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Unit 7 Essentials

25 must-know vocabulary terms and the 4 big ideas anchoring Unit 7: Industrial and Economic Development.

Unit 7: Industrial and Economic Development🏠 Unit Hub📁 Flashcards🗺 Cheat Sheet⭐ The Essentials🎙 Podcast🎨 Visual Review📝 MC Practice✍ SAQ Practice
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Rostow's Model
Five-stage linear model of economic development from traditional society to high mass consumption.
Development Models
GDP (Gross Domestic Product)
Value of all goods and services produced within a country's borders in a year.
Economic Measures
GNP (Gross National Product)
Value of goods and services produced by a country's citizens, including abroad.
Economic Measures
HDI (Human Development Index)
Composite measure combining life expectancy, education, and income — broader than GDP alone.
Development Indicators
GII (Gender Inequality Index)
Measure of gender-based disadvantage in health, empowerment, and labor market participation.
Development Indicators
Gini Coefficient
Statistical measure of income inequality within a country — 0 = perfect equality, 1 = perfect inequality.
Economic Measures
Core-Periphery Model
World-systems theory dividing the globe into wealthy cores, middle semi-periphery, and poor periphery.
Development Models
Dependency Theory
Theory that Global South underdevelopment results from historical exploitation by core countries.
Development Models
Comparative Advantage
Countries should specialize in producing what they can produce at lowest opportunity cost and trade.
Economic Theory
Weber's Least Cost Theory
Factories locate to minimize transportation of inputs + outputs + labor costs.
Industrial Location
Agglomeration
Clustering of industries to benefit from shared infrastructure, labor, and knowledge spillovers.
Industrial Location
Deindustrialization
Decline of manufacturing in a region as factories relocate to cheaper-labor locations.
Industrial Processes
Special Economic Zone (SEZ)
Designated area with favorable regulations to attract foreign investment — tax breaks, relaxed rules.
Industrial Policy
Foreign Direct Investment (FDI)
Investment by a company from one country into business interests in another country.
Global Economy
Multinational Corporation (MNC)
Company operating in multiple countries; HQ in core, production in periphery.
Global Economy
Outsourcing
Contracting business functions to external companies, often in lower-cost countries.
Global Economy
Primary Sector
Economic activities involving direct extraction of natural resources — farming, mining, fishing.
Economic Sectors
Secondary Sector
Manufacturing — converting raw materials into finished goods.
Economic Sectors
Tertiary Sector
Service industries — retail, healthcare, education, transportation.
Economic Sectors
Quaternary Sector
Knowledge and information-based work — research, finance, technology, management.
Economic Sectors
Microfinance
Small loans and financial services for low-income entrepreneurs without bank access.
Development Strategies
Brain Drain
Emigration of highly educated workers from developing to wealthy countries.
Development Challenges
Sustainable Development
Development meeting present needs without compromising future generations' ability to meet theirs.
Development Concepts
Import Substitution Industrialization
Strategy of producing domestically what was previously imported, using tariffs to protect local industries.
Development Strategies
Technological Leapfrogging
Developing countries bypassing older technologies and adopting newer ones directly.
Development Processes
Big Idea 1
Development is measured in multiple ways — and GDP alone is insufficient
GDP and GNP measure economic output but miss critical dimensions of human well-being. The HDI adds life expectancy and education; the GII captures gender inequality; the Gini coefficient measures how equally income is distributed. Understanding which measure to use — and why — is a key AP exam skill.
HDIGDPInequality
Big Idea 2
Industrial location is explained by cost-minimization models — but globalization has transformed the calculus
Weber's Least Cost Theory explains factory location based on minimizing transportation and labor costs. But globalization — through cheaper shipping, trade liberalization, and digital communication — has dramatically reduced the friction of distance, enabling production to shift to wherever labor costs are lowest regardless of geography.
WeberGlobalizationLocation
Big Idea 3
Core-periphery theory explains geographic inequality in the world economy
Wallerstein's world-systems theory explains why some countries are wealthy (cores) and others poor (peripheries) as the result of a global economic system in which cores extract value from peripheries. Dependency theory extends this critique, arguing underdevelopment is caused — not just correlated — by integration into the world system on unfavorable terms.
CorePeripheryInequality
Big Idea 4
Development strategies involve real trade-offs between growth, equity, and sustainability
From Rostow's optimistic linear model to dependency theory's pessimistic critique, development economists disagree fundamentally about how countries can improve living standards. Special economic zones, import substitution, microfinance, and fair trade represent different bets about what works. Sustainable development adds the constraint that growth must not compromise future generations.
RostowSustainabilityPolicy