1. Define: Cottage Industry a business or manufacturing activity carried on in a person's home. Traditional Economy Less Developed Countries Weaving

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1 1. Define: Cottage Industry a business or manufacturing activity carried on in a person's home. Traditional Economy Less Developed Countries Weaving Tool/weapon building Pottery Crafts

2 1. Define: Life Expectancy The average number of years a resident of a place is expected to live-used as an indicator to determine a country s level of development. Based on factors such as: Access to healthcare Nutrition Access to food and clean water Quality of life and standard of living

3 1. Define: Infant Mortality Rate The number of babies per 1,000 that die before their 1 st B-Day. (For a given year in a particular country.) An economic/demographic indicator of a country s level of development

4 1. Define: Free trade zone An agreement between nations to remove barriers to trade (or limits on the # of imports, tariffs)

5 1. Define: GDP Per Capita Total value of goods and services produced by a country in a year divided by total population. Measure of average incomes LDC have low GDP per capita/mdc have high GDP per capita GDP/Total Population=GDP per Capita

6 2. ECONOMIC SYSTEMS

7 Traditional economy An economic system in which traditions and custom control economic activity Advantages of a traditional economy : fosters a sense of community, little friction among members provides a sense of security psychological comfort. low unemployment rate and low crime rate Ex: village making decisions on set beliefs

8 Disadvantages of a traditional economy: A traditional economy does not: allow for much economic growth and development because changes are very slow take advantage of technology There is relatively little promotion of intellectual and scientific development. Limits choices for consumers Low standards of living.

9 Agricultural Production Subsistence Agriculture -small scale -shifting cultivation, nomadic herding are most of the areas in this region VS Commercial Agriculture -large scale -plantation farming -produce cash crops

10 Cottage Industries Very common in traditional societies. People use their spare time in their home to weave cloth, make furniture and clothes, and to produce other goods by hand. Typically, cottage industries involve the entire family

11 Capitalism (Free Market Economy)

12 Ownership & Control Means of production owned by individuals and businesses Market determines what will be sold and in what quantities. Supply and demand: Supply refers to how much of a good producers are willing to make and sell. Demand refers to how much of a good consumers are willing to buy

13 Competition & Efficiency Freedom to compete helps to keep prices low and quality high Desire for profits encourages efficiency

14 Standard of Living Goals are high standard of living and economic security Individuals are free to earn profits, but may risk losses

15 Communism (Command Economy)

16 Ownership and Control Government owns means of production Government determines what will be sold and in what quantities.

17 Competition & Efficiency Government control over economic decisions hinders efficiency; market not allowed to work Lack of competition hurts quality of goods

18 Standard of Living Goals are full employment and income equality Individual efforts are not rewarded; workers work for the nation Low standard of living with few luxuries

19 Socialism (Mixed Market Economy)

20 Ownership & Control Basic means of production owned and managed by government Private ownership, with regulation of many businesses

21 Competition & Efficiency Cooperation stressed over competition Central planning by government can hinder efficiency

22 Standard of Living Goals are high standard of living & economic security High taxes provide free health care and free education

23 3. LEVELS OF ECONOMIC ACTIVITIES

24 RICH, DEVELOPED COUNTRIES POOR, DEVELOPING COUNTRIES LEVELS OF ECONOMIC ACTIVITY No matter how large or small an economy is, it operates at least at one of the four economic levels below. Which level a country s economy is engaged in determines if it a poor, developing nation or a rich, developed nation. Primary Activities: agriculture or the gathering of raw materials to use in the making of a final products Secondary Activities: involve adding value to materials by changing their form Tertiary Activities: involves providing business or professional services- doctors, salesperson, teachers Quaternary Activities: involves providing information, management, and research services by highly-trained persons.

25 4. LEVELS OF DEVELOPMENT

26 5. INFRASTRUCTURE AND ECONOMY A developed economy requires an extensive and modern infrastructure to support production, transportation of goods, reducing costs to producer and consumer, and to reduce the geographical impacts of location.

27 6. Impacts of Industrialization The Pros of The Industrial Revolution 1. More Efficient Production Inventions like the steam engine helped to streamline production of many goods. This reduced the time and labor that was involved in creating the things that people needed everyday. 2. Cheaper Prices Along with making production processes more efficient, the Industrial Revolution also resulted in dramatically lower prices for goods. This was due to the shortened amount of time needed to produce goods, as well as the costs saved for labor.

28 Pros of Industrialization 3. Major Increase In Job Opportunities Factories began to pop up everywhere during this time, which needed employees to run and manage them. This created tremendous job growth and also provided the opportunity for new products and inventions to be designed and produced. 4. Spectacular Motivation, Changing The World With all of the new and innovative things that began to emerge out of this time period, people became more motivated and educated than over. This spurred a large amount of useful inventions that are still widely used and pertinent in today s modern world. Some of this include the light bulb, the telephone, and X-rays. 5. Improved Quality of Life All of the modern inventions and the amount of wealth that was brought into the cities greatly improved the way that people lived. Health care, education, appearance, and nutrition all began to get much more attention than previously.

29 Cons of Industrialization 1. A Loss Of Farming and Cottage Industry/Rural Decline There was much more money to be made in the cities than in the rural farming areas. This caused many people to abandon their farms and move to the industrial centers. This made the amount of farmed foods scarce for a long period of time. 2. The Beginning of Pollution Before all of the factories came about during the revolution, there was no major sources of pollution to the water and air in the world. The pollution never stopped after this time and continues to contaminate our air, land, and water. 3. Working Conditions In Factories Factories quickly became all about profit. The working conditions for the large amount of people working these factories where extremely poor. They where forced to work extremely long hours with few breaks and little pay in order to maximize profits. This resulted in stress related illnesses, the spread of disease, and death through out the factories.

30 8. PROS and CONS of ECONOMIC COOPERATION