(economy, 4 min)

1. Economic Systems are patterns of production and consumption and the location of economic activities within each system
    
   1. Subsistence Economic Systems
       
      • Agricultural, rural, technologically underdeveloped regions.
         
      • The agriculture is extensive instead of intensive.
         
        • Extensive agriculture (pastoralism) is a system characterized by low input of materials and labor with the crop yield depending largely on the naturally available soil fertility, water supply and other land qualities.
           
        • Intensive agriculture is a system characterized by the high inputs of capital, fertilizers, pesticides, and labor-saving technologies. It is associated with the increasing use of agricultural mechanization, which has enabled a substantial increase in production along with a decrease in the manpower required.
         
      • Little or no specialization.
       
   2. Commercial/Market Economic Systems
       
      • Complex, advanced economies, hierarchically & spatially linked in patterns of consumption, production, and the exchange of goods and services.
         
      • Profit drives the system
         
      • Specialization, even in agriculture, produces an interdependence within the system
         
      • Economic location decisions based on:
         
        • Accessibility to material inputs (raw materials)
           
        • Labor with particular skills
           
        • Processing costs (land, taxes, energy)
           
        • Transfer costs at other locations (transportation)
           
        • Local government policies
       
   3. Planned/Command Economic Systems
       
      • Central planning to achieve government-determined objectives
         
      • Government agencies control supply and price
         
      • Government decides where to locate industries and what crops to grow
         
      • All decisions are based on social criteria, not profit
    

2. Four Kinds of Economic Activities
    
   1. Primary economic activities are those that use natural resources directly.
       
   2. Secondary economic activities use raw materials to produce or manufacture something new and more valuable. Examples of secondary economic activities include manufacturing steel, processing wheat into flour, milling lumber into plywood, iron smelting, chemical industries, power production, and construction.
       
   3. Tertiary economic activities are those activities which provide services, personal and professional services such as doctors, teachers, dry cleaners, and secretaries as well as retail and wholesale services such as store clerks, truck drivers, and fast-food providers.
       
   4. Quaternary economic activities are "white collar" activities with professionals working in education, government, management, information processing, and research.
    

3. Location of Economic Activities.

   Geographers are concerned with the spatial organization and location of economic, transportation, and communication systems which produce and exchange the great variety of commodities (raw materials, manufactured goods, capital, and services) which constitute the world economy.
    

   1. Primary economic activities are located at the site of the natural resource being exploited, for example, iron mining at the site of the iron deposit.
       
   2. Secondary economic activities locate either at the site of the resource or close to the market for the manufactured/processed good depending upon whether which affect the location of economic activities (labor costs, energy costs,availability of capital, land, resources, and expertise).
       
      • In the case of lumbering, the finished product is cheaper to ship than the raw materials so lumber mills are located close to forests to minimize costs (and maximize profit).
         
      • In the case of flour and bread, it is cheaper (and easier) to ship wheat than the finished product, bread. Consequently, bakeries are located close to consumers in cities, again, to minimize costs.
       
   3. Tertiary economic activities locate where services are required - where people are.
       
   4. Quaternary economic activities are not tied to resources, the environment, or access to a market.
       
      • With improvements in telecommunications, these economic activities can be located anywhere.
         
      • Factors which do tend to affect the location of "high-tech" economic activities include:
         
        • Access to universities and research centers.
           
        • Access to a pool of highly trained and skilled workers.
           
        • Availability of venture capital.
           
        • Proximity to places with high quality of life attributes (scenery, recreation, climate, quality education system) .
           
        • Access to excellent transportation and communication networks.
    

4. Developing a World System: Global Economic Interdependence
    
   1. Change from industrial to post-industrial.
       
      • Many manufacturing and processesing jobs have moved from the U.S. overseas to cheaper wage regions.
         
      • More people in our nation are employed in service (tertiary and quaternary) jobs.
         
      • We are linked economically with all regions of the world (think of profit, specialization, and trade networks).
       
   2. Change in scale: Multinational corporations - Consequences?
       
      • This has caused major geo-economic restructuring. The end result has been a global world economy.
         
        • Most powerful economic entities in the world are multinational corporations. Exxon, Shell, Hitachi, GM, and Nestle are all multinational.
           
        • These corporations are highly concentrated geographically in advanced economies, like Japan, U.S., Canada, and Western European nations like Germany and France.
           
        • Money from multinational corporations flows into the developing world, especially into newly industrialized countries like Taiwan, Singapore, and China. The investment has caused these nations to industrialize very rapidly.
           
        • At the same time, command economic systems have collapsed in nations like Russia, Poland, and Hungary, while others have undergone liberalization and privatization, like China. These countries are in the process of creating market economies.
           
        • Multinational corporations have encouraged new trade agreements and liberal trade policies, like the European Union, NAFTA, GATT.
      

