0 is a gross good, if equal to 1.0 it is a pure good, and if less than 1.0 it is a ubiquitous good.

Mercantilism - colonial economic system in which trade between the metropolitan power and overseas possessions was controlled and goods from other nations ere excluded, to avoid paying for imports with gold or sliver out of national treasuries.

Newly industrializing countries (NICs) - a term that has been coined for up-and-coming economies; they have not yet quite achieved the status of first world developed economies, but they are rapidly approaching that status; the four “little tigers” of Asia (Hong Kong, Singapore, South Korea, and Taiwan) are often used as examples.

North American Free Trade Agreement (NAFTA) - an extension of the free trade zone that had been going on for some time between the United States and Canada and the United States and Mexico; now all three of these countries are par of one free trade zone.

Oligopoly - a situation in which there are few sellers in some product line; by the 1950’s for example, only the “Big Three” (GM, Ford, and Chrysler) remained in the automobile assembly industry, whereas at the turn of the 20th century there were almost 200 sellers.

Outsourcing - the practice of locating branch plants in foreign countries in order to take advantage of the cheaper labor there.

Pure good - in Weber’s terminology, a good like thread/yarn in which the input and the output of the manufacturing process weigh about the same; other things being equal, such an activity would probably locate at the marketplace.

Primary sector - the portion of the economy concerned with the direct extraction of materials from Earth’s surface, generally through agriculture, although sometimes by mining, fishing, and forestry.

Quaternary sector - the economic sector in which knowledge-based jobs are among the fastest growing; sometimes referred to as white collar jobs.

Quintary sector - the economic sector reserved for the very top echelon of any organization: the CEO, FEO, research scientists, and the like; these people are responsible for the top-level corporate decisions and exist in an information-rich environment; these are “gold collar” jobs.

Raw material orientation - the location of the manufacturing plant in relation to the source of raw materials; while most industries would prefer to locate near their markets in order to save the recurring costs of transportation, some industries, especially those that involve a loss of weight, bulk, or perishability in the process of manufacturing, might prefer to locate near their source of raw materials since their material index is much greater than 1.0.

Resource - the physical existence of some raw material that can be used under the current state of technology; if raw material can’t be of use, it isn’t really a resource.

Secondary sector - the sector of the economy that takes raw materials from the earth or sea and converts them in form into something more useful (i.e., adding value to the product); manufacturing and construction are the two most important examples of this sector, the former talking place in factories and the latter on site; workers in this sector are called “blue collar” and achieved their greatest relative importance in the pre-World War II era.

Slater, Samuel - employed by Moses Brown (started textile mill Rhode Island) to replicate the British textile innovations of the Industrial Revolution in America.

Tertiary sector - the sector of the economy that is growing rapidly in most developed nations; some authors divide the tertiary sector into those types of jobs that can be performed with little or not job skills (the “McJobs” of the service sector) and those better-paying jobs that require a great deal of education and information upon which to base decisions; hence the tertiary sector dealing with services and distribution can be further subdivided into quaternary and even quintary sectors.

Time-spaced compression - the reduction in the time needed to move information, people, and goods across earth space.

Traditional society - the first stage of economic development; this stage can last for thousands of years unless there is an impetus for growth in the mercantile and manufacturing areas and a change in the institutions necessary to make the transition to a more modern capitalist society.

Transnational (multinational) corporations - corporations, usually large ones, with operations in more than one host nation; often the headquarters are the research and development facilities are located in technologically advanced countries, while the routine manufacturing for the products of such transnational corporations are often global in scale.

Ubiquitous good - a widely available good that might be added in the process of manufacturing at eh market since the weight of the finished product would, in this case, be greater than that of the localized raw materials of which it is composed.

Watt, James - inventor of the steam engine in Great Britain that revolutionized both transportation and industry, as steam power could replace falling water as the source of power for factory machines.

Weber, Alfred - German economist who developed in 1909 a theory for the location of industries that focused on transportation, labor, and agglomeration as factors of production affecting the optimal (least cost) industrial location.

Zaibatsu (Japanese) - literally money clique; a system of interlocking investments by which Japanese groups, such as Mitsubishi, arrive at control of segments of economic activity to the exclusion of outsiders; they were outlawed after WWII; the present-day version is the Keiretsu, literally interlocking chain.