5. Natural, Capital, and Human Resources
    
   1. Natural resources are naturally occurring substances that are considered valuable in their relatively unmodified (natural) form. A natural resource's value rests in the amount of the material available and the demand for it.
       
      • Renewable resources can restock themselves if they are not over-harvested.
         
        • Living resources like plants and animals.
           
        • Non-living resources like solar energy and wind power.
           
        • Once renewable resources are consumed at a rate that exceeds their natural rate of replacement, the standing stock will diminish and eventually run out.

          The rate of sustainable use of a renewable resource is determined by the replacement rate and amount of standing stock of that particular resource. Non-living renewable natural resources include soil and water.

         
      • A non-renewable resource is a natural resource that exists in a fixed amount that cannot be re-made, re-grown or regenerated.
         
        • Some non-renewable resources can be renewed over an extremely long time.
           
          • Fossil fuels (oil, coal, and natural gas), for example, take millions of years to form and so are not practically considered "renewable".
       
   2. Capital resources or capital goods refers to items of extensive value. Capital goods may be acquired with money or financial capital. In finance and accounting, capital generally refers to financial wealth, especially that used to start or maintain a business, sometimes referred to as Cash Flow.
       
      • Goods with the following features are capital:
         
        • Can be used in the production of other goods (this is what makes it a factor of production).
           
        • Was produced, in contrast to "natural resource".
           
        • It is not used up immediately in the process of production - unlike raw materials or intermediate goods.
       
   3. Human resources commonly refers to the people making up the "work force".
       
      • Within a company, the term refers not only to the workers, but to the portion of the company's organization that deals with hiring, firing, training, and other personnel issues.
         
      • An important controversy regarding labor mobility points out the broader philosophical issue with usage of the phrase "human resources".
         
        • Governments of developing nations often regard developed nations that encourage immigration or "guest workers" as appropriating human capital that is rightfully part of the developing nation and required to further its own growth as a nation.
    

   

6. National Political Systems
    
   1. Earth's surface now completely divided into national units. This is a relatively recent occurrence.
       
      • State - an independent political unit occupying a defined, populated territory with full control over internal and external affairs.
         
        • A state can have more than one nation - like the Soviet Union.
         
      • Nation - a group of people with a common culture bound together by a strong sense of unity by language, religion, and a sense of ethnocentrism.
         
        • A single nation can be divided among two or more states - like the United States.
       
   2. Geographic Characteristics of States
       
      • Size - advantages and disadvantages of being large
         
        • Microstate - a state that is extremely small, like San Marine.
         
      • Shape
         
        • Compact state - the distance from the geographic center of the area to any point on the boundary does not vary greatly, like Hungary.
           
        • Prorupt state - state having a portion of territory that is elongated, like Thailand.
           
        • Elongated state - the state is geographically long and narrow, like Chile.
           
        • Fragmented state - the state split into many pieces, like the Philippines and Indonesia.
         
      • Location - absolute vs. relative
         
      • Boundaries
         
        • Boundary Delimitation - political boundaries on Earth's surface are determined by the use of man made structures such as fences and walls, like between the United States and Mexico.
           
        • Boundary Demarcation - there are no physical signs on Earth's surface to show that a boundary exists, like between Saudi Arabia and Omen.
           
        • Physical Boundary - major physical features such as a deserts, mountain ranges, and/or water bodies that serves as a means of separation, like the Great Lakes, Pyreness Mountains, and Sahara desert.
           
        • Geometric Boundary - straight lines that serve as political boundaries that are unrelated to physical and /or cultural differences, like between the United States and Canadian.
           
        • Cultural Political Boundary - political boundary that separates different cultures, like the former Yugoslavia.
           
        • Religious Boundary - boundary that separates different religions, like Northern Ireland and Ireland.
           
        • Language Boundary - boundary that separates different language speakers, like France, Spain, and Portugal.
         
      • Boundaries classified according to when they were laid out:
         
        • Antecedent Boundary - a boundary that was created before the present day cultural landscape developed, like Malaysia and Indonesia on the island of Borneo.
           
        • Subsequent Boundary - boundaries that are created as a result of long term processes, like between Vietnam and China.
           
        • Super Imposed Boundary - a boundary that has been forced upon the inhabitants of an area to solve a problem and/or conflict, like Indonesia and Papa New Guinea.
         
      • Boundary Disputes: positional, territorial, resources, functional
       
   3. State Cohesiveness

      Centripetal Forces (promote unity and stability)   nationalism   iconography   unifying institutions   organization and administration   transportation and communication

      Centrifugal Forces (disrupt, destabalize, and weaken)   regionalism   lack of common history, language, etc.   social and economic inequity   peripheral location   weak infrastructure

   4. Political Power
       
      • Politics of geography
         
      • Geography of politics